Parson says budget cuts are coming if deal on Medicaid tax renewal is not reached
Missouri Gov. Mike Parson warned Monday that Medicaid budget cuts would be coming in July if lawmakers don’t strike a deal to renew a critical medical provider tax that underwrites a major portion of the state’s health coverage program for low-income residents.
Lawmakers did not renew the tax, which expires Sept. 30, before they ended their session May 14. At issue was a fight led by Republican Sens. Paul Wieland, of Imperial, and Bob Onder, of Lake St. Louis, to insert language banning Medicaid coverage of certain birth control methods.
The tax collected from hospitals, nursing homes and pharmacies generates roughly $1.6 billion a year. That allows the state to bring in $3 billion in federal funds that is returned to the facilities for treating low-income elderly and disabled residents enrolled in the state’s $12 billion Medicaid program.
“The clock’s ticking on us,” Parson told reporters Monday afternoon. “If there’s not some sort of agreement where we have a solution, and it doesn’t happen before July 1, there’s not going to be choices. We’re going to have to start withholding [from the budget] July 1. “
The $35 billion state budget sitting on Parson’s desk for the fiscal year that starts July 1 includes increased funding for homes for the developmentally disabled, higher Medicaid payments to nursing homes and expanded mental health services.
Those facilities have found it hard to hire workers recently, Parson said, and a Medicaid budget crisis is “going to make that situation much harder.”
“It has a dramatic effect on state government,” he said. Without the tax renewal, “you’ve probably got enough to be able to pay the bills for five or six months ... but I mean you’re breaking the bank to do it.”
The tax is one of two crises imperiling Medicaid this year. If a Cole County court forces the state to implement a voter-approved Medicaid expansion plan, the program would be required to take on 275,000 newly eligible low-income residents without adequate funding.
Lawmakers and health care industry representatives universally agree Parson will have to call a special legislative session for the tax renewal. But the governor has said he wants to wait until lawmakers reach a deal ensuring its passage first.
Senate Minority Leader John Rizzo, an Independence Democrat, last week called that “wise.”
“It would probably be best to wait until some of that fence-mending actually happens,” he said. “I give credit to the governor for doing that.”
Division over the tax renewal ground state Senate business to a halt on the final day of the legislative session. Democrats opposed any tax renewal that contained a contraceptives coverage ban. The chamber’s most hard-right Republicans insisted on its inclusion.
In an overnight vote less than a day before the session ended, Senate President Dave Schatz cast a vote in favor of adding the ban back in, effectively killing the renewal bill and apparently going back on an agreement with Democrats and some Republicans to pass the renewal. Rizzo, furious, moved the adjourn the session four hours early with no opposition.
Wieland told The Star last month he was determined to try to insert the contraceptives ban again. He did not respond to a request for comment on Monday.
Parson did not specify whether he wanted the tax renewed free of any amendments, but said his office was “working on this daily.”
The governor withheld $448 million from the current state budget as the COVID-19 pandemic raged last June, with cuts concentrated in K-12 and higher education. He restored all of the funds this March as the state ended up seeing record amounts of revenue.
