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Federal Health Care Act Would Strain MO’s Budget, Health Care

**Note: The recently released Senate discussion draft would further cut Medicaid and shift even more costs onto Missouri over time. As a result, the consequences described in the papers below remain. The caps included in both bills would force Missouri to raise taxes, cut eligibility or services, or cut other parts of the state budget.**

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AHCA’s Medicaid Cuts Would Have Broad Impact: Compromised Health Services, Strained Behavioral Health & Education, & Lost Jobs

AHCA’s Changes to Medicaid Funding Put Access to Health Care, State Budget at Risk


A pair of analyses released by the Missouri Health Partnership show that provisions of the American Health Care Act being considered by the U.S. Senate would dramatically strain Missouri’s budget and the health care of thousands of vulnerable Missourians.

At issue is a major cost shift to states through a fundamental change in the financing of Medicaid. The historic shared financial responsibility for Medicaid protects states from increased or unexpected health care costs. The AHCA would replace this structure with a capped federal allotment designed only to reduce federal costs. A recent analysis by the Urban Institute found that as a result of this change, Missouri would face $3 billion in increased costs within the first 10 years of implementation. That is more than double the state general revenue Missouri uses in the current year to support Medicaid.

While any capped federal allotment would shift costs to states, the extent of the shift is driven largely by flaws in the formula used to calculate the “per capita caps.”

  • The formula fails to account for the acuity of those covered by Medicaid, who tend to be disproportionately sicker and more expensive.
  • When it is implemented, the allotments would be based on four-year old, dated costs, not the actual cost of care at the time.
  • The formula fails to account for an aging population.
    • The number of Missourians 65 and older is expected to increase 50% between 2013 and 2030.
    • The number 85 and older is expected to increase 40 percent. On average, seniors aged 85 and older cost 2.5 times as much as those aged 65 to 74.

Missouri’s costs just to maintain its existing Medicaid eligibility and services will steeply increase as a result of these dynamics. The state would have few options to respond to this cost, including tax increases, cuts to other services, or cuts to health care for hundreds of thousands of Missouri’s seniors, children and people with disabilities. The likely cuts to health care forced by this dramatic costs shift would:

  • Compromise health services for Missourians statewide, with an even more severe impact on rural areas
    • Rural Missourians are more likely to be covered by Medicaid. Rural residents, including farmers and others who are self-employed, are more likely to be low-income and lack access to employer-sponsored health plans.
    • Because Medicaid is such a significant provider of health care coverage for rural Missourians, it plays a critical role in funding rural health care infrastructure – helping rural hospitals, emergency centers and clinics to stay open and available for all rural residents.
  • Further exacerbate the already strained behavioral health care system
  • Increase educational costs for special education services, and
  • Result in job losses in the state.

At this time, the Senate majority is largely negotiating provisions of its health care bill behind closed doors, with a goal of voting on a bill before the 4th of July recess. Some media reports indicate that the Senate’s cuts to Medicaid could be even more severe, but without public review of the bill, those details are not yet known.


The Missouri Health Partnership reports can be found at the links below and on its website:

AHCA’s Medicaid Cuts Would Have Broad Impact: Compromised Health Services, Strained Behavioral Health & Education, & Lost Jobs

AHCA’s Changes to Medica Funding Put Access to Health Care, State Budget at Risk

The Missouri Health Partnership is a coalition of advocates, providers, and organizations that have come together to support the health and behavioral health safety net for Missourians.​

The Missouri Health Partnership believes that it is vital to invest in a strong community health and behavioral health safety net, both to save lives and to save money.

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