House Medicaid plan ill-advised

Budget & Tax , Health Care

Jonathan Small | May 10, 2021

House Medicaid plan ill-advised

Jonathan Small

Do you think the problem with state government is that agencies are too small and inexpensive?

Perhaps Republicans in the Oklahoma House of Representatives do, because they’ve voted to increase the number of state employees by more than 1,000 and dramatically boost the cost of Medicaid expansion.

Due to passage of an initiative petition, Oklahoma’s Medicaid program will add hundreds of thousands of able-bodied adults to the rolls starting in July, costing anywhere from $164 million to $374 million based on estimates.

But now House Republicans have voted to further boost the added cost by up to another $277 million per year. That should leave all citizens shaking their heads—especially since another option exists.

Gov. Kevin Stitt has called for contracting with private managed care companies that would be paid a fee to oversee implementation of Medicaid benefits. Those companies would direct patients to preventative care and early treatment, which costs less, ultimately reducing expensive hospitalizations. If costs exceed what the private companies are paid, the private company pays the difference, protecting Oklahoma taxpayers from price shocks.

But House Republicans have voted instead to have the Oklahoma Health Care Authority (OHCA) handle cost-control internally. If the OHCA doesn’t control costs, there are no financial penalties for failure. In fact, the agency would probably ask for more funding.

But that’s not the worst of it.

A fiscal analysis bluntly warns that “in order to build a state-run managed care delivery system, the agency would require a significant investment that would continue for several years.” The analysis notes the OHCA “does not currently have the personnel, infrastructure or technology needed” to coordinate care in a way that improves health outcomes while still controlling costs.

As a result, the fiscal impact predicts average increased costs of $263.4 million each of the next five years at OHCA to pay for additional personnel, upgraded IT systems, infrastructure needs, and more. Administrative costs are expected to increase to around 11% of the agency’s budget. OHCA is expected to hire another 1,200 state employees.

Also, the analysis shows the OHCA program probably won’t be operational for another two to three years.

In contrast, the governor’s plan would require private contractors to “live within the current OHCA budget including their administrative cost.”

While House lawmakers passed the Medicaid bill, they killed another measure to prevent hospitals from price-gouging patients with “surprise” medical bills. It’s as if a majority of lawmakers want Oklahoma families and taxpayers to pay as much as humanly possible for health care, regardless of quality or service.

Medicaid expansion was a cornerstone of “Obamacare.” It has proven a budget-buster in states across the country, which is cause for concern for serious conservatives. But in Oklahoma, it appears House Republicans responded by saying, “Hold my beer.”

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Jonathan Small President

Jonathan Small


Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.

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