Greitens cites 'explosion' in Medicaid spending, but growth exaggerated, experts say

Gov. Eric Greitens has pointed to rising costs in the Medicaid program as one of the driving reasons he wants to slash $68.2 million from the state’s higher education budget.

“Despite the fact that Missouri’s economy is growing and we’re in a stronger position than we were last year, what continues to be the greatest challenge in the budget is the explosion in federally mandated and other health care spending,” Greitens said Monday at a news conference in Jefferson City to outline his budget plan.

But many health policy experts are taking issue with the governor’s characterization of Medicaid growth — and the numbers appear to support their skepticism.

An analysis of the expenditures on Medicaid show that from fiscal years 2016 to 2017, overall spending on Medicaid grew about 6.2 percent to $9.8 billion, according to documents provided by the Missouri Department of Social Services.

The rise in spending is primarily tied to increases in premiums paid to health insurers — which have contracts with the state to manage care for certain members — and increases in mental health spending.

Medicaid is the health insurance program for low-income individuals. It’s funded by both the state and federal government, although the federal government picks up a larger portion of the tab.

While total Medicaid spending in Missouri grew by 6.2 percent in the year ended June 30, Missouri’s share — general revenue spending — only rose 4 percent year over year. That appears to be on track with trends in other states, according to a recent report from the Kaiser Family Foundation. The portion the states spend on Medicaid increased 3.5 percent in fiscal 2017, according to the report.

So when Greitens describes Medicaid spending growth as “massive,” as he did at the news conference last week, representatives of provider groups, policy experts and others disagree.

“I wouldn’t say 6 percent was explosive growth,” said Dave Dillon, spokesman for the Missouri Hospital Association.

Still, while some health policy experts say Missouri is not an outlier, the overall increases are above average, particularly for a state that did not expand Medicaid to allow more individuals to be covered.

In 2016, total Medicaid spending in the country grew 3.9 percent to $565.5 billion, according to the Centers for Medicare and Medicaid Services (CMS).

By comparison, spending on private health insurance grew by 5.1 percent in 2016, according to CMS.

“I think the reason we say the growth is explosive is that we are having to cut other things to make room for the new Medicaid spending,” said House Budget Chairman Scott Fitzpatrick, R-Shell Knob.

Amy Blouin, executive director of the Missouri Budget Project, which advocates for policies that support those in need, says Medicaid “is essentially becoming a ‘scapegoat’ for a much more complicated problem.”

Blouin says the state has lost out on $1 billion in revenue every year from special tax breaks and other loopholes. That leaves “schools, hospitals and community agencies without the resources they need to allow our state to thrive,” she said.

Ryan Barker, vice president of health policy at the Missouri Foundation for Health, said it’s unfortunate that important discussions about health care policy are getting buried under political talking points.

“We do need to have serious conversations about how to improve the Medicaid program to make it more effective and to control costs,” Barker said. “But I think using that kind of rhetoric doesn’t help bring people together to solve really pressing health care needs, and we do need everybody to come to the table.”

Medicaid trends

Policymakers, Barker suggests, need to have a better understanding of the underlying dynamics driving growth in the health care program.

In Missouri, the majority of people covered by Medicaid are children, but most of the Medicaid spending goes to care for people with disabilities.

There are more than 1 million individuals enrolled in Missouri’s Medicaid program, known as MoHealthNet. About 64 percent of enrollees are children.

While enrollment in the program increased by 2.6 percent last year, almost all of the increase was attributable to more children being signed up for coverage.

When insurance coverage became a requirement under the Patient Protection and Affordable Care Act — President Barack Obama’s signature health law — many parents likely discovered that their children were eligible for Medicaid coverage through the Children’s Health Insurance Program. The program allows parents with modest incomes to enroll their children in MoHealthNet.

The average spending per child enrolled in the program in 2017 was about $3,548.

For comparison, the disabled population experienced the largest increase in spending per person ($2,400). Last year, the program spent $26,257 per disabled person enrolled in the program.

While spending for the disabled population increased, enrollment declined by 2,664.

Although the number of pregnant women covered by Medicaid declined, cost per woman increased by more than $2,000.

More than half of the total Medicaid funding in the state goes to pay for five services. The service that received the largest share of funding in 2017 was managed care premiums, at $1.4 billion. That money is used to pay insurance companies — including Clayton-based Centene Corp. — to manage the care of mostly children.

That’s a self-inflicted wound, said Dillon, the hospital association spokesman.

Managed care contracts expanded to cover every county in the state in 2017, as opposed to those in certain geographic areas. Dillon says his organization warned the state about the “cost implications” of a statewide managed care. “Nonetheless, the transition occurred,” he said.

Last year, the second-, third- and fourth-largest spending items were hospital services, pharmacy and mental health services, all at about $1.3 billion each. Rounding out the top five spending categories was nursing homes at just over $1.1 billion.

Managed care premiums and mental health services drove most of the increase in costs last year. The spending on pharmaceuticals decreased by $17 million, a 1.3 percent drop from last year. The spending on hospitals increased by $21 million, or 1.6 percent. Nursing home spending increased by $47 million, up 4.3 percent.

More cuts ahead?

With the governor lamenting the growth in Medicaid, providers worry cuts to Medicaid will again be on the chopping block.

The Greitens administration has already said cuts could be a possibility.

But after last year’s cut to reimbursement rates, some nursing homes are struggling financially, said Nikki Strong, executive vice president with Missouri Health Care Association.

“Our facilities currently provide care to the seniors, veterans and disabled citizens in nursing homes for $25 less per patient per day than it costs our facilities to care for them,” Strong said. “The math is simple: This is unsustainable.”

Health care providers also warn that it’s taxes imposed on their facilities that are critical to funding Medicaid in the state, and without them, the state would be on the hook for a larger portion of funding.

The providers, particularly hospitals, feel that they’re significantly shouldering the burden of funding Medicaid through provider taxes and low reimbursement rates for services.

But there are areas that need to be looked at, or where improvements and efficiencies can be gained.

Some lawmakers and policy experts want to look at pharmaceutical spending to curb costs.

Barker, the health policy expert, and House Budget Chairman Fitzpatrick agree. There are needed cost controls for pharmaceutical spending, they say.