Craig's analysis is probably on the right track here. While the Missouri State Militia undertook a very broad consolidation of units and weeding out of personnel in February 1863, the 2nd MSM Cavalry and the 11th MSM Cavalry were ahead of the curve in the matter--they consolidated in September 1862. The process would not have been too unlike a merger of businesses in our era--layoffs involving redundant positions; layoffs involving those not up to doing the job at hand (aged and infirm were quick to go during these unit consolidations); etc. Note the date of the consolidation, and the fact that your wife's ancestor was let go just weeks later.

When the MSM was first authorized following an agreement between President Lincoln and Governor Gamble that was ratified by the U.S. Congress in late 1861, there were few constraints placed in regard to recruiting. As recruiting got out of hand and the costs associated with the influx of personnel and a broad number of different units started spinning out of sight during 1862, controls were put into place. Those controls included capping the number of troops in the MSM at 10,000 as well as doing away with some of the units altogether. Four thousand troops had to be let go, while five MSM regiments disappeared entirely during the process, including the 10th MSM Cavalry, 11th MSM Cavalry, 12th MSM Cavalry, 13th MSM Cavalry and 14th MSM Cavalry, as well as 3 independent MSM battalions, 2 independent MSM artillery batteries, and single independent MSM companies of cavalry, infantry, and sappers and miners. The 10th thru 14th MSM Cavalry regiments seem to have been chosen for no other reason than because of their numeric designations. The 3rd MSM Cavalry/Old was washed out, while the 10th MSM Cavalry was kept intact and was given the 3rd's numeric designation. The other regiments, including the 11th MSM, were absorbed into other units, with large numbers of discharges of veterans resulting, including your wife's ancestor.

Unless he was too old, or was too infirm, I suspect the ancestor's name will show up on 1863-1865 muster rolls for the Enrolled Missouri Militia and/or other Missouri Militias, which will give you additional avenues to research. For more on the militias, go here: http://www.civilwarstlouis.com/militia/federalmilitia.htm. Follow the county of origin links to see where you should focus your research in regard to these units.