Medicaid growth ‘clearly unsustainable, and undesirable’

October 31, 2013

“Although touted as a safety net, Oklahoma’s current Medicaid program actually grows regardless of economic conditions,” The Oklahoman pointed out in an excellent editorial yesterday (‘Oklahoma can't afford not to reform Medicaid’).

Since 1995, Oklahoma's Medicaid enrollment has increased every year. When times are tough, more people enroll; when the economy is booming ... more people enroll!

In the 2000 state budget year, 12.13 percent of Oklahoma's population was on Medicaid. By the 2012 budget year, that figure reached 26.57 percent, a 141 percent gain in enrollment at a time the state's population grew just 10.3 percent. This trend is clearly unsustainable, and undesirable. Its impact on state finances is significant. Total Medicaid spending in Oklahoma, including state and federal dollars, increased 190.9 percent during that time period even as inflation increased just 35 percent. Looking only at state Medicaid appropriations, the picture gets worse: From the 2001 budget year to 2012, state spending on Medicaid increased 217 percent.

State Medicaid spending is often touted as a way to get “free” federal matching funds, but over the past decade the federal Medicaid reimbursement rate to Oklahoma has been cut 7 percent, which forced diversion of other state funds away from things like schools and roads to preserve Medicaid. Another cut totaling $66 million is scheduled. And President Barack Obama has called for cutting Medicaid payments further.

Regrettably, some Oklahomans want to expand Medicaid even further. But as Dr. Tom Coburn and OCPA’s Jonathan Small pointed out in the Tulsa World, Medicaid expansion is a threat to Oklahoma’s future. They warn against any form of Medicaid expansion, including creative “program redesign.”

Gov. Mary Fallin also understands that Medicaid expansion doesn’t make sense. As she said last year,

I have also decided that Oklahoma will not be participating in the Obama Administration’s proposed expansion of Medicaid. Such an expansion would be unaffordable, costing the state of Oklahoma up to $475 million between now and 2020, with escalating annual expenses in subsequent years. It would also further Oklahoma’s reliance on federal money that may or may not be available in the future given the dire fiscal problems facing the federal government. On a state level, massive new costs associated with Medicaid expansion would require cuts to important government priorities such as education and public safety. Furthermore, the proposed Medicaid expansion offers no meaningful reform to a massive entitlement program already contributing to the out-of-control spending of the federal government.