Missouri’s Medicaid Expansion Update

Manatt on Health: Medicaid Edition

The Big Picture

On August 10, 2021, a Missouri circuit court ruled that Missouri can no longer delay Medicaid expansion. This order follows the July 22, 2021 unanimous Missouri Supreme Court ruling that ordered the state to implement Medicaid expansion and extend coverage to an estimated 275,000 low-income individuals.1 These rulings come after a decade of the state legislature’s repeated rejection of Medicaid expansion and almost a year after voters in Missouri approved a ballot measure to expand Medicaid no later than July 1, 2021.2 The ballot measure modified the Missouri Constitution to adopt Medicaid expansion for individuals with incomes up to 138 percent of the federal poverty level (FPL). After the passage of the ballot measure, the state legislature declined to appropriate funds for the state share of Medicaid expansion, and Governor Mike Parson determined that without appropriations he did not have the authority to implement expansion.

Under the federal American Rescue Plan Act of 2021 (ARP Act), states that expand Medicaid will receive a two-year, five percentage point increase in federal matching funds for most non-expansion Medicaid populations.3 As a result, it is estimated that Missouri will receive $1.47 billion in new federal funding when it expands Medicaid.4 This article outlines the obstacles Missouri faced in implementing Medicaid expansion, even in light of the significant federal funding available.

An Overview of Missouri’s Legislative and Judicial Challenges

Fig-1-8-12-21v2.pngMissouri Residents Vote to Expand Medicaid. On August 4, 2020, Missouri approved Medicaid expansion via a ballot referendum, following the path of six other states.5 The amendment modified the Missouri Constitution to adopt Medicaid expansion for individuals with incomes up to 138 percent of the FPL and prohibited the state from establishing more restrictive eligibility and enrollment standards for the expansion eligibility group as compared with other Medicaid eligibility groups.

Missouri Legislature Fails to Fund Medicaid Expansion. During the 2021 legislative session, the Missouri House of Representatives separated the budget request to finance the statutorily mandated Medicaid expansion from its fiscal year 2022 appropriations bill. On March 23, 2021, the stand-alone Medicaid expansion funding bill failed to pass in the House, and on April 28, 2021, the Missouri Senate passed the 2022 fiscal year budget without including funding for the state’s portion of the cost of Medicaid expansion.6,7 The legislature’s failure to appropriate expansion funding placed the onus on Governor Parson to decide whether to implement Medicaid expansion as dictated by the state’s Constitution or to defy the constitutional amendment. Proponents of Medicaid expansion argued that the constitutional amendment compelled the Governor to implement Medicaid expansion, even without specific state appropriations.

Missouri Formally Withdraws State Plan Amendments (SPAs) Authorizing Medicaid Expansion. On May 13, 2021, the Missouri Department of Social Services (DSS)—which oversees the state’s Medicaid program—submitted a letter to the Centers for Medicare & Medicaid Services (CMS) to formally withdraw the SPAs submitted to CMS earlier this year to authorize Medicaid expansion. The withdrawal letter cites the lack of financing for the Medicaid expansion as the reason for withdrawing the SPAs.8

Circuit Court Rules Missouri Is Not Obligated to Expand Medicaid. Shortly after the state withdrew the SPAs, three Missourians who would have been eligible under Medicaid expansion filed a lawsuit against DSS. On June 23, 2021, a Missouri state trial court declined to order the implementation of Medicaid expansion as requested by the plaintiffs. A state circuit court found that the referendum’s constitutional amendment “indirectly requires the appropriations of revenues created by the initiative.”9 The court reasoned that because the constitutional amendment authorizing Medicaid expansion did not include appropriations, it was unconstitutional. This ruling was appealed directly to the state’s Supreme Court.

Missouri Supreme Court Rules Medicaid Expansion Should Proceed, Reversing Lower Court Decision. On July 22, 2021, the Missouri Supreme Court unanimously ruled that the state must implement the Medicaid expansion approved via the 2020 ballot measure, overturning the lower court’s ruling. The Missouri Supreme Court found that because the Missouri General Assembly chose to appropriate funds for the MO HealthNet Program, DSS and MO HealthNet are bound by the ballot initiative to expand eligibility for Medicaid, and that “[c]onsequently DSS has appropriation authority to provide services for all individuals eligible for MO HealthNet” following the passage of the ballot initiative.10

The state’s Supreme Court sent the case back to the lower court to determine the details of how to implement the expansion.

Circuit Court Rules DSS Can No Longer Delay Medicaid Expansion. On August 10, 2021, the circuit court ruled that DSS, MO HealthNet and the Family Support Division can no longer prohibit eligible individuals from enrolling in Medicaid as of July 1, 2021, and may not impose any greater or additional burdens or restrictions on eligibility or enrollment standards to the Medicaid expansion eligibility group than what is applied to other Medicaid eligibility groups.11

The state still needs to resubmit the eligibility SPA to CMS in order to authorize Medicaid expansion and enroll eligible participants; however, the state must accept applications immediately.

