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Mo. senators cite credit concerns about Medicaid

Published on NewsOK Modified: February 11, 2013 at 6:10 pm •  Published: February 11, 2013

JEFFERSON CITY, Mo. (AP) — Some Missouri lawmakers already hesitant to expand Medicaid now have a new reason to object: the potential effect on the state's debt.

Republican members of the Senate Appropriations Committee raised concerns Monday that an expanded Medicaid health care program could hurt the state's stellar credit rating, making it more expensive for Missouri to issue bonds.

Missouri currently enjoys a AAA credit rating — a fact that Democratic Gov. Jay Nixon and Republican legislative leaders alike frequently tout as evidence of their conservative financial management. But Moody's Investors Service last week assigned a negative outlook to Missouri because of its link to the federal government. That means a downgrade in the federal government's credit rating likely also would result in a downgrade in Missouri's credit rating.

Moody's cited two areas of concern are the amount of federal purchasing in Missouri, such as for military contracts, and the proportion of the state budget comprised by the federally and state-funded Medicaid program.

Missouri is projected to spend about $8.5 billion on Medicaid this year, about 35 percent of the state's $24 billion operating budget. Under Nixon's budget proposal for next year, Medicaid spending would rise to $9.9 billion — about 38 percent of the total budget. Nixon has touted the Medicaid expansion as the right thing to do to — both for the health of an estimated 260,000 lower-income adults who would be added to the rolls and to ensure Missouri gets a good return on the federal taxes its citizens pay.

Nixon and some lawmakers also have proposed a state bond issue for public facilities such as colleges, universities, parks and a state mental health hospital. A lower credit rating could increase the interest rate that Missouri would pay on new bonds.

Some senators on Monday questioned whether a larger Medicaid program could make it even more likely that the state's crediting rating could be downgraded.

"We're faced right now with making a pretty darn big decision on Medicaid, and that is if we're going to basically hitch our wagon a lot tighter to the federal government," said Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia. "What does that mean for long-term economic stability for the state of Missouri?

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