Missouri Medicaid expenses quadruple over 10 years

HERMITAGE, Mo. -- Seven years ago, Anna Phillips was in high school and hopeful about her future. She never imagined being enrolled in a government health care program for the poor.

But Phillips, now 26, dropped out of high school and has worked intermittently cleaning homes. Two of her children are already enrolled in Medicaid, and she is pregnant again.

So a few days ago, Phillips was in the office of the Missouri Department of Social Services in Hickory County in western Missouri, applying for Medicaid coverage -- for herself.

Her enrollment would put her among more than 870,000 Missourians participating in the health care program jointly financed by the federal and state governments.

"You get the best treatment you can buy without having to buy it," Phillips said as she waited for her interview with a Medicaid caseworker.

"Any time there's an emergency," she added, "it's all paid for."

Sharp drop in revenue

Paying for Medicaid falls to taxpayers, in the revenue they supply to government.

That revenue has dropped sharply, however -- so much that the Medicaid program has become a target for budget cutters in Jefferson City.

That's a stark contrast to the financially robust 1990s, when Medicaid underwent vast expansions in both spending and eligibility. Since 1990, Missouri's roll of Medicaid participants has more than doubled, and the costs have nearly quadrupled.

On one side of the Medicaid equation are Gov. Bob Holden and legislators who must balance needs versus sound fiscal policy.

On the other end are citizens like Phillips, who lives in Hermitage, population 406, the seat of Hickory County, about 65 miles north of Springfield.

Phillips lives with the father of the two children who receive Medicaid, and the adults split their work schedules -- she usually works in summer, he in winter -- that so one parent is always with their 3- and 4-year-olds.

The household's income is about $100 a week, Phillips said: "We don't make a lot."

But the program has clients in every county, and there is a cost, 60 percent of which is borne by the federal government with the state covering the other 40 percent.

Upward spiral

In 1995, Missouri's total Medicaid program cost $2.2 billion, with the state contributing $409 million and the federal government contributing the balance. In 2002, the last full budget year, total Medicaid spending in Missouri had doubled to $4.1 billion, of which the state's share jumped to $804 million.

For the budget year that starts July 1, the total Medicaid bill is expected to top $4.5 billion with an estimated $872 million of that coming from Missouri's tightly squeezed revenue.

The upward spiral was noted by -- and perhaps was alarming to -- state officials more than a decade ago.

The 1987 state budget proposed by then-Gov. John Ashcroft included this admonition: "The size of the Medicaid budget and its rapid growth make controlling costs in this program of major importance."

One big factor has been the ballooning expense of prescription drugs coverage. Federal-state spending on Medicaid-covered prescriptions in Missouri swelled by 700 percent between 1991 and 2002.

Increases in other kinds of coverage for Missouri Medicaid recipients were similarly dramatic over that period: 857 percent for in-home health care, 676 percent for mental health services.

For the next budget year, Holden is seeking $156.4 million in core cuts in the state's Medicaid spending. A legislative budget panel has recommended a total cut of $315 million.

Also under scrutiny is the expanded range of health services covered by Medicaid in Missouri. Since 1990, Missouri has added 22 areas of coverage, such as orthodontics.

While some of the additions were mandated by the federal government, most were options chosen by the state during the boom years of the '90s.

Missouri's experience with the program -- in the growth of costs and participation -- is not unique. Neither is the decline in revenue that has Missouri's administration and Legislature, like those of most states, looking closely at Medicaid as they struggle to balance budgets.

But Dianna Moore, executive director of the Missouri Association for Social Welfare, cautions that any savings achieved by cutting Medicaid could prove illusory.

"The cuts to Medicaid and specifically to the children's insurance program really is going to, in the long term, end up costing us more" because people turn to hospital emergency rooms for covered treatment, Moore said.

Moore said the economic recession has cost people jobs that carried health insurance, contributing to the rise in Medicaid participation.

"More people are losing their jobs," she said. "More children and adults are now eligible for Medicaid when they hadn't been before."

But Brian Kinkade, budget director for the Missouri Department of Social Services, cited another factor -- the nation's changing demographics.

"Significant costs are associated with the elderly and disabled," Kinkade said. "Those populations have shown steady growth over the past few years. It's a costly population to care for. They have very high needs."

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On the Net:

Missouri Department of Social Services: http://www.dss.state.mo.us

Missouri Association for Social Welfare: http://www.masw.org