Oklahoma leaders maintain opposition to Medicaid expansion, as homegrown reform founders

OKLAHOMA CITY – So far, Oklahoma Gov. Mary Fallin is sticking with her frequently expressed determination to avoid entanglement in the morass of what she and many Oklahomans call “ObamaCare.” But in the Legislature, a pro-active reform measure to trim Medicaid expenses may not make it to the Senate floor. 

Early in her tenture, Fallin flirted with Medicaid expansion, as well as  state-run online health exchange and other aspects of the Affordable Care Act. But in the face of rising opposition within the Legislature, Fallin said Oklahoma would neither create an exchange nor follow the Medicaid expansion envisioned in “ObamaCare.” The chief executive reiterated that stance last fall.

Pressure on Fallin to reverse herself and embrace the federal law has come, relentlessly, from members of the Oklahoma Hospital Association.

In an Op-Ed piece for the state’s largest newspaper, The Oklahoman, seven OHA executives argued last Sunday that “devising an Oklahoma plan that uses expansion money” would allow the state to “recapture federal tax dollars and use them to control the cost of health care and enhance the access to and the quality of care. The funding to cover the additional 17 million uninsured people nationwide and 180,000 in Oklahoma has already been allotted. The allotment is drawn from the federal taxes Oklahomans pay. In short, it is Oklahoma taxpayer money.

“If Oklahoma doesn’t find a way to incorporate its tax dollars into a state plan, Oklahoma taxpayers will cover the cost of expansion in New Jersey, Florida, Ohio, Arkansas, Arizona and many other states, reducing their health care costs and providing their uninsured residents with health care. If we don’t use this federal money, Oklahoma’s Medicaid costs will increase, costing the state an extra $332 million.”  

However, the troubled economics of Medicaid – including a dynamic in which spending is virtually certain to increase with or without the ACA’s mandates – have bolstered Fallin’s stance in opposition to expansion.

An effort to build an alternative set of reforms with a market orientation, patterned on steps already taken in Florida and Louisiana, were foundering in the Legislature this week. 

Jonathan Small of the state’s leading free-market “think tank” – Oklahoma Council of Public Affairs – says the Medicaid program’s built-in growth could lead to it taking around 50 percent of total state growth revenue (money projected to be available for expenditure from all sources, including the federal government) by 2017.

For the current state budget, the Legislature approved $80 million for “maintenance of effort” in Medicaid. A third of that was pulled from the Insure Oklahoma fund, an insurance program to help the state’s working poor.

Small and others criticized robbing Insure Oklahoma resources, saying the homegrown program to support access to insurance for the working poor is a model to build on, rather than to erode it with observance of federal dictates. Small points out the state’s Medicaid spending challenges are historic, and intensifying.

This year, merely to “run in place” could require $40 million to $60 million in new spending. In FY 2000, 416,785 Oklahomans were enrolled in Medicaid, at a cost of $1.14 billion. By last fiscal year, there were 1,007-356 enrollees, or 26.57 percent of the entire population.

Oklahoma program costs increased 190.9 percent in 12 years, reaching $4.77 billion (with the state’s share about $1.3 billion).

Small is not alone in doomsday scenarios about Medicaid expansion. The Oklahoma State Medical Association (OSMA) worries that the addition of 200,000 people to Medicaid rolls in 2014, which could have happened if Gov. Fallin hadn’t resisted the Medicaid expansion, would crater any ability to care for patients, poor or otherwise, in a sustainable way.

Louisiana and Florida have begun to implement a mix of reforms sometimes dubbed the Florida model. Louisiana’s reforms have taken effect statewide, and expansion beyond a regional pilot is beginning in Florida.

The Florida/Louisiana approach allows consumer choice and program accountability, and greater access to specialists for participant who need that. The two states’ managed care programs for eligible populations are the basis for House Bill 1552 in the Oklahoma Legislature. Insurance programs within the system would include long-term care, allowing some distinctions between urban and rural care systems. 

The Louisiana/Florida reforms include a core focus on better coordinating the healthcare of those utilizing Medicaid assistance, through contracting with for-profit and non-profit plans.

The approach allows administrators “to better predict costs and reward patient and provider usage that results in better health. This is a paradigm shift from the traditional fee for service model of Medicaid, where the primary focus is predominantly quick payment for providers, arbitrary pilot programs that are not tied to incentivizing better behavior and expanding Medicaid.”

Notably, this approach has been embraced by both the Obama administration, and its predecessor. Small contends, “Louisiana will see savings exceeding $135 million in its first year alone.”

The pro-active reform, House Bill 1552, has been pressed by state Rep. Mark McCullough, R-Broken Arrow, and state Sen. AJ Griffin, R-Guthrie.

On the House side, the measure secured 64-21 approval on March 12. However, it may not be heard by the state Senate Health and Human Services Committee before the April 4 deadline for each chamber to act upon the other’s first-round of proposed laws. 

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.