ST. LOUIS — Missouri healthcare advocate Leslie Ortbals and her husband wish to begin a household, however she worries they will’t afford it. The 27-year-old mentioned she takes 10 drugs each day to handle a number of continual diseases.
Now she worries the price of these medication may rise — not due to value will increase, however due to a tax system revamp placed on the poll by the state’s Republican-dominated legislature and backed by the Republican governor.
Prescription medication and physician visits are at present exempt from taxes within the state. But in August, Missouri voters will weigh in on a proposed constitutional modification to present the legislature the facility to interchange the state’s earnings tax with expanded gross sales taxes, together with on items and companies at present exempt.
“Politicians want Missourians to trust them when they say not to worry about our medications and healthcare being up for grabs,” Ortbals mentioned at a June press occasion organized by Progress MO, a progressive advocacy group.
“I have spent enough time in Jefferson City to know better,” mentioned Ortbals, who works for a Democratic state legislator however was talking in her private capability. “I have watched them speak about protecting life while making lifesaving healthcare less accessible.”
Taxes on healthcare are uncommon within the United States however not unprecedented. Most states already tax over-the-counter medication. Illinois, Missouri’s neighbor, is the only state to also tax pharmaceuticals. Delaware, Hawai‘i, New Mexico, and Washington all have taxes on companies by physicians, dentists, out-of-hospital nursing suppliers, and medical laboratories.
Critics of the modification to eradicate earnings tax in Missouri say it’d be tough to make up the misplaced income with out additionally imposing taxes on healthcare. Nearly two-thirds of the state’s normal income finances comes from earnings taxes, about $8.7 billion in 2026. Failing to make up that income may result in steep cuts in state companies.
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The proposed tax reduce comes at an already precarious time for the state finances. Missouri Gov. Mike Kehoe restricted about $440 million in spending on this yr’s finances over issues of lagging revenues. The state legislature has handed a series of tax cuts since 2022, together with repealing capital gains taxes. Federal covid help has propped up the finances in recent times, however the state’s auditor recently warned that the excess is dwindling. And the state is projected to lose about $14 billion in federal Medicaid funding over 10 years attributable to cuts from President Donald Trump’s signature One Big Beautiful Bill Act.
Proponents of the Missouri earnings tax proposal, comparable to Elias Tsapelas of the Show-Me Institute, a conservative suppose tank, say the reduce would spur economic and population growth within the state, each of which have been flat in recent times. He doubts healthcare can be among the many issues topic to gross sales tax. But even when it had been, he mentioned, it could possibly be performed in ways in which wouldn’t goal lower-income residents. New Jersey, for instance, taxes cosmetic procedures (excluding reconstructive surgical procedures), which are usually carried out on wealthier individuals.
In a press release to KFF Health News, Kehoe spokesperson Gabby Picard mentioned the governor “will never support extending sales taxes on agriculture, healthcare, or real estate,” noting that the legislature must determine what to exempt if the poll measure passes.
Federal regulation already prohibits states from imposing taxes on many healthcare companies lined by authorities applications comparable to Medicare, the federal medical health insurance program for seniors, and Medicaid, the joint state-federal medical health insurance program for individuals with low incomes or disabilities, Picard wrote. More than a third of Americans had been insured by these two applications in 2024.
But Jay Hardenbrook, advocacy director for AARP Missouri, argued that elevating taxes on healthcare, actual property, and agriculture is the real reason for the modification, contemplating the legislature doesn’t want particular permission to chop earnings taxes. He cautioned that as a result of the modification opens the door to new taxes on something, it may unleash a “weird feeding frenzy” with special-interest teams lobbying for exemptions.
“Let’s say we do protect prescription drugs from a tax increase; does that mean that the cost of food goes up?” Hardenbrook mentioned.
And if the Missouri measure passes and the legislature exempts healthcare and actual property from new taxes, Hardenbrook worries about cuts to state-funded companies like dwelling and community-based care.
“When I talk about taxes going up, and the price of every good and services going up, that’s the best-case scenario,” Hardenbrook mentioned. “The worst-case scenario is that the income tax just goes away, and we just don’t have the money to do the things that we need to do.”
Eight states haven’t any earnings tax, and Washington taxes solely capital features, however Carl Davis of the Institute on Taxation and Economic Policy, a progressive suppose tank, mentioned the way in which Missouri goes about its elimination is almost unprecedented. Only Alaska has repealed a broad-based private earnings tax that had beforehand accounted for a good portion of the state finances, Davis mentioned.
“The situation in Alaska was they struck oil, and they had this gusher of economic activity and tax revenue that resulted from that,” Davis mentioned. “Missouri has not struck oil.”
A 2012 tax reduce in Kansas that decreased earnings taxes for people and eradicated them for some forms of companies created a big finances gap, prompting lawmakers there to largely repeal the cuts 5 years later.
Tsapelas of the Show-Me Institute mentioned Missouri’s earnings tax elimination wouldn’t occur in a single day however would as an alternative be extra akin to recent income tax reductions within the state: phased in and tied to income targets that might defend the state from huge finances gaps.
“It’s not as doom and gloom as some people are worried about,” Tsapelas mentioned.
But Ortbals, the healthcare advocate, mentioned too many Missourians are already delaying medical care due to prices.
“I want a Missouri where young people can afford to stay, where families can afford to grow, where chronic illness does not become financial ruin,” Ortbals mentioned.