Missouri Senate faces a critical decision: Renew crucial taxes or risk losing billions in Medicaid funding

Republican divisions have caused significant delays in the Missouri Senate this year. Despite being a month into the session, senators have not engaged in any formal debates or managed to pass a single bill.

Senators this week may attempt to take action on crucial legislation that is necessary to keep the state’s Medicaid program operational. The program, which provides healthcare coverage to approximately 1 million residents, is at risk. Unfortunately, it is expected that these attempts will not yield positive results.

The Senate is preparing to discuss a bill that will reauthorize a set of vital taxes responsible for funding Medicaid. These taxes, referred to as the Federal Reimbursement Allowance (FRA), are paid by healthcare providers including hospitals and nursing homes. They play a significant role in financing Missouri’s Medicaid program.

According to an analysis conducted by the nonprofit organization, the Missouri Budget Project, if the FRA is not renewed, it would result in a significant loss of $4.3 billion in state and federal Medicaid funds in fiscal year 2026. Such a substantial loss would compel lawmakers to implement across-the-board cuts, including areas such as education and other important priorities, in order to sustain the Medicaid program.

Renewing taxes that are set to expire later this year is encountering strong opposition from a group of conservative senators known as the Missouri Freedom Caucus. This faction is determined to include a provision that would prohibit Medicaid funds from being allocated to Planned Parenthood, despite the fact that abortion is already illegal in Missouri.

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Sen. Bill Eigel, a Weldon Spring Republican and a prominent leader of the Freedom Caucus, is taking a firm stance on the renewal of the FRA. He believes that renewing the FRA should not be a priority and is even considering voting against the measure entirely.

In an interview, Eigel, a gubernatorial candidate, stated his intention to filibuster the bill until senators agree to consider a separate proposal aimed at increasing the difficulty of amending the state constitution, which is a priority for the hard-right caucus.

According to Eigel, there is currently no chance for the bill to move forward this week. He speculates that the bill may have a slim chance of passing on the last day of the session, but even that is uncertain.

Missouri lawmakers are gearing up to discuss a bill proposed by Sen. Lincoln Hough, a Republican from Springfield. This bill aims to extend the taxes that provide funding for the Medicaid system, thereby averting a significant loss of over $4 billion, with $1.5 billion of that being state revenue.

According to Hough, it is unfortunate that people perceive tasks that need to be done as leverage points. He emphasizes that when something needs to be accomplished, it should be seen as a necessary action rather than a means of leverage.

According to Hough, he is not willing to consider any changes that would prevent funding from going to Planned Parenthood. He believes that such amendments could potentially lead to the entire bill being invalidated by the court. Since 1992, hospitals, ambulance companies, and pharmacies have been voluntarily contributing to the system. These taxes play a crucial role in providing funding for the state budget as a whole.

In a statement, John Rizzo, the Senate Minority Leader and an Independence Democrat, highlighted the significant number of rural hospitals that have closed in Missouri over the last twenty years. He expressed concern that the hard-right caucus’s actions could jeopardize billions of dollars in healthcare funding for political motives.

Rizzo, a Senate Democrat, has strongly emphasized that the well-being of rural hospitals in Missouri should not be jeopardized by the actions of the Republicans. He urges Republicans to take immediate action and pass the bill to prevent any further risks to the state’s healthcare system.

In 2021, there was a prolonged battle over the renewal of taxes, which mirrored a previous Senate confrontation. During that year, the taxes were also up for renewal. A faction of conservative senators attempted to prohibit Medicaid coverage for certain types of birth control and impede payments to Planned Parenthood. As a result of this dispute, legislators were compelled to convene a special session, ultimately leading to the passage of a bill to extend the taxes.

Eigel criticized the FRA, referring to it as a “pyramid scheme” and expressing his concerns about its effectiveness in generating funds for the state’s hospitals.

“I have a strong belief in the free market system,” he expressed. “Hospitals should actively participate in it rather than constantly seeking government subsidies.”

Sen. Denny Hoskins, a Republican from Warrensburg and a member of the Freedom Caucus, has expressed his stance on the matter, albeit not as strongly as Eigel. Hoskins is advocating for an amendment that would prevent funds from being allocated to Planned Parenthood and would also include a specified expiration date.

Hoskins also recognized the significance of the tax system.

“The FRA holds great significance for Missouri as it provides crucial funding for our hospitals and nursing homes,” he emphasized. “While I acknowledge the importance of protecting innocent life, it is imperative that we include pro-life language in this FRA bill.”

Hough expressed his discomfort with the idea of risking billions of dollars on a provision that could potentially be invalidated if it is included in the bill.

According to Hough, it is crucial for hospital doors to remain open when people seek medical attention. The potential consequence of not addressing this issue is the closure of rural hospitals.

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