Budget & Tax, Health Care

Senate Bill 131 bad for taxpayers, Medicaid patients

May 10, 2021

Kaitlyn Finley

Beginning July 1, Oklahoma’s Medicaid program will open up eligibility to certain able-bodied adults. Allowing hundreds of thousands of new adults into the program will come with a hefty price tag: state officials have estimated the expansion could cost anywhere from $164 to $246 million annually.

Oklahoma policymakers are considering two competing proposals to address these increased costs. Governor Kevin Stitt’s administration has proposed a plan called SoonerSelect which would partner with private managed care organizations (MCOs) to help rein in costs and manage all the new enrollees from expansion. By contrast, some lawmakers have instead supported Senate Bill 131, a bill which would direct the Oklahoma Health Care Authority to effectively become its own MCO.

Earlier this year Gov. Stitt reached agreements with four private MCOs to implement his SoonerSelect plan. These companies will receive a set amount of funds to manage and provide all medical services for each Medicaid enrollee; generally, they assume much of the financial responsibility if costs exceed the capped amount. If savings are accrued by the MCO the state may share in a portion of those savings. Under this type of model, MCOs are also financially incentivized to help member’s health outcomes improve and provide access to comprehensive preventative care in primary care settings.

Forty other states utilize this type of managed care model for their Medicaid programs. Studies have shown a handful of states have experienced significant cost savings and patients have experienced better access to care resulting in improved health outcomes.

If SoonerSelect is to be enacted later this year, the Oklahoma Legislature must choose to fund the proposal before the legislative session ends.

Senate Bill 131, authored by Sen. Jessica Garvin (R-Rush Springs) and Rep. Marcus McEntire (R-Duncan), would void Gov. Stitt’s “SoonerSelect” plan by directing the Oklahoma Health Care Authority to run its own state-run “managed care” program for Medicaid members.

If enacted, SB 131 would cost taxpayers on average $263 million annually over the next five years. The bill would also require hiring an additional 1,200 full-time government employees, according to the fiscal analysis prepared by the House’s legal staff. The fiscal analysis notes that under Gov. Stitt’s plan, by comparison, the size of the Oklahoma Health Care Authority would not increase because the private contractors would be required “to live within the current OHCA budget including their administrative cost.”

According to the fiscal analysis, it could take up to three years for the state-run managed care program to be implemented. By contrast, under Gov. Stitt’s managed care plan, Medicaid patients and Oklahoma taxpayers would begin to reap the health and financial benefits in October 2021, when SoonerSelect is set to take effect.

With Medicaid expansion on the horizon, Oklahoma should reform its Medicaid program by implementing managed care in order to provide better care to beneficiaries while stabilizing state spending for this large entitlement program. This is not the time to experiment with hundreds of millions of taxpayer dollars to implement an inferior version of managed care. The Oklahoma Legislature should reject SB 131 and instead adopt Gov. Stitt’s plan to rein in Medicaid costs and improve the program.

To take action on this issue, click here.