The problem with Medicaid - Our current budget crunch in Mo.

Tuesday, April 12, 2005

The main story dominating the headlines of Missouri's major newspapers and television stations has been the effort to reduce the size of our state welfare system. Last week, the House took up a bill to substantially restructure our Medicaid system in order to reduce spending by eliminating waste, fraud and abuse.

With all of the media reports flying around, I think it is important that everyone know the situation Missouri is facing and the reasons these changes are desperately needed.

First, and most importantly, our welfare rolls have been growing at an explosive and unsustainable rate. In 1991, there were 395,000 Missourians receiving state welfare, or a little less than one in every 10 Missouri citizens. Right now, there are more than 1 million people on Medicaid. This means that currently one out of every five Missourians is receiving some form of state welfare.

As you can imagine, the costs of the system have skyrocketed as well. In 1991, we spent $1.1 billion on state welfare assistance programs. Currently, we are spending $4.1 billion. But this explosion in spending has not been accompanied by any substantial growth in revenue. The result is that we are spending 31 percent of our state budget on welfare.

This has led to reductions in other areas of the budget, most alarmingly in education. While we are sending 30 cents out of every dollar to welfare recipients, we are only spending about a quarter of every dollar on education. This marks the first time in our history as a state that we are spending more of your tax dollars on welfare and social services than on the education of our children. This cannot be allowed to continue.

Some have argued that the situation can be fixed by a small tax increase. Unfortunately, they are wrong. Not only would any tax increase be against the clear wishes of the Missouri voters, any tax increase large enough to pay for our current levels of growth would be so large that it would kill our economy.

Just to maintain the current level of service for the current number of recipients, assuming not a single person gets added to the system, we would need to increase taxes by $104 dollars for every man, woman and child in Missouri. Taxes would need to be increased by that amount for every year from here on out. All in all, that means that in order to pay for the current system, we would have to increase your taxes at least $1,040 by the year 2015. Such a huge tax increase would be a crushing blow to Missouri's families and our economy.

Without reforms in the Medicaid system, we could see major shortfalls in the state budget. A leading national economist testified before the House if we do nothing to stop the growth of Medicaid-welfare, it would consume our entire general revenue budget in 10 years. That means that if the status quo holds, by 2015 there will be no money for elementary and secondary education, no money for higher education and the University of Missouri system, no money for public safety officers, no money for any of the other vital services our state government must provide.

As you can plainly see, the situation is pretty troubling. If we are unable to do something now, we will be shortchanging the future of this state and the future of our children.

Rod Jetton of Marble Hill, Mo., is the speaker of the Missouri House of Representatives.

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