Missouri Medicaid funding at risk as crucial taxes stall. It could be a ‘huge loss’

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With just four weeks left in session, Missouri lawmakers have yet to pass or even debate a bill to reauthorize a series of crucial taxes that fund the state’s Medicaid program.

The must-pass legislation would keep Medicaid — which provides health coverage to roughly 1 million residents — operating. Failure to renew the taxes, called the Federal Reimbursement Allowance or FRA, would result in a loss of billions in state and federal Medicaid funds.

But the renewal has been stalled for months as a group of hard-right Republicans have pushed a laundry list of demands, including a plan to attach language to the bill that would block Planned Parenthood from receiving reimbursements from the Medicaid program.

While lawmakers and Republican Gov. Mike Parson aren’t sounding the alarm just yet, the expiration of the taxes looms over the General Assembly’s final weeks of session. A failure to pass the bill this year would be devastating to Missouri hospitals, patients, ambulance providers and the state as a whole, experts say.

“It’d be very difficult to fund the Medicaid program without the FRA,” said Dave Dillon, a spokesperson for the Missouri Hospital Association, a Jefferson City-based nonprofit that represents 139 hospitals across the state.

“Medicaid is an important program for hospitals and clearly is a safety net for many patients who have disabilities, are blind, are low income, you know, seniors, so it is absolutely existential relative to how the healthcare system works.”

John Barclay, president of the Missouri Ambulance Association, said he was “very concerned” about the bill’s progress this year. Failing to renew the taxes would force the state to essentially restart its Medicaid program, he said.

“That would be a huge, huge loss to the state and the revenue that it brings in,” Barclay said.

Lawmakers’ failure would specifically harm ambulance providers as well as patients, especially due to the fact that ambulance services are already strained due to understaffing and high call volumes, he said.

“It represents approximately $37 million to EMS in the state, and that would be a huge loss, especially to our small rural services,” Barclay said.

Despite these concerns, Republican leaders in the Missouri Senate have not yet brought the bill to a debate by the full Senate as GOP infighting has gripped the chamber for most of the session.

If lawmakers do not pass the bill this session, Parson will almost certainly call them back into a special session to get it done — which is what happened the last time the taxes were up for renewal in 2021.

But Parson doesn’t seem too concerned by the tight deadline.

“Lawmakers have plenty of time to pass the FRA this session, and Governor Parson expects them to get it done,” Parson spokesperson Johnathan Shiflett said in an email.

Members of the hard-right Missouri Freedom Caucus have vowed to block the renewal until two of their priorities are completed: A bill to prohibit Planned Parenthood from Medicaid reimbursements and a measure that would make it harder for Missourians to change the constitution.

One Freedom Caucus leader, Sen. Bill Eigel, a Weldon Spring Republican, has gone a step further, signaling that the FRA is not a priority. He has said he may vote against the measure altogether.

“These concerns about there’s not going to be enough money in Jefferson City are just completely overblown,” Eigel, who is running for governor, told reporters last week.

Senate Democrats aren’t ruling out the possibility of being forced into a special session to take up the tax renewal.

“I don’t think a special session is out of the realm of possibility,” said Senate Minority Leader John Rizzo, an Independence Democrat. “It’s one of those things that you try not to worry about it until the session is done.”

Lawmakers in both parties fear that adding the anti-abortion language to the FRA would put the entire bill at risk of being struck down in court. The House is poised to pass the separate bill blocking payments to Planned Parenthood this week — largely viewed as a way to appease the Freedom Caucus.

House Majority Leader Jonathan Patterson, a Lee’s Summit Republican, said on Monday that he’s hopeful the Senate will be able to come to an agreement and renew the taxes before the end of session.

“If we don’t do it, it would be devastating to the health care of so many people,” he said. “It is something that we must get done.”

Not renewing the FRA would lead to an estimated loss of $4.3 billion in state and federal Medicaid funds in fiscal year 2026, according to an analysis by the Missouri Budget Project, a nonprofit that analyzes fiscal policy.

Hospitals, ambulance companies and pharmacies have voluntarily contributed to the system since 1992. The taxes are a critical funding source for the entire state budget.

Sen. Doug Beck, a St. Louis Democrat, last week slammed Republicans for spending time on other legislation before bringing up the tax renewal.

“It’s completely ridiculous that we’re (voting on) a Senate bill on gold and silver on a Thursday when all week long we could have been talking about the FRA,” Beck told reporters, referring to a bill from Eigel that would make gold and silver legal tender.

As the Senate continues to slow-walk the legislation, House Minority Minority Leader Crystal Quade, a Springfield Democrat, has filed her own bill to renew the taxes. She criticized the Senate for not taking action on the measure during a news conference last week.

“If we do not get this passed, everything else we’re doing when it comes to the budget or funding mechanisms is just smoke and mirrors,” said Quade, who is running for governor.

Quade called on House leadership to take up the bill so that lawmakers “are no longer relying on the Senate to actually get this important piece of the budget done.”

While members of the Freedom Caucus have vowed to block the legislation if their demands aren’t met, Sen. Lincoln Hough, a Springfield Republican who filed the legislation, signaled that he wants the bill passed as soon as possible.

Hough, who chairs the Senate’s powerful budget-writing committee, brushed off the idea of waiting to take up the FRA until after the Senate passes its version of the budget.

“My plan is to pass the FRA before we pass the budget and get both of those things done during our regular session and not be back here for a special session,” said Hough, who is running for lieutenant governor. “I think we should do our job.”

Senate President Pro Tem Caleb Rowden, a Columbia Republican, acknowledged the General Assembly’s tight deadline on Thursday.

“We’re running up against the end,” he said. “FRA and the budget and all of these things that we know are in front of us I think will take center stage in the coming days.”

Rowden also signaled that he also wanted to pass the FRA renewal before the Senate passes its version of the budget for the next fiscal year.

“It makes a lot of sense for anybody…in our position as a body as a whole not to write a budget that potentially is $4.5 billion out of balance, right? That wouldn’t be responsible,” he said.

Rizzo, the Independence Democrat, said he thinks lawmakers will be able to pass the FRA and the budget on time. But he said the Senate will have to spend a significant amount of time this week debating it.

“I would argue that you’re gonna probably see a lot of other bills fall by the wayside because they’re unable to move on FRA and the budget pretty quickly,” he said. “I don’t think it’s time to panic quite yet.”