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Perspective: Medicaid expansion is the wrong course for Missouri taxpayers

by Leah Vukmir and Jess Ward | July 17, 2020 at 5:05 a.m. | Updated July 19, 2020 at 2:43 p.m.

To expand Medicaid or to not expand Medicaid? That is the question voters will have to answer on the Aug. 4 primary ballot that could bring Obamacare's program expansion to Missouri. If voters approve Constitutional Amendment 2, it'll mean more state spending, more Missourians on the government dole, higher health care costs and an inevitable tax increase. The outcome of this ballot initiative will have serious implications not just for taxpayers, but all who are enrolled in a health care plan in the Show-Me State.

Medicaid expansion would mean that any able-bodied adult who earns up to 133 percent of the federal poverty line can get health insurance from the government. The federal government will initially pick up 90 percent of the additional Medicaid budgetary costs, with the state covering the remaining 10 percent. Multiple estimates suggest more than 350,000 people in Missouri could be eligible for this expanded entitlement.

If more people have health coverage, and the federal government is picking up the majority of the cost, why should taxpayers care?

First and foremost, Medicaid expansion would balloon the state budget. As a result of declining tax revenues, Gov. Mike Parson has been forced to strip $459 million from future state spending in 2021, reducing K-12 funding, stopping infrastructure improvements and halting university aid. Medicaid spending already accounts for approximately 40 percent of the state's operating budget. Lawmakers have wisely raised concerns about the ongoing commitment of the federal government. Should the federal government reduce future funding provided to Missouri, the cost of expansion could reach $200 million, leaving the state constitutionally obligated to absorb the cost. What remains a mystery is the specific source of funding lawmakers will use to fund expansion, a concern Parson has voiced, and a conundrum that should alarm Missouri taxpayers.

Voters must also be aware that policy developments out of Washington, D.C., could have a huge impact on the funding of Medicaid. Under Obamacare, the federal government initially covers most of Medicaid expansion and gradually decreases its support, thus increasing the state's responsibility. States such as Oregon and Ohio, in addition to others, have experienced enrollment numbers that far exceed initial estimates, resulting in states struggling to cover budget shortfalls while still paying for other essential services. With higher-than-expected enrollment, states will be on the hook for higher-than-expected costs as the federal portion of the funding drops. During a time in which states are drowning in budget woes, while simultaneously absorbing revenue reductions, they often raise taxes or increase fees on taxpayers to cover the cost, a foreseeable problem Missouri should strive to avoid.

President Trump and some congressional leaders have also stated their intention to repeal and replace the Affordable Care Act following its failure to deliver on its two primary promises: reducing premiums and the number of uninsured Americans. Instead, the enactment of ACA forced plans to cover more services and raised minimum requirements of coverage, increasing overall costs. Even with the subsidies provided, the Congressional Budget Office projects 28 million people will be uninsured by 2026, as Obamacare is simply not affordable. Should President Trump and Congress follow through on eliminating the ACA entirely, contributions from the federal government will slowly subside, leaving a gaping hole in state budgets.

The uncertainty from Washington should make voters wary of Medicaid expansion. While we don't know what exact path our federal policymakers will take, we can confidently predict that a permanent expansion here in Missouri will be a bad deal for taxpayers, the economy and state finances.

Leah Vukmir is the vice president of state affairs and Jess Ward is the director of state affairs for the National Taxpayers Union, a nonprofit dedicated to advocating for taxpayer interests at all levels of government.

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