deep cuts if Medicaid tax not renewed

Gov. Mike Parson on Monday promised deep and painful budget cuts to colleges, schools and social services if the General Assembly doesn’t renew a tax critical to funding Medicaid, while warning that lawmakers standing in the way would “own” the destruction.

Missouri faces a budget shortfall of $1.4 billion over the next two years without the tax, the Republican governor said in an afternoon news conference, where he outlined a raft of draconian reductions he said would begin July 1 unless lawmakers act quickly.

Parson’s ultimatum came as Republicans remain divided over renewing a tax on hospitals that provides billions each year for Medicaid, health coverage program for low-income and disabled Missourians. A contingent of hard-right lawmakers, led by Lake St. Louis Republican Sen. Bob Onder, insist any bill must prohibit Planned Parenthood from receiving Medicaid payments, a longtime goal of Republicans.

Parson, invoking his own anti-abortion record, brushed aside the protests of lawmakers who are continuing to push for further changes and set a deadline of noon Tuesday — 20 more hours — to reach an agreement.

“For those who want to move the goalposts yet again, know that you and and you alone will own this and the devastating effects on Missourians and our economy if the FRA is not extended,” Parson said.

On Twitter after Parson’s press conference, Onder wrote that the anti-abortion group Missouri Right to Life backed his provision.

“This is not ‘moving the goal posts,’ Governor,” he wrote. “It is their consistent position.”

Senate Republicans and Parson reached tentative agreement last week over blocking Medicaid from covering certain forms of birth control, including Plan B and IUDs. A group of conservative senators had demanded a ban on contraceptive coverage, which they view as tantamount to abortion, in exchange for supporting a renewal of the tax, called the Federal Reimbursement Allowance or FRA.

Democrats, advocates and some Republicans have raised concerns that either provision could violate federal Medicaid coverage rules. The state’s Medicaid program is heavily dependent on the federal government, which pays for nearly 70% of the costs.

The dispute among Republicans threatens the financial stability of Medicaid, which covers more than 1 million people across Missouri —a record high. Enrollment has grown more than 27% since the start of the pandemic, according to the Missouri Hospital Association.

The FRA generates $1 billion in revenue every year and allows the state to receive more than $3 billion in federal funding. Without the dollars provided by the FRA, the $12 billion a year program would collapse.

Parson’s budget cuts are designed to prevent that from happening. But they would result in extensive reductions across much of state government. Among the cuts outlined are $28 million to universities and community colleges, $20 million to school transportation, more than $170 million in increased payments for homes for the developmentally disabled and more than $60 million in increased payments for foster and adoptive parents.

Some of those, Parson noted, were “recent legislative wins that we are eager to sign.” Financial benefits for foster and adoptive families were a top priority of Republican lawmakers this year, particularly House Speaker Rob Vescovo, and cuts to school transportation mean the beginning of a long-sought voucher-like school choice program won’t be triggered.

The FRA doesn’t expire until Sept. 30 but the General Assembly adjourned its regular session in May without renewing it — the first time that has happened in its 30-year history.

“We certainly hope that some sort of consensus will emerge, as Medicaid coverage is essential to vulnerable Missourians and kids in low-income families,” said Dave Dillon, a spokesman for the Missouri Hospital Association. “The tax doesn’t expire until the end of September. If there isn’t consensus and a fix before then, the state’s Medicaid program will be in significant jeopardy.”

Parson had previously said he would call a special session only once an agreement was reached on FRA renewal. Anticipation mounted last week that an announcement would come Friday, but none did.

On Monday, Parson effectively signaled he would not entertain further “political maneuvering” on the bill.

“Noon’s the cut-off time,” he said. “So if we don’t have something called by tomorrow at noon then it’s not happening.”

While lawmakers have until September to renew the tax, the budget Parson signed in May for the fiscal year that starts July 1 includes the FRA, necessitating the need to announced budget cuts now. If the renewal is passed too late, Parson said the state will need to re-apply with the federal government for matching funds, risking the generous rate Missouri is provided now.

“He has to plan accordingly for the fiscal year at the beginning of the fiscal year and I think that’s the prudent thing to do,” House Budget Chair Cody Smith, a Carthage Republican, said on Friday.

Smith described negotiations on the renewal as “two steps forward, one step back.”

Onder, who is spearheading the latest attempt to halt payments to Planned Parenthood, has called the hospital tax the best opportunity to stop the flow of dollars to the organization.

“The Missouri Supreme Court has made it very clear we can’t do it in the budget, we have to do it in statute,” Onder said last week. “And the FRA bill renewal is the perfect vehicle by which to do that.”

Smith said lawmakers have been careful to leave the language out of the budget this year. He said he believes it would be legal to include it in the tax renewal bill.

But Missouri would still risk violating federal law, which requires states’ Medicaid programs to cover patients’ treatments at any provider they choose as long as they are considered “qualified” by the federal government.

“Whether it’s blocking access to birth control or trying to ‘defund’ Planned Parenthood — which really means blocking thousands of Medicaid patients from getting essential care like birth control, cancer screenings, and STI testing at Planned Parenthood health centers — these political games at the expense of patients have to stop,” M’Evie Mead, director of Planned Parenthood Advocates in Missouri, said in a statement.

Both the Planned Parenthood fight and the effort to ban coverage of certain contraceptives underscore the degree to which basic legislation, such as the FRA, has become wrapped up in abortion politics. Republican leaders in charge of the state budget have been placed in the precarious position of crafting anti-abortion restrictions they hope won’t violate federal coverage rules.

“It’s my understanding that states cannot pick and choose who gets federal dollars,” Smith said. “I’m hopeful that we can continue to seek a solution that would enable us to not send any taxpayer dollars whatsoever to any abortion providers or their affiliates, and at the same time keep our federal funding intact.”

The federal government requires state Medicaid programs to cover family planning services, and all insurance plans to cover birth control.

Guidelines are less clear on specific forms of contraception for Medicaid recipients, though federal law does specify that recipients of family planning services must be “free from coercion or mental pressure and free to choose the method of family planning to be used.” The Centers for Medicare and Medicaid Services has in the past encouraged states to cover all forms.

The agreement among Republicans would prohibit Medicaid coverage of Plan B and IUDs, among other contraceptives.

Most states cover all FDA-approved forms of contraceptives, according to a 2016 Kaiser Family Foundation survey, while some do not cover emergency ones.

From 2017 to 2020, Missouri’s Medicaid program covered long-acting reversible contraceptives — which includes IUDs and other implanted birth control — for an average of 8,100 women a year.

IUDs and implants made up 16% of the chosen methods last year for roughly 31,000 mostly low-income women who sought contraceptives from the Missouri Family Health Council’s clinics statewide, said director Michelle Trupiano.

“We are witnessing a high-speed, head-on collision between the responsible governance of funding Medicaid and the far-right Republican politics of banning birth control,” House Minority Leader Crystal Quade, a Springfield Democrat, said in a statement. “If extremism wins, it will be devastating for Missouri.”

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