ST. LOUIS \u2014 Missouri healthcare advocate Leslie Ortbals and her husband want to start a family, but she worries they can\u2019t afford it. The 27-year-old said she takes 10 medications daily to manage multiple chronic illnesses.<\/p>\n
Now she worries the cost of those drugs could rise \u2014 not because of price increases, but because of a tax system revamp put on the ballot by the state\u2019s Republican-dominated legislature and backed by the Republican governor.<\/p>\n
Prescription drugs and doctor visits are currently exempt from taxes in the state. But in August, Missouri voters will weigh in on a proposed constitutional amendment to give the legislature the power to replace the state\u2019s income tax with expanded sales taxes, including on goods and services currently exempt.<\/p>\n
\u201cPoliticians want Missourians to trust them when they say not to worry about our medications and healthcare being up for grabs,\u201d Ortbals said at a June press event organized by Progress MO, a progressive advocacy group.<\/p>\n
\u201cI have spent enough time in Jefferson City to know better,\u201d said Ortbals, who works for a Democratic state legislator but was speaking in her personal capacity. \u201cI have watched them speak about protecting life while making lifesaving healthcare less accessible.\u201d<\/p>\n
Taxes on healthcare are unusual in the United States but not unprecedented. Most states already tax<\/a> over-the-counter drugs. Illinois, Missouri\u2019s neighbor, is the only state to also tax<\/a> prescription drugs. Delaware, Hawai\u2018i, New Mexico, and Washington all have taxes<\/a> on services by physicians, dentists, out-of-hospital nursing providers, and medical laboratories.<\/p>\n Critics of the amendment to eliminate income tax in Missouri say it\u2019d be difficult to make up the lost revenue without also imposing taxes on healthcare. Nearly two-thirds of the state\u2019s general revenue budget comes from income taxes, about $8.7 billion in 2026. Failing to make up that revenue could lead to steep cuts in state services.<\/p>\n The proposed tax cut comes at an already precarious time for the state budget. Missouri Gov. Mike Kehoe restricted about $440 million<\/a> in spending in this year\u2019s budget over concerns of lagging revenues. The state legislature has passed a series of tax cuts<\/a> since 2022, including repealing capital gains taxes<\/a>. Federal covid aid has propped up the budget in recent years, but the state\u2019s auditor recently warned<\/a> that the surplus is dwindling. And the state is projected to lose about $14 billion<\/a> in federal Medicaid funding over 10 years due to cuts from President Donald Trump\u2019s signature One Big Beautiful Bill Act.<\/p>\n Proponents of the Missouri income tax proposal, such as Elias Tsapelas<\/a> of the Show-Me Institute, a conservative think tank, say the cut would spur economic and population growth<\/a> in the state, both of which have been flat in recent years. He doubts healthcare would be among the things subject to sales tax. But even if it were, he said, it could be done in ways that wouldn\u2019t target lower-income residents. New Jersey, for example, taxes cosmetic procedures<\/a> (excluding reconstructive surgeries), which tend to be performed on wealthier people.<\/p>\n In a statement to KFF Health News, Kehoe spokesperson Gabby Picard said the governor \u201cwill never support extending sales taxes on agriculture, healthcare, or real estate,\u201d noting that the legislature would have to decide what to exempt if the ballot measure passes.<\/p>\n Federal law already prohibits states from imposing taxes on many healthcare services covered by government programs such as Medicare, the federal health insurance program for seniors, and Medicaid, the joint state-federal health insurance program for people with low incomes or disabilities, Picard wrote. More than a third of Americans<\/a> were insured through those two programs in 2024.<\/p>\n But Jay Hardenbrook, advocacy director for AARP Missouri, argued that raising taxes on healthcare, real estate, and agriculture is the real reason<\/a> for the amendment, considering the legislature doesn\u2019t need special permission to cut income taxes. He cautioned that because the amendment opens the door to new taxes on anything, it could unleash a \u201cweird feeding frenzy\u201d with special-interest groups lobbying for exemptions.<\/p>\n \u201cLet\u2019s say we do protect prescription drugs from a tax increase; does that mean that the cost of food goes up?\u201d Hardenbrook said.<\/p>\n And if the Missouri measure passes and the legislature exempts healthcare and real estate from new taxes, Hardenbrook worries about cuts to state-funded services like home and community-based care.<\/p>\n \u201cWhen I talk about taxes going up, and the price of every good and services going up, that\u2019s the best-case scenario,\u201d Hardenbrook said. \u201cThe worst-case scenario is that the income tax just goes away, and we just don\u2019t have the money to do the things that we need to do.\u201d<\/p>\n Eight states<\/a> have no income tax, and Washington taxes only capital gains, but Carl Davis<\/a> of the Institute on Taxation and Economic Policy, a progressive think tank, said the way Missouri is going about its elimination is nearly unprecedented. Only Alaska has repealed a broad-based personal income tax that had previously accounted for a significant portion of the state budget, Davis said.<\/p>\n \u201cThe situation in Alaska was they struck oil, and they had this gusher of economic activity and tax revenue that resulted from that,\u201d Davis said. \u201cMissouri has not struck oil.\u201d<\/p>\n A 2012 tax cut in Kansas that reduced income taxes for individuals and eliminated them for some types of businesses created a large budget hole, prompting lawmakers there to largely repeal<\/a> the cuts five years later.<\/p>\n Tsapelas of the Show-Me Institute said Missouri\u2019s income tax elimination wouldn\u2019t happen overnight but would instead be more akin to recent income tax reductions<\/a> in the state: phased in and tied to revenue targets that would shield the state from massive budget gaps.<\/p>\n \u201cIt\u2019s not as doom and gloom as some people are worried about,\u201d Tsapelas said.<\/p>\n But Ortbals, the healthcare advocate, said too many Missourians are already delaying medical care because of costs.<\/p>\n \u201cI want a Missouri where young people can afford to stay, where families can afford to grow, where chronic illness does not become financial ruin,\u201d Ortbals said.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/em><\/p>\n This <a target=”_blank” href=”https:\/\/kffhealthnews.org\/health-care-costs\/sales-tax-healthcare-services-missouri-state-amendment-revenue\/”>article<\/a><\/a>; first appeared on <a target=”_blank” href=”https:\/\/kffhealthnews.org”>KFF<\/a> Health News<\/a> and is republished here under a <a target=”_blank” href=”https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/”>Creative<\/a> Commons Attribution-NonCommercial-NoDerivatives 4.0 International License<\/a>.<img src=”https:\/\/kffhealthnews.org\/wp-content\/uploads\/sites\/8\/2023\/04\/kffhealthnews-icon.png?w=150"<\/a>; style=”width:1em;height:1em;margin-left:10px;”><\/p>\n
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