Medicaid expansion gains business support

Days after state lawmakers took spring break March 15, a small army of business groups across the state threw their support behind Gov. Jay Nixon’s call for Medicaid expansion – a move largely resisted by Republicans who have pushed a market-based plan at the state Capitol.

The Springfield, Branson and Bolivar chambers of commerce are among the 30 business groups statewide now advocating for expanding Medicaid in Missouri under national health care reforms.

“It is a complex issue, but we think an expansion of Medicaid is the best thing for the employment community over the long term,” said Sandy Howard, vice president of public affairs for the Springfield Area Chamber of Commerce.  

Through the Affordable Care Act, the program would be 100 percent funded by federal dollars for the first three years, and the state would cover up to 10 percent of the costs through 2022.

Howard said bucking the national reform would hurt health care providers and the employers that are now required to insure workers under certain conditions.

On March 18, Nixon and chambers across the state called for bringing an estimated $5.7 billion in federal funds to Missouri to expand the program and add 300,000 people to Medicaid rolls. In support of the governor’s push, the Missouri Hospital Association said failing to strengthen Medicaid would increase uncompensated care costs in the state by $11.1 billion through 2022.

A day before the legislative break, seven Republican Senate leaders, including Sen. Jay Wasson, R-Nixa, signed an open letter saying Medicaid expansion would mean the state would have to pick up a $1.2 billion tab from additional costs through 2022.

“We simply cannot afford to double down on a broken system and gamble our state’s budgetary future with our children’s money,” the senators’ March 14 letter said.

Additionally, two committees in the House of Representatives have voted down expansion proposals along party lines.

George Connor, director of Missouri State University’s political science department, considered the Senate letter the equivalent of drawing a line in the sand, and effectively kills hope of an expansion in 2013. He chalks up the maneuvering to a Republican majority that doesn’t want to be seen as supporting President Barack Obama’s health care reforms.

“Supporting Obamacare, as it is pejoratively called, is suicide politically,” Connor said.

Second injury and taxes
Meanwhile, business bills getting nods in the session’s first half included Senate measures to fix the failing Second Injury Fund and to reduce individual and corporate income taxes.

Senate Bill 1, which would bring occupational diseases back under the state’s workers’ compensation system, passed in the Senate on Feb. 14. The bill, which passed 32-2 and received a House committee reading on March 6, also would lift caps established in 2005.

At the end of 2012, the Second Injury Fund held a balance of $3.2 million and unpaid obligations of $28.1 million, according to a February report by State Auditor Tom Schweich. SB 1 seeks to replenish the fund by limiting the types of injuries the fund covers, raising the surcharge fee to 4.5 percent from 3 percent for the remainder of 2012 and increasing the rate businesses pay to 6 percent annually through 2020.

A move to reduce personal and corporate state income tax rates through Senate Bill  26 also appears to be on the fast track to becoming law.

Under the proposal, beginning in 2014, the maximum tax rate on personal income would drop to 5.25 percent from 6 percent. The rate could be reduced to 5 percent should the federal government pass the Marketplace Fairness Act of 2013, or similar legislation, which would allow states to collect sales taxes from online purchases.

SB 26 also proposes a corporate income tax reduction of 0.75 percent for five years, taking the corporate rate to 5.5 percent in 2018. The bill also exempts the first $25,000 of corporate income from taxation.

MSU’s Connor said a reduction in broad tax rates is expected given Republicans control both the House and Senate.

Still, he said the moves might unnerve some fiscal conservatives if the tax changes result in budget shortfalls.

The suggested cuts are, in part, a response to the Kansas legislature’s reduction last year of its top tax rate to 4.9 percent from 6.45 percent. Kansas Gov. Sam Brownback has proposed dropping its rate further this year, to as low as 3.5 percent.

According to the Kansas Policy Institute, a 2012 analysis of the tax reforms predicts $2.4 billion in budget deficits through fiscal 2018, yet another model projects the state would collect $359.9 million in new revenue during the same time frame.

“Kansas is giving away the store, potentially,” Connor said. “They are potentially setting themselves up for an economic catastrophe. It just depends on who you believe.”

Forward thinking
Howard said another bill the Springfield chamber is following is Senate Bill 120. Among other tax-credit reforms, the measure caps incentives such as low-income housing and historic preservation tax credits at $50 million per year and $45 million per year, respectively, which is roughly half of the bipartisan Missouri Tax Credit Review Commission’s 2012 recommendations. Howard said the chamber supports the commission’s higher recommendations. The Senate passed the bill on Feb. 28, and it received a second reading in the House on March 4.

Another proposal getting a lot of attention is the 1-cent sales tax to fund transportation priorities.

“A strong transportation infrastructure is vital to Missouri’s future growth and economic prosperity,” Howard added, noting the Springfield chamber supported the tax.

The House Rules Committee passed the proposal, House Joint Resolution 23, on March 14, but no hearing was scheduled as of March 21.