Health Care

7 Questions about 'Medicaid Rebalancing'

May 10, 2016

Trent England

Some state lawmakers think increasing spending is the solution to the state’s budget shortfall. They believe this because of dire claims about what might happen if Medicaid provider reimbursement rates are cut by the yet-unseen state budget. Like a shopper with a rebate coupon, these legislators think the way to save money is to spend more and wait for the “savings”—in this case, borrowed federal dollars made available by Obamacare—to roll in.

Yet many questions about the “Medicaid Rebalancing Act” remain unanswered and, in some instances, unasked. Here are seven important questions about the proposal.

1. Does the state actually need to cut provider rates? If so, how much?

This is a question for state budget writers, who have yet to release a plan or even a framework for a plan. If state officials cut lower priority spending and implement recommended cost-cutting reforms, there may be no reason to clamor after borrowed federal dollars from Obamacare.

2. If reimbursement rates were cut, what would be the real impact?

Oklahoma currently reimburses companies providing care to Medicaid patients at rates higher than the national average. In fact, Oklahoma pays the seventh highest Medicaid reimbursement rates of any state for primary care and the tenth highest overall. (See Table A2 in this Urban Institute report.) Medical companies want to protect their revenue. Legislators, on the other hand, should not blindly accept self-interested claims that cutting reimbursement rates to something like the national average would somehow cause a crisis in our state.

3. Hospitals complain about charity care, but isn’t that their mission?

Many of Oklahoma’s largest hospitals describe themselves as religious non-profit corporations. They collect money from the state, from private patients, and from donors, and enjoy preferential treatment by government. Many have wonderfully expensive buildings and large staffs of well-paid managers and middle managers. When these major corporations pay lobbyists to demand more money from the public, it is fair for legislators and taxpayers to ask whether they are really focused on their original mission of service.

4. Is moving 175,000 pregnant women and children off Medicaid and into the Obamacare subsidized exchange good policy?

This is an important question because if the answer is “yes,” this policy can be carried out in 2019 with or without the rest of the “rebalancing” proposal. And if it is not good policy, it need not be part of the proposal. In fact, it seems to be included in the plan only to make it appear “balanced,” that is, to show that the total number of people on Medicaid stays approximately level.

5. How many people will really sign up if Oklahoma expands Medicaid eligibility?

State after state has struggled with incorrect projections of Medicaid enrollment growth that lead to underestimated costs. Here again, it appears proponents of the “Rebalancing Act” predict 175,000 new enrollees simply to make that number “balance” with the number of people shuffled off Medicaid and into the exchange. In fact, over 600,000 Oklahomans would suddenly find themselves eligible to sign up for this most generous medical welfare program. This would include able-bodied, childless adults and even those who already have health insurance through an employer.

6. What are the other options?

An adhesion contract is a take-it-or-leave-it deal, like the “I AGREE” box that pops up on a computer before installing new software. This is not how lawmaking in a state legislature is supposed to work. Legislators are responsible for considering all the options. In this case, there are many reforms that could better stretch Medicaid dollars or refocus those dollars to make sure they reach the neediest Oklahomans.

7. How important is honesty and integrity?

Most Oklahoma elected officials, like most Oklahoma voters, oppose Obamacare. Many state legislators won office campaigning against the overreaching and unconstitutional power of the Obama Administration—speaking out in particular against the hastily passed Obamacare scheme. Those legislators, considering the Medicaid Rebalancing Act, face a simple, personal question: How important is honesty, integrity, and their reputation?

For more details, read OCPA’s report: Out of Balance.