For the first time last year, the 50 states collectively spent more on Medicaid than on any other program... Missouri is currently one of the 22 states in which Medicaid has replaced K-12 education as the largest single expense.

Some things never change in Missouri politics, but one thing that has is the growing consciousness of economic development, even among people who have not thought in those terms historically.

Nowhere has this heightened awareness been more obvious than in the furor over the elimination or reduction of Medicaid health cover age for thousands of low-income Missourians, as championed by Gover-nor Matt Blunt.

To be sure, many critics have attacked the impending reductions along traditional lines, claiming that reductions are “morally bankrupt” and/ or “cruel.” A ringing example of this political tradition was provided by State Rep Frank Barnitz, a Democrat from Lake Spring, who described the reductions as “the legislative equivalent of pushing someone in a wheelchair down a flight of stairs.”

Similarly moved, if somewhat more restrained, is State Sen. Victor Callahan, whose guest column in the Independence Examiner was tellingly headlined, “Reckless Medicaid Cuts Will Hurt Missouri.”

For the most part, the state’s media have echoed the concerns of the more traditional critics. A recent article in The Kansas City Star, “Proposed Cuts in Medicaid Decried,” shows clearly how these concerns shape the nature of the news coverage.

“Proposed cuts to Missouri Medicaid,” reads the article’s entirely indicative lead, “would leave the state with one of the stingiest health insurance programs for the poor in the nation, advocates for the uninsured said Thursday.”

Blunt’s more sophisticated critics, however, realize that emotional appeals do not carry too much weight three and a half years before the Governor’s next election. Nor do such appeals address the very tangible fact that in the past dozen years, the Medicaid rolls have doubled and the cost of Medicaid to the state has nearly tripled. What is more, even with the reductions in place, Medicaid would absorb nearly 29 percent of Missouri’s budget next fiscal year while costing more than $5.5 billion in state and federal money.

For the first time last year, the 50 states collectively spent more on Medicaid than on any other program, and Missouri is now at least among the better performing states. According to a report by the National Association of State Budget Officers issued in October, Missouri is currently one of the 22 states in which Medicaid has replaced K-12 education as the largest single expense. And the trend lines are not at all encouraging. As even his critics admit, the young Governor’s fiscal worries are not illusory.

Understanding the terrain, Blunt’s savvier critics have chosen to contest Blunt not on an emotional battlefield—they presume victory on that front— but to assault Blunt on his own high ground, the redoubt of fiscal responsibility. They too have found their own allies in the media.

“Study: Medicaid cuts would cost Missouri millions,” reads the headline of a recent Business Journal article. The article cites a recent study by two St. Louis University professors, Heather Bednarek and Muhammad Islam. The pair makes the undeniable point that Blunt's proposal to reduce Medicaid spending by $231 million a year would result in a loss of $379 million in federal matching money in fiscal 2006.

In fiscal 2006, Missouri is slotted to receive $1.63 in federal matching money for every dollar it spends on Medicaid. One of the federal system’s less enlightened disincentives is to discourage states from showing fiscal responsibility by punishing them with withdrawal of Federal funds if they do.

Using the IMPLAN model, which is commonly used to gauge the economic effect of lost federal money, Islam and Bednarek project that the reductions, once implemented, would result in a loss of $737.4 million in economic activity statewide. This would translate into 10,130 jobs. The authors project that Jackson County—the one Missouri county with the most Medicaid enrollees—would lose more than 1,000 jobs because of the withdrawal of just the Federal matching funds. An additional 300 jobs and $20 million in economic activity would be lost among the counties of Clay, Platte and Cass.

What the study does not address, however, are the ramifications to the Western end of the state if there are no reductions in Medicaid enrollees. As with malpractice reform, the Kansas City area faces a problem that the St. Louis area does not, that is the need to stay competitive with the generally less needy, more affluent, more business-friendly slice of Kansas sitting on its border. There are many in the Kansas economic development community who are as eager to poach over-taxed businesses as they are over-litigated physicians.

The Springfield News-Leader, using a Gannett news service release, repeats the figures from the Saint Louis University study and expands the argument. Curiously, Gannett relies on still another study emanating from St. Louis University. The second study’s co-author, Joel Ferber, an attorney for the Legal Services of Eastern Missouri in St. Louis, argues that the cuts would only shift the costs from the Medicaid program and on to hospitals and private insurance companies and ultimately to those employers who provide health coverage for their employees. “Everybody pays for it,” says Ferber.

For all of their sophistication, the studies either supporting or attacking the Governor’s plan cannot begin to measure the human variables that affect economic behavior. The critical studies work under the presumption that citizens losing their Medicaid will be unable or unwilling to find private insurance. More affirmative studies, like those that inspired the equally contentious federal welfare reform of 1996, presume that citizens will be inclined to pursue their own best interest when forced to.

As Governor, Matt Blunt has made K-12 education the state's top priority. Public education arguably has even more economic development impact than Medicaid. And politically, it is even more sensitive. Many more voters are affected by public education than by Medicaid. For all the emotional storm over Medicaid reductions, it is nevertheless politically safer to restrain Medicaid spending than to cut public education or raise taxes.

In 2008, voters will judge the Governor on how he has grown the state’s economy and how well he’s managed it. If his critics prove right that Medicaid has a deleterious effect on the state’s fiscal health, Blunt will pay for his decision. In the meantime, only those Republicans running in 2006 will have to answer to the emotional issue of limiting health care for the less affluent.