State lawmaker projects savings if Medicaid changed

JEFFERSON CITY, Mo. -- The chairman of a special Missouri House panel outlined potential Medicaid changes Wednesday that could expand coverage to lower-income adults while reducing it for children and eventually saving the state millions of dollars.

The detailed cost estimates presented by state Rep. Jay Barnes assume Missouri would expand its Medicaid eligibility to a level sufficient enough to trigger a lucrative influx of federal money -- something his fellow Republicans repeatedly rejected earlier this year.

The projections also assume Missouri would reap savings by ending Medicaid coverage for tens of thousands of children living in lower- to middle-income families -- something that has faced resistance from both Democrats and Republicans.

Barnes, of Jefferson City, stressed the potential changes weren't a formal proposal but a starting point for discussions by the House Interim Committee on Medicaid Transformation that he leads. The panel will meet again later this month as it tries to develop recommendations for the 2014 legislative session.

The bottom line of Barnes' projections is Missouri could gain $42 million in state general revenue in the 2021 fiscal year if it adopted eligibility and structural changes to the Medicaid program. That year is important because it's the first full year in which Missouri would receive a 90 percent -- instead of 100 percent -- federal payment for the expanded adult Medicaid coverage.

The financial projections are likely to change somewhat before the next legislative session.

But "it is safe to say, with the right amount of reforms, that we can stay in positive territory," Barnes said.

Missouri's Republican-led House and Senate rejected Democratic efforts earlier this year to expand adult Medicaid eligibility, often citing concerns about the potential long-range costs.

Some Republicans remained skeptical Wednesday about the financial projections presented by Barnes. They noted the savings assume some people no longer eligible for Medicaid would instead get federal subsidies to buy private insurance through a federally run website. Some Republicans questioned whether the federal government could afford that over the long run.

"As a state, it may have a negligible or even positive effect on the general revenue, but as a nation, I think it's putting concrete shoes on a future generation," said Rep. Keith Frederick, a Republican and orthopedic surgeon from Rolla.

The financial projections outlined by Barnes assume about 225,000 adults living in poverty would be added to the Medicaid rolls, and the state would subsidize private insurance policies through the federal website for an additional 82,000 adults with incomes slightly above the federal poverty level.

That expansion would cost an estimated $147 million in state general revenue in the 2021 fiscal year.

But that would be partially offset by eliminating or paring back Medicaid eligibility for blind adults, women's health services and children whose family incomes and circumstances make them eligible to buy federally subsidized insurance policies.

Barnes did not have an estimate of how many people could be removed from the state's Children's Health Insurance Program, but he said: "There would be a substantial reduction in eligibility."

Some lawmakers appeared uneasy about that possibility.

"I would just as soon take care of the kids," said Rep. Sue Allen, R-Town and Country, a member of the interim committee and chairwoman of the House Appropriations Committee for Health, Mental Health and Social Services.

The potential changes outlined by Barnes assume additional federal Medicaid dollars flowing to Missouri would result in greater income and sales taxes for the state.

The financial projections also assume Missouri would save money by expanding the number of Medicaid recipients covered through managed care plans and enlarging the number of people whose mental health services are paid with federal Medicaid dollars instead of solely with state funds. The potential changes also assume that expanded mental health coverage would lead to a reduction of people in prison, saving the state millions of additional dollars.