John W. Bluford III doesn’t have to speculate about what major cuts to Medicaid could mean to Kansas City area patients and hospitals. 

He remembers.

In 2005, when the Missouri legislature slashed the government-funded health insurance program for low-income children and adults, Bluford was CEO of Truman Medical Center, Kansas City’s safety net hospital now known as University Health. 

“I don’t remember all the facts and figures,” Bluford said. “But I know there was a big burden on our bottom line.”

Those Medicaid cutbacks, which then-Gov. Matt Blunt signed into law in April 2005, were supposed to address a multibillion dollar state budget shortfall. Their impact on the state’s budget is debatable, but their effect on the state’s health care ecosystem was undeniable. 

After those cuts took effect, more than 100,000 Missourians, many of them children, lost coverage.

As a result, hospitals like the one Bluford oversaw treated ballooning numbers of uninsured patients needing care. Community health centers, which rely on Medicaid payments to subsidize free care, struggled to keep their doors open.

“Just because the coverage stops,” Bluford said, “doesn’t mean the patients stop getting sick. The care is still necessary.”

Now, as the Trump administration pushes even more extreme nationwide cuts to Medicaid, those who lived through Missouri’s 2005 Medicaid experiment urge federal policymakers to look back at what happened here and understand that cutting Medicaid would almost certainly go beyond reducing a budget line item. 

The effects, said Cindy Samuelson, a spokesperson for the Kansas Hospital Association, will be felt well beyond hospitals and the patients they serve.

“This ripples through the entire economy,” she said.

Looming Medicaid cuts 

On May 22, the U.S. House of Representatives passed a spending bill 215-214 that would slash $700 billion from the Medicaid program. The Senate is expected to make changes to the legislation, but some cuts to Medicaid appear likely.

Proponents of the bill argue that the program, which pays for health and long-term care for low-income Americans, is too expensive. Medicaid is administered at the state level, but funded jointly by state and federal taxes.

In Missouri, 1.2 million people, 19% of the state’s population, rely on Medicaid for health care. In Kansas, Medicaid goes to 358,000 people, about 12% of the population.

The federal government picks up $12.5 billion, or 78%, of the bill for Missouri. It covers $3.4 billion, or 65%, of Medicaid spending in Kansas.

Medicaid has grown significantly since 2014, the year states began adopting “Medicaid expansion,” which makes the coverage available to people earning below 138% of the poverty level. That group fell in a converge gap, making too much to qualify for traditional Medicaid, but too little to benefit from the Affordable Care Act marketplace.

In 2014, the year states began expanding Medicaid, the program covered around 66 million low-income Americans. Today, the coverage reaches 83 million Americans. In 2023, Medicaid spending totaled $871.1 billion, about 18% of the country’s total health expenditure.

Missouri voters passed a constitutional amendment to expand Medicaid in 2020, which means absorbing potential federal cuts won’t be as simple as rolling back Medicaid expansion. Voters would have to change the Missouri Constitution again. 

Kansas is one of only 10 states that have not expanded Medicaid, but Gov. Laura Kelly said she doesn’t see that as an advantage now that federal cuts are looming.

“By not expanding Medicaid,” Kelly said at a May 21 luncheon sponsored by Swope Health, “it means Kansas hospitals are under greater financial strain. We lost the chance to strengthen our system and build capacity by sending $8 billion taxpayer dollars to D.C. without bringing any of them home.”

The impact of Medicaid cuts

More than 8 million people nationwide could lose health coverage under the proposed federal legislation, which also includes $3.8 trillion in tax cuts. In Missouri, that includes 110,000 people who could lose health coverage. Another 22,000 people could lose coverage in Kansas. 

The picture could be even worse If enhanced tax credits for people who get insurance through the Affordable Care Act marketplace are allowed to expire at the end of the year. A loss of Medicaid coverage combined with the loss of those tax credits could mean 13.7 million people losing health coverage by 2034, including 190,000 people in Missouri and 61,000 in Kansas.

That’s an even bigger number than in 2005, when Missouri Republicans pushed for cuts to Medicaid by arguing, much like proponents of the current cuts, that the program’s costs were out of control. 

In the previous 12 years, Missouri’s Medicaid rolls had doubled, but costs for Medicaid had tripled. Republicans argued that trimming the program would ultimately protect its future and allow the state to spend money on other critical services like education. 

Besides, they said, even after reducing Medicaid coverage by changing eligibility requirements, shifting cost sharing and eliminating some coverage, Medicaid would still eat up almost a third of the state’s budget.

As it turned out, many researchers now agree, cutting Medicaid in Missouri actually led to higher costs in other parts of the health care system.

