As prepared for delivery:

My name is David Balat and I am the Director of the Right on Healthcare initiative with the Texas Public Policy Foundation.

Chairman Smith and Ranking Member Kendrick, thank you for allowing me to take the time to address this incredibly important issue. I’m honored to be speaking with this esteemed group today. I have testified before Congress and in various state legislatures regarding the detrimental impact of Medicaid expansion, both financially and in terms of the health outcomes of it’s citizens. I’ve also worked in the healthcare industry as a hospital executive and CEO for nearly 20 years.

As Governor Parsons said in his address on January 20th, “a budget is about priorities”. Like my own home state of Texas, Missouri’s state constitution requires a balanced budget. We share another similarity that is a stark reality in the wake of this global pandemic that has impacted our respective budgets. The economic devastation to major industries and small business alike are unprecedented and deeply impactful. Rather than the surplus that was expected, this body is having to make the very difficult decisions of how to cut the budget by a projected $700 million.

According to your state auditor, the fiscal note for expanding Medicaid based on feedback from the Department of Social Services is conservatively $225 million, which includes the 10% state match on the $2 billion budget for expansion.

Wisely, an analysis was requested which was subsequently delivered in February of 2019. The Center for Health Economics and Policy concluded that “expansion of Medicaid in Missouri is close to budget neutrality and actually has an estimated savings of $39 million.”

What they fail to mention are the other states that have expanded have seen up to twice the enrollment from what was projected. There may be a temptation to qualify these as outliers, but several of these states have gone to the federal government to request permission for charging Medicaid recipients some amount of premium or co-pay to mitigate the strain on their own state budgets. If implemented, that charge would be applied to all recipients (including those most vulnerable for whom the program was intended). The authors of the analysis later echoed this risk within their report, which reads:

“Although we find expansion to be roughly revenue neutral, we caution that some assumptions (In particular, the size of the new population) are fairly uncertain prior to implementation.” “The cost estimates for the newly eligible, however, really depend upon how well Missouri can commit to modernizing and improving its relationship with manage-care companies.”

The analysis also claims, “There are numerous benefits in terms of health outcomes that have been documented in other states, many of which will likely generate economic dividends over time”. There is no supporting data broad enough to uphold this claim and in fact, our research has found that outcomes are actually worse in states that have expanded.

Yet another risk the analysis did not put forward that is potentially the most devastating to the state’s budget is the legal risk of the ACA being struck down by the Supreme Court in the next year. I don’t have to tell the members of this committee what a decision of that magnitude would do to the financial health of Missouri’s budget.

As I bring this to a close, I would like to make one final point – Medicaid (or any type of insurance for that matter) is not health care. Coverage is not care. Health care is what happens in the relationship between doctor and patient. Insurance is the vehicle that finances catastrophic events. I would love the opportunity to work with Missourians to improve health care affordability in the private sector and reform Medicaid so all citizens have access to the care they need. Some innovations that would have little impact on the state budget but a significant one on improving affordability would be to increase overall pricing transparency, reforming the pharmaceutical and medical product supply chain, cracking down on the anti-competitive behaviors of many health systems, and implementing direct care models in Medicaid and the state employee benefit programs.

Medicaid was intended for women, children, the disabled, and the elderly. Let’s focus on improving Medicaid for them rather than crowding them out in an expansion.

Thank you so much for your time today. I’m happy to be available for questions.