Health Care

Uncertainty persists on Medicaid expansion, funding

April 23, 2020

Ray Carter

While Gov. Kevin Stitt’s administration has filed federal paperwork to expand Oklahoma’s Medicaid program to cover hundreds of thousands of able-bodied adults, which officials have dubbed “SoonerCare 2.0,” a top legislative leader indicated Thursday that the expansion issue remains a topic of debate.

“There is still is not an agreement on SoonerCare 2.0 and/or funding,” said Senate President Pro Tempore Greg Treat, R-Oklahoma City.

Treat noted Stitt’s expansion plan is competing with a ballot measure to expand Medicaid at the same time the existing Medicaid program, which primarily serves the disabled and low-income pregnant women and children, is seeing a dramatic surge in enrollment and expenses.

“We’re moving on three tracks, it seems to me,” Treat said. “And the numbers have gone up, largely because more people now qualify for Medicaid because of our current economic conditions.”

The state is receiving a slight increase in federal matching funds for the existing Medicaid program, Treat noted, but “with the caveat that you cannot kick any ineligible participants out.”

The governor’s plan and the ballot measure, which will be decided by voters in June, are largely identical. Both would expand the Medicaid welfare program to include able-bodied adults. The main difference is that the ballot measure would make Medicaid a constitutional right, while Stitt’s plan would allow the imposition of minor work requirements or modest cost-sharing mandates in future years, but not during the initial year of expansion.

The governor’s office initially claimed Stitt’s expansion plan would increase state expenses by $150 million per year, predicting only 200,000 individuals would become eligible for Medicaid expansion and just 160,000 would sign up in the first year.

That figure has now increased to around $200 million per year, and the cost of traditional Medicaid now costs $50 million more than expected this year.

Those expansion projections may still be low-ball estimates. A previous study commissioned by the Oklahoma Health Care Authority, which administers Medicaid, predicted up to 628,000 Oklahomans would become Medicaid-eligible under expansion. Based on current Medicaid expenses, that translates into a state cost of $374 million annually. Those projections were done at a time when economic conditions were far better than today.

The effort to find an additional $200 million to $374 million is coming at a time when the state faces a major budget shortfall. Earlier this week, officials announced that the budget for 2021 could involve cuts of as much as 7.5 percent even if lawmakers use all $534 million that remains in state savings.

Adding $200 million to $374 million to state costs will only increase the size of the budget cuts required elsewhere. The governor and lawmakers have discussed a hospital “fee,” which some have conceded is a de facto tax on health care, to cover the cost of expansion.

Earlier this week, the Senate Health and Human Services Committee voted to approve Kevin Corbett as the new head of the Oklahoma Health Care Authority. During that hearing, when asked how the state would cover a potential $250 million cost for Medicaid expansion, Corbett noted the hospital fee was the original funding source identified but appeared to indicate other tax or fee hikes may be proposed due to rising costs.

“This is a little bit of a different game, quite frankly, because the amount that is going to be required for that group is going to be higher,” Corbett said. “It’s still a work in progress with regards to where the federal support may come and to the extent that there are other sources of revenue that may be available to do that is something that we should consider.”

During that same hearing, one lawmaker noted most states have badly underestimated the cost of Medicaid expansion.

“States that have walked down this path previously have seen significant cost overruns,” said Sen. Adam Pugh, R-Edmond. “In fact, I believe North Carolina has seen almost a 400 percent increase over what their original estimates were.”

Sen. Julie Daniels, R-Bartlesville, noted the Legislature will have little authority to control Medicaid costs if the program has cost overruns like those Pugh noted, which would increase the negative impact on other parts of state government.

“There really doesn’t appear to me to be much discretion on the part of the Legislature should the program cost more than it’s intended, or should the federal participation be decreased,” Daniels said.

Treat said senators have not committed to supporting any plan.

“There’s no agreement to that end yet,” Treat said. “I know the governor is still pursuing the state-plan amendment with the federal administration, but we have not committed to getting the money there yet.”