Missouri Medicaid Expansion Disrupted Due to Legal Roadblock

Although Missouri Medicaid expansion passed by a popular vote through an initiative petition, a recent court ruling has paused progress on the measure.

Missouri’s Medicaid expansion effort was intended to offer coverage to 275,000 individuals who would otherwise fall into a coverage gap, according to the court documents. 

In this case, the defendant was the state’s Medicaid program—MO HealthNet Division—which withdrew Missouri’s Medicaid expansion state plan amendment. The plaintiffs were individuals who had severe diseases and chronic conditions and who depended on Medicaid expansion for access to care. 

Primarily, the plaintiffs asked the court to determine that the state’s decision to withdraw the Medicaid expansion state plan amendment was illegal, to affirm that there were sufficient funds for the expansion project, and that the plaintiffs and others who would be eligible under Medicaid expansion be allowed to enroll on July 1, 2021.

The circuit court, however, sided with the state. The court found that the Medicaid expansion initiative petition itself was not lawfully enacted. However, the court was not convinced by the state’s arguments that lack of funding was the primary reason why this initiative petition could not be implemented, characterizing this logic as “semantic and legal gymnastics.”

Instead, the defendant’s argument regarding Article III of the Missouri state constitution convinced the court that the petition was not constitutional. According to preceding cases, an initiative petition cannot directly or indirectly (through practical necessity) demand that the state allocate funds to its work.

The initiative petition says that the Medicaid program will cover the costs of Medicaid beneficiaries’ benefits who become eligible under Medicaid expansion. In doing so, it implies that the General Assembly must direct funds toward the newly eligible population of Medicaid beneficiaries. No supplemental appropriation is attached to the petition to provide funding.

According to a Kaiser Family Foundation (KFF) analysis, this move could have downstream implications for Missourians. The population of individuals who currently fall into the coverage gap in Missouri disproportionately consists of people of color.

Moreover, since it will no longer be expanding its Medicaid program, the state has relinquished over $1 billion in federal funding under the American Rescue Plan Act. The state would have paid less than $157 million, according to legislative estimates.

The state’s fiscal year 2022 budget originally accounted for Medicaid expansion, which was supposed to go into effect on July 1, 2021. 

However, as the acting director of MO HealthNet Division—the state’s Medicaid program—explained in a letter to CMS, initiative petitions cannot direct the General Assembly to allocate funds to the initiative and state leaders did not set aside the resources to pay for Medicaid expansion.

The Medicaid expansion initiative was not designed to be self-funding. Thus, the General Assembly would have had to include a funding stream for it in the fiscal year 2022 budget, which the General Assembly did not do. As a result, Missouri’s Medicaid program withdrew the state plan amendment for Medicaid expansion.

This is not the first court case regarding Missouri’s intention to adopt Medicaid expansion. In a previous case which centered around funding and whether the initiative petition was directing the legislature to allocate funds, the court ruled in favor of the initiative petition, stating that it did not circumvent the General Assembly’s authority to distribute funds.

Missouri was the second state to expand its Medicaid program during the coronavirus pandemic. 

The first state—Oklahoma—also passed Medicaid expansion through a ballot and, like Missouri, the voting margin was very tight. The state determined that its program would go into effect on June 1, 2021.

Unlike its neighbor, however, Oklahoma’s Medicaid expansion continued as planned. In the first month of enrollment under the expanded policy, Oklahoma added 120,000 new enrollees to its Medicaid program and another 70,000 individuals are eligible to enroll.