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A hot-button topic in Missouri this year has been the state budget, a large part of which goes to social services, primarily Medicaid. With more budget cuts looming, funding these services may be hard to maintain.
That’s what state Sen. Caleb Rowden suggested in mid-January before Gov. Eric Greitens unveiled his proposed state budget. At a legislative breakfast Jan. 20, Rowden said, "This would be the first year, if everything holds true, we will spend over $10 billion of our state budget on Medicaid out of the $28 billion budget." Rowden then said maintaining this current level of spending for social services is not an option given the revenue shortfalls officials expect.
Ten billion dollars is a massive amount of money, and the figure piqued our interest. We wanted to know if this level of Medicaid spending could be correct.
Where does the state gets its money for Medicaid?
Before diving deeper into Rowden’s claim, it’s important to get some background on the Medicaid program. Medicaid is designed to provide health coverage for lower-income families, people with disabilities, senior citizens, pregnant women and newborns, blind and visually impaired, uninsured women, families, kids, and women with breast or cervical cancer. As of November 2016, 69 million people nationwide were covered through Medicaid.
Missouri disperses Medicaid to participating residents through its MO HealthNet program under the Department of Social Services.
A document by the Missouri Budget Project explains how Missouri funds Medicaid.
The majority of funding for Medicaid — 83 percent — comes from the federal government through two programs. One program called the Federal Medical Assistance Percentage, or FMAP, matches federal government dollars to state dollars spent on health care services based on a percentage rate.
Missouri's FMAP rate for fiscal year 2018 is 63.21 percent, according to the Henry J. Kaiser Family Foundation. This means that for every dollar Missouri spends on health care — not just Medicaid — the federal government gives $1.72.
Of the total money Missouri receives from the FMAP program, only a certain amount goes to Medicaid. The rest goes toward other health care services the state provides. Fifty-one percent of Missouri's Medicaid spending is funded through FMAP.
The other program — Federal Reimbursement Allowance — along with other capital reserves, covers another 32 percent of Missouri’s spending on Medicaid. Missouri has been participating in this program for 25 years.
So this leaves Missouri picking up only 17 percent of its own Medicaid bill. This money comes from collected state revenue.
Dan Haug, acting budget director for the state, told us in a phone call that he expects Medicaid to cost the state $10.21 billion in the coming fiscal year. This would make Rowden’s statement true, but we wanted to check the budget to see where all the Medicaid money went.
Figuring out Medicaid
Finding Medicaid spending in the state budget is complicated. The bulk of Medicaid spending falls under the Department of Social Services. In the last fiscal year, the state approved $9.2 billion for the DSS, $7.7 billion of which went toward Medicaid.
At first glance, this seems like this is the total budget for Medicaid in the state. There are really no other places in the budget where Medicaid is clearly defined as an expense. So Rowden’s claim about the Medicaid budget is false, right?
Not so fast.
In fact, Medicaid money is spent by more agencies than just the DSS. It is used for other services spread throughout the state budget, most notably in the Department of Mental Health. Traci Gleason, the director of communications and public engagement at the Missouri Budget Project, confirmed that nearly 20 percent, or $2 billion, of the Medicaid budget goes toward mental health services, driving the total budget of Medicaid closer to that $10 billion figure.
Where does the rest of Medicaid spending go? Even an expert such as Gleason said that’s very tricky to determine. Part of the reason for this is because portions of the Medicaid budget are listed as MO HealthNet, which is the health care system Missouri switched to in 2007.
Through the MO HealthNet name, a series of supplemental appropriations sections are added at the bottom of the state budget document. Some of the services funded through supplemental appropriations, such as pharmacies, physicians and premium services, fall under the Medicaid budget. When you add all the supplemental appropriations together for services that fall under Medicaid, it comes out to $10,023,904,918. While this falls short of Haug’s estimate, it does make Rowden’s statement about the Medicaid budget correct.
"It’s really hard to drill down (the Medicaid spending) because it’s spread over all sorts of different departments and programs," Gleason said. "Overall, though, Sen. Rowden is correct with his totals."
Nevertheless, because the state is responsible for funding only 17 percent of the total on Medicaid, the total amount Missouri will spend is $1.7 billion from state revenue.
Rowden was trying to illustrate that Medicaid spending has reached out-of-control levels. According to Greitens' budget recommendations for fiscal year 2018, the budget for Medicaid has gone up over $1 billion in the last three years and now takes up approximately 37 percent of the state budget. Despite the growing concern from Republicans on the cost of Medicaid spending, Greitens has recommended $10.7 billion for the service for fiscal year 2018, an increase of over $500 million from fiscal year 2017.
However, it’s important to note that "we" — as in the state of Missouri — don’t directly fund the entire $10 billion. Because of the Federal Medical Assistance Percentage and the Federal Reimbursement Allowance programs, the state only has to spend approximately $1.7 billion of state revenue on Medicaid.
So while Medicaid spending will exceed $10 billion of the nearly $28 billion budget, not all of the money is coming directly from the state. Rowden’s statement is accurate but needs clarification. We rate it Mostly True.
Supervising editor is Mike Jenner.
Columbia Missourian, Budget cuts are a tough egg to crack at legislative breakfast, Jan. 20, 2017
Interview with Traci Gleason, director of communications and public engagement at the Missouri Budget Project
Phone call with Dan Haug, Acting Budget Director for the state of Missouri
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