Ultimately, one study found, 15% of Missourians enrolled in Medicaid were thrown off the rolls after the 2005 overhaul. That included 51,000 children. Between 2004 and 2006, when the cuts were implemented, the number of  uninsured Missourians grew by more than 100,000.  

That wasn’t good news for hospitals, which already were struggling to absorb the rising costs of health care. By 2006, Missouri hospitals saw uncompensated care jump to $591 million from $429 million two years earlier. In the same period, emergency room visits covered by Medicaid fell by 20,000, but uninsured visits increased by about 85,000. 

For community health centers in Missouri, uninsured patient visits increased almost 30% in 2006, compared to 2004. But Medicaid revenue — those clinics’ primary source of revenue — fell. The state had to increase grant funding for the centers to help them survive that Medicaid decline.

Kansas City voters also helped cover the gap. A special health levy that passed in April 2005, just before Medicaid cuts were implemented, sent additional city property tax dollars to Truman Medical Center and community health centers that provide free health care to impoverished residents.

“Some laypeople have the misunderstanding that if you cut this critical coverage for women and children and the elderly,” Bluford said, “and for behavioral health services and nursing home services … then the necessity of care goes away. And that’s just not the case. You’re not cutting costs. You’re shifting costs and shifting who pays.”

Another study about the impact of the cuts on Missouri hospitals found that 17 Kansas City-area hospitals experienced “a significant decrease” in profit margins from 2003 to 2005 as charity care and bad debt both increased.

Meanwhile, hospitals raised prices, which caused private insurance rates to increase. And that led more employers to drop coverage for employees, adding to the number of uninsured Missourians.

It’s a vicious cycle, said Jeron Ravin, president and CEO of Swope Health, a community health clinic with patients in Missouri and Kansas.

“You’re talking about worse health outcomes, more (emergency department) visits, people who are just opting out of care generally, because they don’t want to deal with the red tape,” Ravin said. 

Other arguments in today’s debate also echo Missouri’s debate 20 years ago. Proponents of the 2005 cuts pointed to fraud and abuse, for example, and emphasized the importance of adding regular eligibility checks so ineligible Missourians weren’t getting coverage. And they added patient copays. 

Critics argue that adding costs that patients may not be able to afford and piling on other obstacles like work requirements or time-consuming eligibility checks could ultimately keep people from getting the health care they need.

“Some folks are just going to say, ‘I’m not going to do it. It’s not worth it,’” Ravin said.

New appreciation for preventive care

Three years after Missouri lawmakers passed those Medicaid cuts, the state had to make changes. In 2008, Blunt signed legislation to remake Missouri’s Medicaid program as MO HealthNet, converting more patients to managed-care plans. Public outcry against the 2005 cuts helped send then-Attorney General Jay Nixon to the governor’s mansion in 2008 after he campaigned on restoring and expanding Medicaid.

That new Medicaid plan, which involved re-enrolling some of the people who had lost coverage in 2005, tried to emphasize the importance of preventive care and early health screenings.

Dave Dillon, a spokesman for the Missouri Hospital Association, said many aspects of MO HealthNet that grew out of that time have proved to be beneficial to hospitals in the state. 

The state’s Medicaid program has focused on improving maternal health, for example, by adding provisions that let new mothers stay on Medicaid a year after giving birth. The hospital association also supports MO HealthNet programs that focus on providing patients help for nonmedical issues that nonetheless affect their health.

“There are a lot of innovative things going on in the Medicaid program,” Dillon said. “We’re engaged with them to try to understand what the impact of these cuts could potentially be.”

The hospital industry, like most other health care providers, opposes cuts to Medicaid. Especially those that would take away preventive services that help keep costs down in the long run. Medicaid, which gives people access to doctor visits, medication and even dental care, is to a great extent focused on preventive care.

Since Missouri went through its Medicaid shakeup 20 years ago, Dillon said, health care providers and payers have gained a greater appreciation for this more holistic approach to health care.

“There’s a much better understanding of the influence of things that are external to care,” Dillon said. “The entire model for the way we view care delivery has changed.”

But if Medicaid is cut or eligibility is reduced, those preventive services will be affected. Hospitals would again likely see higher costs from caring for people who can’t afford to pay and don’t have insurance. Community health centers, which primarily exist to offer that preventive care, would need to look at reducing costs in order to survive.

“The most straightforward answer is (if major Medicaid cuts happen) we’re going to have to cut services,” said Patrick Sallee, president and CEO of Vibrant Health, a community health clinic in Wyandotte County.

“Philanthropy can only do so much, and while we would certainly continue to seek philanthropy to help offset losses in Medicaid reimbursement, we would probably scale back services.”

Ravin sent a letter to Swope Health employees last week assuring them that there won’t be mass layoffs as a result of potential Medicaid cuts. But there may well be reduced services and belt tightening.

“We don’t know how bad it’s going to get,” he said.