When Oklahoma’s Medicaid program was expanded in 2020 to provide welfare benefits to able-bodied adults of working age, it lit the fuse on a financial time bomb that is now threatening to prevent funding for Oklahoma’s school system, state leaders warn.

This year, the Oklahoma Health Care Authority, which administers Medicaid, requested nearly half a billion dollars in increased funding to cover Medicaid expansion’s runaway costs. The newly announced budget agreement provides $250 million in additional Medicaid funding, and lawmakers had to draw down state savings to make that happen.

Otherwise, there would have been no money for any other needs, particularly Oklahoma’s education system.

“If we had funded the full $494 (million), there would be no money for education, teacher pay raises,” said Senate President Pro Tempore Lonnie Paxton, R-Tuttle. “That would have sucked up everything we had.”

The newly announced budget agreement provides more than $230 million in new money for education, including almost $80 million for reading and math programs and $85 million for a $2,000 teacher pay raise.

But Medicaid expansion’s runaway costs threaten to defund state schools and education programs if nothing is done to rein in its exploding trajectory.

“We just can’t afford it,” Paxton said. “We can’t afford to pay for that whole thing.”

That’s why lawmakers have advanced two proposed state questions that could go before voters later this year.

House Bill 4440, by House Speaker Kyle Hilbert, would allow Oklahoma voters to remove Medicaid expansion from the state constitution and instead place expansion in state law, allowing lawmakers to amend the law as financial conditions require in future years.

House Joint Resolution 1067, by state Rep. Ryan Eaves, R-Atoka, would allow Oklahoma voters to amend the state constitution to repeal Medicaid expansion if the federal match is cut below the current 90-10 federal-state split for the expansion population of able-bodied adults.

If Medicaid expansion is not removed from the Oklahoma Constitution, Hilbert noted the only way to address cost overruns is either through slashing payments to medical providers or raising taxes.

Paxton noted the same thing and said working Oklahomans should not be punished for Medicaid’s problems.

“I don’t expect to go to the taxpayers and ask them to increase what they’re paying to us in order to pay for all those things,” Paxton said.

While Medicaid cost overruns can currently be backfilled by drawing down state savings, Hilbert noted that this is only a short-term strategy.

“We need to be cautious of that because Medicaid spend, that’s a recurring expenditure,” said Hilbert, R-Bristow. “So when you go into one-time funds for a recurring expense, you do that with eyes wide open, knowing that eventually you could deplete your savings, and then you’re in a difficult position.”

And the depletion of state savings to prop up Medicaid expansion means other areas of government—such as schools and law enforcement—will face cuts in future economic downturns since the safety net provided by savings will no longer be there.

“The savings will be depleted in a very short amount of time,” Paxton said.

When Gov. Kevin Stitt and legislative leaders announced this year’s budget agreement, Stitt noted that Oklahoma already spends $10 billion to $11 billion on Medicaid and that the program is on a financially unsustainable path without reform.

If Medicaid expansion is removed from the Oklahoma Constitution by voters, it will allow lawmakers to implement reforms, such as prioritizing the truly needy over those added to the program who are simply choosing not to work.

“Most people agree with the aged, blind, and disabled population receiving services, with pregnant women receiving services,” Hilbert said. “The question is on the able-bodied adults.”

“My deal with Medicaid: I know there are people that need it,” Paxton said. “I know there’s people that just have to have that service and want to make sure that it’s there for them. So, easily put: The people who really can’t take care of themselves, I want to help out. But the ones who just refuse to take care of themselves, I’m not interested in helping them. They need to go get a job and take care of their own health care. We can’t afford to pay for everybody’s health care.”

There’s also reason to question whether many people are abusing the Medicaid program. Paxton noted that 25 percent of Oklahomans are now on Medicaid, which is “way, way above the national average.”

“Why is it that Oklahoma is near 25 percent of our population that is on Medicaid?” Paxton asked. “We’re not the poorest state in the nation. States that are poorer than we are have lower Medicaid participation. Why is that?”