Sen. O’Laughlin – Medicaid Expansion is Wrong for Missouri

On Wednesday, January 8th, the legislature convened in Jefferson City after being on break. I have been back regularly throughout the last couple of months for various meetings and events, but this is the beginning of a new year and a new legislative session. I’m excited to serve in my second year in the Missouri Senate.

This year, one of the most important issues that will consume Missouri politics is Medicaid expansion. The Missouri Hospital Association is circulating an initiative petition trying to get enough signatures to get Medicaid expansion on the ballot. They are doing this because the legislature has refused to expand Medicaid because it is already almost 40% of our annual budget. The reality is that we already pay more for Medicaid than anything else in our state’s budget, and we could potentially have to cover 200,000 more people if Missourians vote to expand the program.

Even though the federal government will pay 90% of the cost for each participant, it is a typical government “hook.” States agree to something because their share is only a small percent initially, but then after getting thousands of people on the benefit the federal government starts cutting back their share and the state’s cost skyrockets. We currently have an outdated system, and our ability to monitor costs and clients is very limited. We must first get control of this explosive expense before even considering an expansion. This is why the legislature has refused expansion.

As in most things funded by the government, there’s more to this story than meets the eye. While we have rural hospitals with some severe financial pressure, we also have urban hospitals that are making tremendous profits. Just in St. Louis, some of the biggest construction projects in the entire city are on hospitals. Currently, SSM Healthcare is building a brand new, $550 million facility at St. Louis University’s medical center. BJC Hospital system recently completed a project on a new, 12-story facility that cost an estimated $1 billion. In fact, nearly every major hospital in St. Louis has completed a major construction project in the last ten years. Contrast this with our rural hospitals who do not have the patient count, don’t have the specialists which help drive higher reimbursements, and don’t have the more wealthy clients with better health insurance coverages.

Medicaid also has some perverse incentives. For example, the higher your billed cost, the higher the rate of reimbursement. Urban hospitals have wealthier client bases and the ability to install very expensive equipment and hire expensive specialists. These drive up the costs of care. This is exactly opposite to what you find in the private market where companies compete based on price and service and the customer is looking for the lowest cost. In the concrete industry, we must continually innovate and look for efficiency to win business. In Medicaid, the higher your cost the better.

So why does the Hospital Association support Medicaid expansion? The more Medicaid supported patients, the more hospitals can make serving them. If you haven’t been asked already, soon you will be asked to sign a petition regarding Medicaid expansion. I would suggest you not sign. If Medicaid is expanded the inevitable result is the money will come from education, which is the next biggest expenditure in our state’s budget. A tax increase isn’t out of the question either. Unfortunately, the big hospitals drive the issue with their funding, and the small hospitals are along for the ride.

This is just one of the issues we face in the legislature. It is a complicated issue with no easy answers, but we will work to find an acceptable solution. As your senator I am always thinking of our “rural specific” issues, and I look forward to working for a better future for each of you.

As always I appreciate hearing your perspective on this and other issues presented in my weekly column. Please feel free to contact me in Jefferson City at (573) 751-7985. You may also email me at cindy.olaughlin@senate.mo.gov.