Missouri judge strikes down state's Medicaid expansion, dealing blow to Centene and Biden admin

A state judge has blocked Missouri's Medicaid expansion because the ballot initiative passed last year to install the expansion didn't include a funding requirement. (Getty/designer491)

A Missouri judge has struck down the state’s Medicaid expansion set to go into effect July 1 because the ballot initiative approving it was not constitutional.

State Judge Jon Beetem issued an opinion Wednesday that the ballot initiative to approve the expansion in August 2020 did not include any requirement for the state to appropriate funds for the expansion. The ruling is a likely setback for the Biden administration, which has sought to entice holdout states to expand Medicaid under the Affordable Care Act (ACA).

The lawsuit, filed by several state residents, aimed to force Missouri to sign up individuals for the expansion starting July 1. Missouri Gov. Mike Parson, a Republican, announced back in May that he will block the expansion after the state’s legislature refused to include funding for it.

A federal court ruled in June 2020 before the Aug. 4 vote that the initiative didn’t create a revenue source nor direct the state’s legislature to appropriate funds, according to a release from the governor’s office.

Parsons asked the legislature for $1.9 billion to fund the expansion but was denied.

Beetem ruled Wednesday that under existing law the general assembly had to choose to fund the expansion or strike down the entire Medicaid program. The ruling found that the ballot initiative “indirectly requires an appropriation of revenues not created by the initiative and is therefore unconstitutional” under state law.

Medicaid expansion would have added 275,000 new beneficiaries, and the estimated cost would be $1.8 million dollars.

There are currently 12 states that have not expanded Medicaid under the ACA.

RELATED: HHS: ACA exchange, Medicaid expansion coverage reaches record 31M

Ballot initiatives have been used by advocates in other states to bypass reluctant governors and legislatures, but getting funding from state lawmakers has been a challenge in other states.

The Biden administration is trying to entice the holdout states to finally expand. The American Rescue Plan temporarily increased the federal matching Medicaid payment rate by 5% for holdout states.

The court ruling could also impact the presence of government insurer Centene, which is headquartered in the state.

Centene CEO Michael Neidorff warned that the state’s failure to pass funding for the expansion has the company questioning whether it should remain in the state, according to a report in the St. Louis Post-Dispatch.

Centene did not immediately return a request for comment as of press time on the ruling.