Hailey
Missouri’s financial outlook is under growing pressure as a sweeping federal budget proposal moves through Congress.
Although the full fiscal impact of these changes won’t be felt immediately, state officials warn of significant budget challenges—especially starting in fiscal year 2027.
Central to these concerns are deep cuts to Medicaid and changes to SNAP funding, which could shift billions in costs to Missouri taxpayers.
State Budget Signed with Caution
As Missouri Governor Mike Kehoe approved the 2025 state budget, he simultaneously vetoed $310 million in general revenue spending.
Kehoe issued a stark warning about the coming fiscal years, noting a projected $1 billion budget shortfall by FY 2027, according to the Office of Administration’s Division of Budget and Planning.
Budget Highlights
- FY2025 general revenue balance: $4.3 billion
- Additional spendable funds: $1.3 billion
- New budget (FY2026): $50.8 billion, exceeding expected general revenue receipts by $2 billion
Medicaid: At the Heart of Budgetary Risk
The primary source of Missouri’s projected fiscal pain lies in the Medicaid program, which currently serves 1.25 million residents.
Under the federal budget plan being debated, Missouri could lose up to 14% of its federal Medicaid funding over the next decade—a loss of approximately $17 billion, according to KFF estimates.
Who Could Lose Coverage?
A Princeton University study estimates that 130,000 individuals could lose Medicaid coverage in Missouri over the next 10 years.
This is partly due to federal cost shifts, but also because some people will simply no longer qualify under new rules.
Key Federal Changes Impacting Missouri
Reduced Federal Match (2029–2030 Onward)
- For the Medicaid expansion group (ages 18–64), the federal match rate will drop from 90% to 65%, starting in federal fiscal year 2030
- New enrollees after 2030 would cost the state significantly more
- Every 10% shift in funding to Missouri means $460 million in additional state expenses
“This bill is going to punch a hole in our budget that we may never fully recover from,” warned Rep. Betsy Fogle, ranking Democrat on the Missouri House Budget Committee.
Medicaid Expansion Cost Breakdown
| Funding Source | Current Rate | Future Rate (Post-2030) |
|---|---|---|
| Federal Share (Expansion Group) | 90% | 65% |
| Missouri’s Share (Current Medicaid) | 35% | 35% |
| Additional State Burden (Est.) | N/A | $460M per 10% shift |
Provider Tax Cap Reductions
Missouri heavily relies on provider taxes (from hospitals, nursing homes, pharmacies, etc.) to fund Medicaid without straining general revenue. However, the bill proposes to:
- Freeze provider tax rates
- Lower the federal cap on provider tax contributions from 6% to 3.5% starting in FY2028
This impacts Missouri’s:
- Hospital tax: Currently at 5% (largest contributor, $900M)
- Nursing home tax: Second-largest, but exempt from these reductions
Industry Reaction
“Deep cuts to provider taxes will harm access to care,” said Dave Dillon from the Missouri Hospital Association.
“Without replacement revenues, any cut to general revenue will hurt,” added Nikki Strong, Missouri Health Care Association.
Work Requirements and Eligibility Verifications
If the bill passes:
- Adults up to age 65 on Medicaid or SNAP would need to work 80 hours per month
- Parents of children 14+ would also be subject to these rules
- Eligibility checks would occur every 6 months, not annually
“This will disqualify some due to paperwork or failure to meet work conditions,” explained Timothy McBride, from Washington University.
SNAP Funding Shift: Federal Burden Shifts to Missouri
Historically, the Supplemental Nutrition Assistance Program (SNAP) has been funded exclusively by the federal government. Under the proposed changes:
- States will bear a portion of costs if their payment error rate exceeds 6%
- Missouri’s 2024 error rate: 9.4%
- Estimated new state cost: $160 million plus extra admin fees
Consequences for Missouri
“Missouri lawmakers will face hard choices,” said Amy Blouin of the Missouri Budget Project. “They may consider cutting SNAP, home-based elder care, or even education funding.”
Political Division Over Tax Cut
Despite the looming fiscal crisis, Governor Kehoe intends to sign a tax cut measure already passed by the legislature.
This move drew criticism from Rep. Fogle, who emphasized that cutting taxes during a projected revenue crisis is fiscally irresponsible.
“If the governor truly believes he can’t pay bills in future years, why is he still pushing tax cuts?” she questioned.
Missouri stands on the edge of a potential budget crisis, largely driven by proposed changes in federal Medicaid and SNAP policies.
With billions in costs likely to be shifted to the state, lawmakers and agencies may soon face tough decisions about program funding, eligibility rules, and how to maintain essential services.
As the debate continues in Washington, Missourians are urged to stay informed and engaged to ensure their voices are heard during this critical time.