Budget & Tax, Health Care

Warnings prove true as Medicaid expansion strains Oklahoma state budget

February 4, 2026

Ray Carter

When Oklahoma’s Medicaid program was expanded to include able-bodied, working-age adults in 2020, it set off a fiscal bomb that continues to wreak havoc on state finances today, based on information reported by state officials.

The Oklahoma Health Care Authority (OHCA), which administers Medicaid, has requested an additional state appropriation of nearly $500 million this year, due in part to surging costs related to the expansion population.

Every dollar that goes to the Medicaid welfare program is one less dollar that can be directed to education, law enforcement, or roads.

While the financial problems caused by Medicaid expansion are unwelcome, they are not entirely unexpected by lawmakers.

“Everything that those of us who were vocally opposed to Medicaid expansion, when it was on the ballot, said was going to happen is happening,” said House Speaker Kyle Hilbert, R-Bristow.

At a recent budget hearing, officials with the Oklahoma Health Care Authority requested an increased state appropriation of nearly $500 million in what has become the latest sign of growing financial problems associated with expanding Medicaid to include able-bodied, working-age adults.

The OHCA reported in December that 220,665 able-bodied individuals had been added to the Medicaid rolls due to the expansion. That group represented nearly 22 percent of all people covered by the program.

Those individuals are using taxpayer-funded health benefits at a high rate that is driving up taxpayer costs, officials told lawmakers at a recent budget hearing.

“Their utilization rates are much higher,” said Clay Bullard, chief executive officer of the Oklahoma Health Care Authority.

The high costs associated with taxpayer-funded payment of health care services for the Medicaid expansion population have been predicted for years because the expansion group has higher rates of certain medical problems, including some that are effectively self-inflicted due to personal behavior.

A study commissioned by the Oklahoma Health Care Authority and released in 2013 that explored the ramifications of expansion found that Oklahoma’s Medicaid-expansion population “has a higher prevalence of serious mental illness, serious psychological distress, and substance-use disorders than both the national low-income, uninsured population as well as Oklahoma’s current Medicaid population.”

If costs exceed available revenue, lawmakers could reduce Medicaid spending—but not spending that benefits the able-bodied adults added to the program since 2021. If the state makes any budget cuts, those able-bodied adults, many of them working-age men, are protected.

Instead, the constitutional amendment that expanded Medicaid effectively requires that cuts be made to services for other people on Medicaid, such as the aged/blind/disabled and low-income children.

“It is not a state or a federal requirement to have a Medicaid program—except for the expansion program, which is now a constitutional requirement,” Bullard told lawmakers.

In his State of the State address this week, Gov. Kevin Stitt urged lawmakers to send a constitutional amendment to the voters that will allow officials to cut Medicaid welfare benefits for able-bodied adults before cutting benefits for the aged/blind/disabled.

Stitt noted that Medicaid should not be a financial support system for those who can obtain employment and support themselves.

“Government dependency is a trap. It robs self-reliance and it balloons budgets,” Stitt said. “I always say government programs should be a trampoline, not a hammock, but too often that is not the case. Medicaid is Exhibit A. It’s driving massive spending growth while enabling waste. In 10 years, Medicaid is projected to eat up 37 percent of our annual budget—$6 billion. We have to make a change.”

In addition to causing significant financial problems for state government, Medicaid expansion has failed to deliver any meaningful benefit.

At an October 2025 legislative study, officials with the Oklahoma Hospital Association told lawmakers that profit margins at Oklahoma’s rural hospitals are weak, ranking 35th out of the 50 states, while rural hospitals in Texas ranked 11th-best nationally in total margin.

Notably, Texas has not expanded its Medicaid program to include able-bodied adults, unlike Oklahoma.

An Oklahoma Hospital Association official told lawmakers that 53 percent of rural Oklahoma hospitals were at medium-to-high risk of closure in 2023, the most recent data available.

Several reports have found that hospitals in Oklahoma are on a more precarious financial footing today than prior to Medicaid expansion. The financial structure of Medicaid is a major reason why. Even a hospital executive who endorsed Medicaid expansion acknowledged that state hospitals lose money treating Medicaid patients because the payment received is often less than the cost of service.

A 2024 study from the Foundation for Government Accountability (FGA) noted that increasing the number of patients on Medicaid simply translates into losses for many health-care providers.

“The more people that are shifted from private insurance to Medicaid, the higher the Medicaid shortfalls, and the lower hospital profits,” wrote Michael Greibrok and Hayden Dublois. “Hospitals are learning that you cannot become solvent by providing more and more services below cost. This is a surefire way to bankruptcy, not solvency.”

Greibrok and Dublois reviewed the federal filings of more than 4,000 hospitals nationwide. In 2013, the final year before Medicaid expansion was implemented under the federal Affordable Care Act (“Obamacare”), the FGA report showed that hospitals in states that embraced expansion reported just over $10 billion in losses due to Medicaid.

By 2021, those Medicaid losses had ballooned to $22.3 billion, an increase of 115 percent.

In contrast, hospitals in non-expansion states saw their Medicaid shortfalls increase by only 6 percent.

The FGA report found that hospital profits in states that did not expand Medicaid were “five times that of hospitals in expansion states” on average.

A September 2025 FGA report similarly noted that Medicaid expansion is “shuttering hospitals,” with 74 hospitals having closed in states after they expanded Medicaid.

Medicaid expansion has also failed to improve overall health outcomes in Oklahoma.

The Commonwealth Fund’s “2025 Scorecard on State Health System Performance” report showed that in Oklahoma in 2018-2019, prior to Medicaid expansion, there were 117.7 deaths per 100,000 population before the age of 75 from health care-treatable causes. By the 2022-2023 period, the most recent for which the report had data, that figure had increased to 124.6, despite Medicaid expansion.

The death rate in Oklahoma was far higher than the rates in nearly all states that have not expanded Medicaid.

Oklahoma ranked 48th on health outcomes and healthy behaviors, according to the Commonwealth Fund, while some non-expansion states did significantly better, such as Florida (ranked 20th in health outcomes) and Texas (27th).

During the OHCA’s budget hearing, Bullard told lawmakers the legal restrictions that prevent policymakers from cutting Medicaid services for able-bodied adults could increase under recently enacted federal law, even as the associated costs continue to climb.

“It won’t get any better,” Bullard said, “but it can get worse.”

At a joint press availability with Senate President Pro Tempore Lonnie Paxton, R-Tuttle, Hilbert indicated he may support Stitt’s proposal to send the Medicaid-expansion issue back to Oklahoma voters.

“I remember we were both in this building when the OHCA budget eclipsed a billion dollars, and that seemed crazy, the fact that OHCA was going to have a billion-dollar appropriation,” Hilbert said. “And now they’re looking at asking for a $1.9 billion appropriation. So we’ve seen those costs skyrocket. I think it’s a valid question to ask of the people of Oklahoma.”