Parson sets tight deadline for Medicaid funding fix

JEFFERSON CITY, Mo. -- Gov. Mike Parson on Monday set a tight deadline for lawmakers to work out a deal on a critical piece of Medicaid funding.

If lawmakers can't find a solution by noon today, Parson said he'll cut $722 million from the state budget July 1. That includes close to $182 million in state funding and would hit programs ranging from K-12 school busing to nursing home care.

"The implications of this are huge," Parson said.

At issue is a tax on hospitals and other medical providers that's used to drawn down federal Medicaid funding. Parson said without the tax, the state faces a nearly $1.4 billion funding gap over the next two years.

The tax now is tangled in an effort by some anti-abortion lawmakers to ban Medicaid coverage for some contraceptives. Those lawmakers are trying to attach the ban to the tax.

During the legislative session that ended May 14, lawmakers proposed banning Medicaid coverage for "any drug or device approved by the federal Food and Drug Administration that may cause the destruction of or prevent the implantation of, an unborn child."

Fighting over the proposed ban derailed a bill that would have extended the medical providers tax. Without an extension, the tax will expire Sept. 30.

Parson wants to call lawmakers back to work sometime before July 1 -- the start of the new budget year in Missouri -- to reauthorize the tax.

He has delayed doing so to give lawmakers time to hash out an agreement, but time is running out. Parson said legislators need at least five days to pass a bill, prompting him to set the deadline today so there's enough time to pass legislation before July 1.

Parson's planned cuts include $166 million for developmental disability caregiving, $88 million for nursing homes, and $20 million that was set to pay for school busing.

The potential budget crisis comes when Missouri should be flush with cash. Net revenue for the year was up 25% as of Friday compared to the same time last year. The state was up more than $2 billion compared to the year before.

The dispute is separate from a lawsuit over extending Medicaid coverage to some of those currently ineligible. Voters approved the expansion in November 2020, but lawmakers this year refused to fund it. The case was heard in a Cole County court Monday, and a ruling is expected within days.