Health Care

Don’t be fooled: Federal government holds all the Medicaid cards

October 4, 2019

Kaitlyn Finley

He who pays the piper calls the tune—this adage rings loud and clear today between states and the federal government when it comes to Medicaid, the nation’s largest welfare program based on enrollment size. Since the federal government pays for a significant portion of each state’s Medicaid program costs, they are free to add as many regulatory strings as they please—more than 1,800, in fact.

Any significant changes to a state’s Medicaid program must be approved by federal bureaucrats at the Centers for Medicare and Medicaid Services (CMS). Even changes that will save taxpayer money will not necessarily receive approval from the federal government. In recent years, both the Trump and Obama administrations have rejected states’ proposed waivers to allow for eligibility changes and cost-sharing measures in their Medicaid programs.

In 2014 the Obama administration exercised its authority over Oklahoma’s Medicaid program and scaled back eligibility for Insure Oklahoma, a program that offers low- to moderate-income workers in Oklahoma partially subsidized health insurance using state and federal dollars. Financial qualifications for the Oklahoma Individual Plan under Insure Oklahoma were reduced from 200 percent to 100 percent of the federal poverty level, which pushed thousands of Oklahomans off of Insure Oklahoma and into the Obamacare exchange. 

Earlier this year, Republican and Democratic lawmakers expressed interest in expanding Medicaid eligibility through some type of alternative expansion option utilizing Insure Oklahoma. This type of Obamacare “conservative-style expansion” plan (SB 605) has been tried in other states with disastrous results.

In 2013, Arkansas expanded Medicaid through a non-traditional state waiver exemption and used state funds to purchase private health insurance in the exchange for expansion enrollees, but this option ended up costing taxpayers nearly $800 million more in its first three years than traditional Medicaid expansion, according to a report by the U.S. Government Accountability Office. Seeing these results, Iowa and New Hampshire decided to scrap their alternative expansion plans altogether in 2015 and 2018, respectively. 

As the Democratic presidential nominees continue to trot out their radical health care plans, Oklahoma lawmakers should think twice before giving away any more authority over Oklahoma’s Medicaid program in exchange for “conservative” compromises.

It’s safe to assume that a President Elizabeth Warren, for example, may gut any conservative reforms for Medicaid (work requirements, for example) approved under President Trump. Experience shows that any deals cut through waivers with any administration, Democratic or Republican, may not last.