The Oklahoma State Medical Association (OSMA) and the Oklahoma Hospital Association (OHA) have been vocal critics of Gov. Kevin Stitt’s proposal to use managed care services in Oklahoma’s Medicaid system, which Stitt says could improve patient treatment and outcomes, reducing the growth of Medicaid’s taxpayer expense.

But, while the OSMA and OHA have both opposed managed care, neither group has identified any other way to control the spiraling costs of Medicaid, which has been consuming an ever-larger share of state tax dollars and may now see explosive growth due to expansion of Medicaid to include able-bodied adults.

The OSMA and OHA are not alone in ducking the question. Of more than 30 lawmakers who have publicly criticized use of managed care, none have offered an alternative means of cost control.

For this article, the Oklahoma Council of Public Affairs reached out to the OSMA, OHA, and lawmakers who have criticized Stitt’s proposal and asked them how they propose to control costs without managed care.

A week later, neither the OSMA nor the OHA had offered any solutions, and only two lawmakers had responded to the question. Only one of those two lawmakers discussed how costs might be controlled.

Stitt has argued that using private contractors to manage oversight of Medicaid patients will ensure those patients obtain routine checkups and other forms of care that identify medical problems before they become severe. In the current Medicaid system, patients often wait until a medical problem has progressed before seeking care—potentially requiring hospitalization—or they use expensive emergency room services for routine care.

Officials at the Oklahoma Health Care Authority have estimated that managed care could reduce hospitalization among Medicaid patients by 40 percent and reduce mental-health care costs by 20 percent if preventative care, including drug treatment, is employed earlier in the process.

In his State of the State address earlier this month, Stitt said, “With Medicaid expansion now in our Constitution, this is the perfect opportunity to reimagine health care delivery in Oklahoma. It’s time to focus on outcomes and not just paying invoices. Forty states have found managed care is the best way forward: Texas, Kansas, Iowa, Tennessee, Florida, even California and Illinois. It’s not a red state or blue state thing. It’s the smart thing to do. In fact, every other state with Medicaid expansion also uses managed care. Every other state.”

Policymakers have long struggled with controlling the cost of Medicaid. From 1999 to 2019, total expenditures on Medicaid in Oklahoma—adjusted for inflation and including both state-and-federal dollars—surged from $2.33 billion to $5.6 billion.

The program’s growing cost has diverted funds from other programs, as noted recently by the chancellor of the State Regents for Higher Education, who pointed out that money was being taken away from education to support Medicaid.

Oklahoma is not alone in facing that problem. In October 2020, officials with the Galen Institute and the Foundation for Government Accountability noted, “In 1988, states spent more than three times more on education than on Medicaid. Now the numbers are roughly equivalent.”

The cost of Oklahoma’s Medicaid program is now poised to increase by an even-larger share each year following passage of an initiative measure that expanded Medicaid to include up to 628,000 able-bodied Oklahomans.

While supporters of expansion claimed it would require $164 million in new state spending, the budget chairman in the Oklahoma Senate has warned that estimate is a “best-case scenario” and the state cost could surge to $246 million this year.

Even that estimate may be optimistic. Based on current Medicaid expenses and a previous study commissioned by the Oklahoma Health Care Authority that predicted up to 628,000 Oklahomans would become eligible under expansion, the state cost of Medicaid expansion could be as much as $374 million annually. The $164 million estimate is based on only 200,000 people enrolling in Medicaid as the result of expansion.

Other states that have expanded Medicaid to include able-bodied adults have consistently underestimated both enrollment and the associated costs of the expansion population. In 2018, the Foundation for Government Accountability found states that expanded Medicaid signed up more than twice as many able-bodied adults as predicted and experienced cost overruns of 157 percent.

The possibility that managed care may reduce non-emergency use of hospital emergency rooms may partly explain why the membership of the Oklahoma Hospital Association opposes managed care and offers no alternatives.

Officials with the Galen Institute and the Foundation for Government Accountability have noted there is “robust evidence that Medicaid expansion significantly increases emergency room utilization for non-emergent conditions” and that hospitals in expansion states “have reported ER visit increases are twice the rate in non-expansion states.”

The fact that non-emergent use of emergency rooms is a revenue generator for many providers has raised moral questions even within the medical community.

A March 2019 article in the AMA Journal of Ethics considered the question, “Should hospitals engage in proactive population health initiatives if they result in decreased revenue from their emergency departments?” The authors concluded that “treating emergency departments purely as revenue streams violates both legal and moral standards.”

Officials with the Stitt administration have stressed that managed care will not reduce overall costs, but only slow the rate of growth. Opponents of managed care, however, have not offered any measures that would even slow the rate of growth.

Of the state lawmakers who have publicly criticized Stitt’s plan to use managed care in Medicaid, Rep. Wendi Stearman, R-Collinsville, was one of only two who responded when asked for comment.

Stearman noted that the press release she signed her name to asked Stitt to “work cooperatively with the state House of Representatives and the state Senate to ensure Oklahomans receive the health care management program that best meets their needs.”

Stearman said she has concerns about a hurried process, but favors finding “the method that will least affect the taxpayers of Oklahoma.” Based on current data, she said the least-expensive way to handle Medicaid expansion may ultimately involve use of managed care.

(Image: Legislative Service Bureau Photography)