Finding prescription to rescue Medicaid state’s big challenge

By Andy Ostmeyer

aostmeyer@joplinglobe.com

As the U.S. House prepares for a historic vote this weekend on health care, Missouri’s political leaders are wrestling with a health care crisis of their own.

The state is broke, but at the same time tens of thousands of residents have fallen into the ranks of the uninsured and are relying on the state’s program. Legislators said they are not sure what direction to take the program as they await federal decisions.

“It is hard to know where to go,” said Rep. Ron Richard, R-Joplin, speaker of the Missouri House.

Budget bust

Last fiscal year, the state budget had “negative growth” of 7 percent, said Mike Schwartz, budget and policy analyst for Rep. Allen Icet, R-Wildwood, the House Budget Committee chairman. To date for this year, the state is 10 percent in the red, which means the Missouri budget will be off by hundreds of millions of dollars. No one is sure exactly what to expect.

Last week, Gov. Jay Nixon cut $204 million in state spending, which wiped out 700 full-time and part-time jobs. That’s on top of $430 million he cut this summer.

Asked if that was going to be enough to balance the budget, Jack Cardetti, spokesman for Nixon, said: “As of right now, that’s the number we feel comfortable with.”

Whether that’s enough will be determined by future income and sales tax revenue, but Richard said that if more cuts are needed, Medicaid is one of the few places with a budget big enough to make a dent.

“If you’re going to decide to cut something, you got to go to prisons, Medicaid or education,” he said.

Nixon’s latest $204 million cut included $32 million in Medicaid cuts. Linda Luebbering, the state’s budget director, said it is too soon to know specifics, but the possibilities include reducing payments to providers and putting more emphasis on generic drugs.

Missouri’s Medicaid budget is around $6 billion annually, using fiscal 2009 totals. The state pumped in more than $1 billion last year; the federal government provided nearly $3 billion; and the rest came from other sources, including taxes on certain providers such as hospitals and pharmacies, and from tobacco money.

Schwartz said education has such a strong constituency that cutting there is tough. Besides, there are state constitutional mandates on education funding.

Likewise, there are limits on what the state can cut with regard to Medicaid, as well as political considerations. Part of the fine print that came with all that federal stimulus money was a promise that the states would not tighten eligibility guidelines for Medicaid recipients, Schwartz said.

And Nixon ran in 2008 in part on his promise to restore some of the funding that that been cut in 2005 — a cut that knocked 100,000 adults off the Medicaid rolls in the state.

Growing need

Meanwhile, the same economic problems that pushed the budget into the red are aggravating the Medicaid problem.

Schwartz said there are 850,000 Medicaid recipients in the state this fall, up 20,000 from last year’s total, and the average spending per Medicaid recipient is $8,500. So that’s $170 million more that is needed. If the federal government supplies 60 percent of that, or about $100 million, that still leaves the state with nearly $70 million more to find, Schwartz said.

It’s impossible to tinker with Medicaid without affecting the lives of thousands of people in the state who either count on the benefits, or work as providers and rely on state payments.

Medicaid in Missouri covers one of every 10 seniors and more than a third of the state’s children. More than 40 percent of the children in Jasper County depend on Medicaid, according to state figures.

Amy Frett, administrator of National Health Care of Joplin, a 120-bed nursing home at 2700 E. 34th St., said 50 to 60 percent of the residents are Medicaid-funded.

The state’s per diem allowance is often not enough to cover the cost of patients with complicating conditions, such as being on a ventilator.

Rick Keller, executive director of Spring River Christian Village, 201 S. Northpark Lane, said that on Thursday, 45 of the 107 filled beds were occupied by Medicaid patients. The operation receives $127.50 per patient per day from Medicaid. Cutting even $2 of that — $90 per day or $32,850 per year based on the 45 patients — would be the equivalent of a year’s pay for a certified nurse assistant.

“We’re at a critical point right now,” Keller said. “If there was any kind of decrease in rates to nursing facilities, it would be devastating.”

Ruth Erisman, director of health and budget policy for the Missouri Budget Project, said rising unemployment has made the problem worse. She defines her organization as a public interest group that advocates on behalf of creating economic opportunity for low- and middle-income people.

In September, the last month for which statistics are available, unemployment in the state was at 9.3 percent, more than double the rate the state saw in the summer of 2007. While tens of thousands of people have joined the ranks of the unemployed, that is not the only challenge, Erisman said. The average income in Missouri remains below the national average. Per capita income in the Joplin metro area stood at $28,429 for 2008, compared with $39,582 for the country as a whole, or 72 percent of the national average.

That means that even people who are working are having trouble paying for health care, Erisman said.

What now?

Aggravating the search for solutions is the fact that no one knows where to turn because no one knows what federal health care reform will look like, putting legislators in Missouri and elsewhere in a holding pattern.

“We are reluctant to move on health care until we know what is required of us from the feds,” said Richard.

Erisman said cutting spending is only half the solution.

“When we are trying to solve our budget problem, we need balanced solutions,” she said. In other words, raise taxes and close tax loopholes, she said.

She has a list of proposals at the ready:

“We reward business for filing taxes on time. Individuals do not get a reward for filing taxes on time.”

“We do not tax sales on the Internet,” putting mom and pop Missouri-based business at a disadvantage.

Cut tax credits. “We have created a big hole in our budget through our tax credit policy as well.”

Last year, businesses and individuals redeemed a total of $584 million in tax credits. State agencies and boards grant most of the breaks, without regard to whether state revenue is plummeting.

“Those things should be done without looking at personal income tax,” Erisman said.

But according to Richard and Cardetti, there’s no support among Republican leaders who control the Legislature or from the Democratic governor to boost taxes at this time.

Many legislators think the problem is likely to get worse.

Rep. Doug Ervin, R-Kearney, said federal health care reforms under discussion in Washington “would have a devastating impact on Missouri’s budget.”

There is no way the state could pay its share of the cost if Medicaid rolls were expanded to include residents making 150 percent of the federal poverty guideline, he said during a recent meeting in Joplin.

If that were to happen, the Legislature would look at “opting out” of the federal program, according to some of the other Republicans leaders who came to Joplin. But Schwartz said opting out may not be a realistic option, since it would mean the loss of federal funds.

He also said the consensus now is that federal health care reform will ultimately ease eligibility standards for Medicaid, and while the federal government may fund the first few years of an expanded program, that responsibility eventually will fall back on the states.

Nixon has told congressional representatives that besides lowering premiums and providing greater access, the federal government must not impose an unfunded mandate on the state during tough economic times, Cardetti said.

Along with the $634 million in state budget cuts this year, Cardetti and others have noted the role stimulus money is playing in Missouri’s budget, but that may not be long-lived. The state has spent or obligated about $1.3 billion in stimulus funds to help balance its budget. An additional $1 billion has been reserved for the fiscal 2011 budget, when much of it will be used to keep education funding stable.

That's because the Legislature put $620 million in federal funds into the operating budget for public schools and universities this year. If the reserved federal money is spent now, more state general revenue would be needed to fill the education hole in 2011.

Schwartz said he believes Missouri will make it through this fiscal year. And next.

“We think that in 2011, with stimulus money and general revenue money left, we can make it,” he said. “It’s going to be painful.

“2012 is where our sights are set as being the real train wreck in the state.”

Andy Ostmeyer is the metro editor for The Joplin Globe. The Associated Press contributed to this report.

Home

Search Results

Related Photos

Discussion

A Missouri lawmaker has filed legislation that would allow Interstate 70 to be turned into a toll road allowing a private company to fix the interstate in exchange for tolls. Do you think this bill should pass?

Site Map

Contact Us