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Missouri Medicaid Expansion Likely Would Pay For Itself, Report Finds

Keith Carter, 53, waits to pick up a prescription for diabetes at Affinia Healthcare in St. Louis. Though he falls in the income gap, he's able to get his preventive care covered through Gateway to Better Health.
Durrie Bouscaren | St. Louis Public Radio

Missouri likely would not have to spend any additional money to expand Medicaid to insure more low-income people, according to a report from the Washington University Center on Health Economics and Policy.

The state spends nearly $4 billion to provide Medicaid to people with disabilities, pregnant women, children and some seniors.

Researchers say adding people who make up to 138 percent of the federal poverty rate – close to $17,000 annually – likely wouldn’t cost Missouri extra funds, because the state would receive increased federal funding under a Medicaid expansion.

An estimated 200,000 people could gain coverage if Missouri expanded the program to include low-income adults, according to the Kaiser Family Foundation. (The report assumes 231,000 people would gain coverage.)

“Intuitively, when you think about adding people to Medicaid, you think it’s going to cost money,” said Ryan Barker, Missouri Foundation for Health’s vice president of policy. “So this is sort of counterintuitive, that it would save the state money.”

Missouri is one of the 14 states that hasn’t expanded the health insurance program for poor and people with disabilities. Missouri HealthNet, the state’s Medicaid program, covers only disabled people, pregnant women and children and some seniors.

Gov. Mike Parson, a Republican, has said he doesn’t want to consider a Medicaid expansion until the state has identified misuse in its current system. To that end, the state has been auditing Missouri HealthNet recipients and has purged many from the Medicaid rolls.

Proponents could gather signatures on a ballot initiative to bring a Medicaid expansion to a statewide vote. In 2018, voters in majority-Republican states Utah, Idaho and Nebraska voted to expand the state’s Medicaid programs.

Currently, the federal government pays for 65 percent of residents’ Medicaid costs, and the state pays the rest. Federal monies would cover 90 percent of the cost of caring for people who become eligible through the Medicaid expansion.

Much of the additional money to the state would come from a higher federal reimbursement rate for insurance covering people with disabilities currently insured through Missouri HealthNet, according to the report. Many would also be eligible for the Medicaid expansion coverage based on their income.

The researchers say once people with disabilities are covered by the Medicaid expansion, the state would receive the higher federal reimbursement rate. People with disabilities historically are expensive to cover and cost the state lots of money, said Barker of the Missouri Foundation for Health. He said a higher reimbursement rate for that segment would make a big difference.

“Either there are existing populations that will become eligible for a much better match rate, which will save the state money, or people will enter the Medicaid program under that higher match rate,” he said.

That money saved is approximately the same amount it would take to cover all the new, healthier adults who would flow into the expanded program, said Abigail Barker, a Washington University professor and one of the authors of the report.

“We were able to save about 25 percent of that high amount of spending, because the federal government would kick that in,” she explained. “It is, roughly speaking, enough to offset the new additional costs of what the new population would be coming in.”

The authors of the report say the state's savings could vary depending on how many people enroll in the expanded Medicaid.

“If more people than we expect and show up and say, 'I’m in that population; I’d like to be covered under Medicaid,' that does cost the state more money,” Abigail Barker said.

The researchers provided best- and worst-case scenarios in the report for how much money the expansion could potentially save or cost. If a larger amount of patients who required more expensive care flowed into program, and if fewer current HealthNet enrollees switched, the expansion could cost the state an additional $42 million.

However, if fewer healthier people enrolled, the state could save up to $94 million.

But the report didn’t account for savings in other parts of the budget as a result of healthier patients, said Abigail Barker, the Wash U professor.

“We were tasked with just answering the question of what this does to the Medicaid budget, specifically,” she said. “We didn’t even look at some of the savings that are likely to occur in other areas of the budget — the Department of Mental Health and the Department of Corrections being the prime candidates based on what other states have seen.”

States that have expanded Medicaid have reported economic benefits as well, said Traci Gleason, a spokeswoman for the Missouri Budget Project.

“As additional evidence comes out, we do continue to see the impacts for states economically,” she said. “When your residents' health is improved, they’re able to be better involved citizens, you see that ripple effect.”

Editor’s note: This story was updated to clarify the sources of coverage estimates that the WashU report and Kaiser Family Foundation made. 

Follow Sarah on Twitter: @petit_smudge

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Sarah is the health reporter at St. Louis Public Radio.

Send questions and comments about this story to feedback@stlpublicradio.org.