What’s Ahead for Medicaid Expansion in Missouri and Nationally?12

Fig-2-8-12-21.pngTo encourage the remaining 12 states that have not adopted Medicaid expansion to do so, President Biden’s ARP Act includes a provision to provide states that implement Medicaid expansion after the date of enactment with a two-year, five percentage point increase in the Medicaid matching rate (FMAP) that applies to most non-expansion populations.13 The increased matching rate is available at any point after enactment and is tied to when a new expansion state begins enrolling people in the Medicaid adult expansion group. States that begin enrolling adults in the Medicaid expansion eligibility group during the COVID-19 public health emergency will receive both the 6.2 percentage point bump authorized by the Families First Coronavirus Response Act (FFCRA) and the five percentage point increase provided by the ARP Act.14

When Missouri goes forward with expansion, it will be eligible to receive the ARP Act funding incentive. Manatt Health estimates that this funding would provide Missouri with a projected $1.47 billion in new federal funding over the eight quarters eligible for the ARP Act FMAP increase, regardless of the expansion start date. (For more information on the fiscal impact of Medicaid expansion following the enactment of the ARP Act, see this Manatt-authored issue brief.)

Oklahoma was the first state to expand and receive the ARP Act funding incentives for expanding Medicaid. On July 1, 2021, Oklahoma implemented its Medicaid expansion, extending full Medicaid benefits to nearly 120,000 Oklahomans.15 Oklahoma became the 38th state to expand Medicaid after a successful ballot initiative in 2020.

The Biden Administration has prioritized addressing the Medicaid coverage gap in the 12 states that have not yet implemented Medicaid expansion. Missouri’s legislative and legal challenges illustrate why the Administration and congressional Democrats are now exploring federal policy options to address the coverage gap instead of waiting for states to take advantage of the funding incentives.

1 Norris, L. Missouri and the ACA’s Medicaid Expansion. HealthInsurance.org. July 2021. Available at https://www.healthinsurance.org/medicaid/missouri/.

2 Ballotpedia. Missouri Amendment 2, Medicaid Expansion Initiative. August 2020. Available at https://ballotpedia.org/Missouri_Amendment_2,_Medicaid_Expansion_Initiative_(August_2020).

3 American Rescue Plan Act of 2021. Public Law No: 117-2. March 2021. Available at https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc%20H155EAEF98A524898BC6F93FE5BB8CB2A.

4 Manatt Health. “Assessing the Fiscal Impact of Medicaid Expansion Following the Enactment of the American Rescue Plan Act of 2021.” State Health & Value Strategies. April 2021. Available at https://www.shvs.org/wp-content/uploads/2021/04/ARP-Medicaid-Expansion.pdf.

5 The six other states are Idaho, Maine, Missouri, Nebraska, Oklahoma and Utah.

6 Missouri H.B. No. 20. Available at https://house.mo.gov/billtracking/bills211/hlrbillspdf/0020H.01I.pdf.

7 Missouri H.B. No. 11. Available at https://house.mo.gov/billtracking/bills211/hlrbillspdf/0011S.04C.pdf.

8 Missouri DSS. Letter to CMS. May 2021. Available at https://content.govdelivery.com/attachments/MOGOV/2021/05/12/file_attachments/1807050/2021.05.13%20CMS%20Letter.pdf.

9 Doyle v. Missouri DSS. Circuit Court of Cole County, Missouri. No. 21AC-CC00186. June 2021. Available at https://www.courts.mo.gov/fv/c/Final+Judgment_FINAL.pdf?courtCode=19&di=2134984.

10 Doyle v. DSS. Supreme Court of Missouri. No. SC99185. July 2021. Available at https://www.courts.mo.gov/file.jsp?id=178955.

11 Doyle v. Tidball. Circuit Court of Cole County, Missouri. No. 21AC-CC00186-01. August 2021. Available at https://themissouritimes.com/wp-content/uploads/2021/08/Medicaid-decision.pdf.

12 Kaiser Family Foundation. Status of State Action on the Medicaid Expansion Decision. August 2021. Available at https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.

13 American Rescue Plan Act of 2021. Public Law No: 117-2. March 2021. Available at https://www.congress.gov/bill/117th-congress/house-bill/1319/text#toc%20H155EAEF98A524898BC6F93FE5BB8CB2A.

14 FFCRA § 6008. Available at https://www.congress.gov/bill/116th-congress/house-bill/6201/text.

15 U.S. Department of Health & Human Services. Oklahoma’s Medicaid Expansion will Provide Access to Coverage for 190,000 Oklahomans. July 2021. Available at https://www.hhs.gov/about/news/2021/07/01/oklahomas-medicaid-expansion-will-provide-access-to-coverage-for-190000-oklahomans.html.

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