| October 1, 2012

Time to reform Medicaid, not expand it

Across the nation, states are trying to cope with ever-increasing Medicaid budgets. Oklahoma is not immune to this challenge.

According to the state’s Comprehensive Annual Financial Report (CAFR), state spending on Medicaid is devouring more and more of the state budget. According to pages 164-165 of the CAFR, in FY-2005 spending on education totaled $3.534 billion and made up 30.13 percent of total state spending. State spending on health services (mostly Medicaid) totaled $3.144 billion and made up 26.81 percent of total state spending.

Fast forward to FY-2011, and spending on education totaled $4.572 billion and made up 27.47 percent of total state spending. State spending on health services (mostly Medicaid) totaled $4.851 billion and made up 29.15 percent of total state spending. So according to the CAFR:

  • Total state spending on education has grown 29.4 percent in six years, yet
  • Total state spending on health services has grown 54.3 percent in six years.

According to the CAFR, total state spending at the Oklahoma Health Care Authority (OHCA), the state’s primary Medicaid agency, is $4.413 billion. This surpasses total state spending by the state Department of Education (common education) and Higher Education combined, which is $4.270 billion.

A review of OHCA statistical information reveals that in August 2001 total Medicaid enrollment (eligibility) was 449,860. Total Medicaid enrollment for July 2012 was 797,753, an increase of 347,893 or 77.33 percent. According to the OHCA FY-2011 Annual Report, for FY-2011 there were 968,296 unduplicated members enrolled in Medicaid in Oklahoma. According to the OHCA, Medicaid covers approximately 64 percent of births in Oklahoma and at least 30 percent of the population in 30 counties.

Clearly, the state should not expand an exploding entitlement program. Rather, it should focus solely on reforming the current program, as suggested in an Oklahoman editorial last week:

Those who bemoan public school funding cuts need look no further than Medicaid to identify a major cause. In 2011, Oklahoma government expenditures on health services exceeded spending on education. Although the budget for K-12 schools was cut in recent years, the budget for the Oklahoma Health Care Authority, which administers Medicaid, increased.

The trajectory of Oklahoma's Medicaid program is unsustainable. It's grown from $333 million in state appropriations in fiscal year 2000 to $922 million this year. Policymakers are currently considering an expansion of Medicaid; it would be better to make the existing program more effective.

Fortunately, Medicaid reforms pioneered in Florida may provide a way to not only reduce costs, but also improve benefits for the poor. Officials with the Florida Foundation for Government Accountability, a conservative think tank, were in Oklahoma recently to tout this patient-centered approach to saving taxpayer money. …

The Florida reforms were championed by former Gov. Jeb Bush and took effect in five counties in 2006; they are scheduled to go statewide next year. Individuals served through the pilot program reported higher satisfaction than those in traditional Medicaid. More importantly, 64 percent of health outcomes were better for those in the reform pilot. For Florida taxpayers, the Medicaid reforms saved $118 million annually, a sum that could jump to more than $1 billion statewide.

That success shows why Oklahoma lawmakers should take a long, hard look at the Florida model as they grapple with the challenges of Medicaid, especially since these reforms have received support from both the Bush and Obama administrations. Oklahoma's Medicaid spending averages $3,171 per recipient. If our costs were comparable to Florida's reform program, Oklahoma could save more than $700 million per year (in both state and federal dollars).

Those savings could make a big difference for other needs such as schools, roads and public safety, while also giving the poor better medical care.

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