01/29/2013 05:10 pm ET Updated Mar 31, 2013

Missouri Medicaid Expansion Savings Eyed For New Spending

Missouri Gov. Jay Nixon (D) believes President Barack Obama's health care reform law will bring a windfall to his state and he aims to take advantage.

During his State of the State address to legislators Monday, Nixon made the case that Missouri should expand its Medicaid program to more poor people under the federal law's generous financing. He's a Democrat, so that part isn't shocking.

But Nixon has an unusual point of view: He thinks expanding Medicaid will bring in so many federal dollars and generate so much new state tax revenue that there will be money left over to finance other projects.

The Medicaid expansion will save the state $31 million in health care spending next year because the federal government will begin funding state services and Missouri will net $15.5 million in taxes from the economic activity the expansion will generate, Nixon and his budget director explained to the Kansas City Star in advance of his speech.

As the Kansas City Star put it, Nixon "will be banking on federal Medicaid money to help bolster the state revenues available to spend on education and other government services."

During his speech Monday, Nixon didn't make the connection between the Medicaid expansion and his other priorities. He did, however, assert that "strengthening Medicaid will strengthen our economy" and cited the support from business leaders present during the address, including the Missouri Chamber of Commerce.

In this respect, Nixon's argument mirrors that of Republican governors like Arizona's Jan Brewer who support broadening the program: That the federal funding is too rich to turn down, that the state's hospitals lose money treating uninsured patients and that the state's taxpayers would contribute to Medicaid expansions in other states but not receive benefits unless Missouri went along.

Nixon wants to take a big step further, though, by planning to redirect the potential economic benefits of the Medicaid expansion to other programs.

A bigger Medicaid program in Missouri is far from a sure thing, though. The state legislature is dominated by Republicans and state House Speaker Tim Jones (R) blasted the Medicaid expansion in his (pre-recorded) response to Nixon's address. Republican Lt. Gov. Peter Kinder also opposes adding more people to Medicaid.

So far, 10 GOP-led states have rejected the Medicaid expansion.