A report by the University of Missouri School of Medicine and Dobson DaVanzo & Associates has been published that evaluates the economic impacts of expanding Medicaid in Missouri. The Missouri General Assembly will consider whether to expand Medicaid in the 2013 session. In this series the MCC examine various aspects of the report.
Most of the cost of the Medicaid expansion will be borne by the federal government. For the period of 2014 to 2020 the federal government will pay 96.1 percent of the expansion costs, pouring over $8 billion into the Missouri economy. Meanwhile, the state of Missouri during this time period will cover only 3.9 percent, representing a state expenditure of $332.9 million.
The $332.9 million state expenditure for the Medicaid expansion may seem like a lot of money, but it would represent only a tiny fraction of what the state of Missouri allocates each year in state funds. In the current fiscal year, for example, the state budget includes over $8 billion in state (not federal) funds.
The most compelling fiscal argument against the Medicaid expansion is not its impact on the state budget, which is modest, but how all the federal spending would increase the federal deficit. If the Obama Administration and Congress can find a path to avert the fiscal cliff, then some expansion of Medicaid may be possible. If an agreement is not reached, then the Medicaid expansion becomes much more problematic.