Earlier I described the proposal by Missouri Governor Jay Nixon to expand the Medicaid (MOHealthNet) program in Missouri to cover about 260,000 persons in 2014, according to the state's estimates [ http://dss.mo.gov/mhd/oversight/pdf/130129-healthcare-expansion.pdf ].

It has often been said in response to this proposal that expansion of Medicaid would not be affordable to Missouri.  For example, Rep. Jay Barnes said "Missouri taxpayers cannot afford a straight Medicaid expansion." [ http://www.stltoday.com/news/local/govt-and-politics/political-fix/gop-medicaid-plan-would-let-some-missourians-in-kick-others/article_42419e09-7266-5de2-b488-3bb897c95093.html ]   

This is indeed a myth, and therefore I call it myth #2 about the implementation of Obamacare (the Affordable Care Act) in Missouri.  There are at least two reasons why this is a myth.  


  • First, of course, in 2014-2016, if this expansion were implemented in Missouri, the federal government pays 100% of the costs of the newly covered Medicaid recipients.  Only after 2016 does the state have to start paying for the newly covered Medicaid recipients, and at that point.  Eventually the state must pay only 10% of the costs through 2019.
  • Second, as shown in the state's estimates it is estimated some of the individuals who would enroll in Medicaid could be those who would have enrolled in Medicaid anyway but would have cost the state their state "match" (that is the state's share of the costs).  Thus in the 2014-16 period the federal government pays 100% of the costs of these individuals, saving the state a great deal of money, and in the 2016-19 period, the federal government pays up to 90% of these costs.  As shown in the state's estimates (reference, see above), these savings amount to $46.6 million   [The Missouri Budget Project also has an excellent document describing these savings: http://www.mobudget.org/files/Medicaid_Expansion_Save_MO_Money.pdf ]
To summarize: the Medicaid expansion will not drain state revenues, but in fact will reduce state budget deficits because of federal funding covering almost all the costs of Medicaid expansion for 2014-2019, because existing groups of eligible populations can qualify for expansion.  Please note that this does not even include the additional benefits to the state from additional jobs that could (I think would be created).  Thus, even if do not assume that that would happen, then Medicaid expansion saves the state money, and it is a myth that expanding Medicaid drains the state's budget or adds to the state's deficit.