Missouri Senate faces a stark choice: Renew key taxes or lose billions for Medicaid

Republican infighting has brought the Missouri Senate to a crawl this year. A month into session, senators have yet to formally debate a single bill, let alone pass one.

But senators this week may try to act on must-pass legislation to keep the state’s Medicaid program – which provides health coverage to roughly 1 million residents – operating. It will probably go poorly.

The Senate is set to take up a bill to reauthorize a series of crucial taxes that fund Medicaid. Collectively known as the Federal Reimbursement Allowance, or FRA, the taxes are paid by hospitals, nursing homes and other health care providers and constitute a major funding source for Missouri’s Medicaid program.

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. A loss of that magnitude would force lawmakers to make cuts across the board, including to education and other priorities, to keep Medicaid running.

Renewal of taxes, which expire later this year, faces fierce resistance from a hard-right group of senators called the Missouri Freedom Caucus. The group has vowed to add language barring Medicaid dollars from going to Planned Parenthood, even though abortion is illegal in Missouri.

One Freedom Caucus leader, Sen. Bill Eigel, a Weldon Spring Republican, is going further, saying that renewing the FRA is not a priority and suggesting he may vote against the measure altogether.

Eigel, who is running for governor, said in an interview that he would filibuster the bill until senators agree to take up an unrelated proposal to make amending the state constitution more difficult — a priority of the hard-right caucus.

“There’s no path for that bill to make any progress this week,” Eigel said. “The only opportunity for passage of that bill, I would imagine, is going to be maybe in the last day of session, but maybe not even then.”

Missouri lawmakers are set to debate a bill from Sen. Lincoln Hough, a Springfield Republican, that would renew the taxes to fund the Medicaid system and prevent a more than $4 billion loss, including $1.5 billion in state revenue.

“People know that it has to get done. So if something has to get done, it’s a leverage point and that’s unfortunate,” Hough said.

Hough said he isn’t open to any amendments that would bar funding to Planned Parenthood because they could risk the entire bill being struck down in court. 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.

Senate Minority Leader John Rizzo, an Independence Democrat, in a statement pointed to the large number of rural hospitals that have closed in Missouri over the past two decades. He said the hard-right caucus was threatening to forfeit billions of dollars in health care funding for political reasons.

“Senate Democrats will not allow Republicans to put rural hospitals at further risk by holding Missouri’s entire healthcare system hostage,” said Rizzo, calling on Republicans to pass the bill.

A protracted fight over renewing the taxes would mark a repeat of an earlier Senate standoff, in 2021, the last year the taxes were up for renewal. A group of hard-right senators at the time pushed to ban Medicaid coverage for forms of birth control and blocking payments to Planned Parenthood. The dispute forced lawmakers into a special session, where they eventually passed a bill to renew the taxes.

Eigel on Tuesday called the FRA a “pyramid scheme” and a poor way to fund the state’s hospitals.

“I believe in this thing called the free market system,” he said. “And I think that the hospitals ought to engage in that instead of looking for government subsidies every time they turn around.”

Another Freedom Caucus member, Sen. Denny Hoskins, a Warrensburg Republican, did not go as far as Eigel. Hoskins said he is pushing for an amendment that would bar money from going to Planned Parenthood and would include an expiration date.

But Hoskins also acknowledged the importance of the tax system.

“The FRA is important to Missouri to fund our hospitals as well as our nursing homes,” he said. “But I also would agree that protecting innocent life is very important. And we need to make sure that this FRA bill has that pro-life language in it.”

But Hough said he’s not comfortable with gambling billions of dollars that could be struck down if that language is included in the bill.

“When people present and show up at a hospital, the hospital doors need to be open,” Hough said. “And what you’re talking about here is closing rural hospitals if this doesn’t get done.”