THE ISSUE
- Health-Care Reform
THE PRINCIPLES
- State government should not
further disincentivize work and
create a new dependency class
by expanding medical welfare
entitlements.
Over and over, Oklahoma has wisely rejected Obamacare’s Medicaid expansion. But like a recurring nightmare, proposals just keep turning up.
Expansion states have added millions of able-bodied, working-age adults to welfare—more than double the number predicted, generating massive cost overruns. This has depleted resources for traditional Medicaid beneficiaries— low-income pregnant women, children, the aged, blind, and disabled—and strained funding for other core services, like education and public safety.
Louisiana’s cost overruns were $1.3 billion in the first year. Arizona’s expansion cost $698 million more than predicted within the first two and a half years. Ohio expanded Medicaid in 2014, and the latest figures available show the cost has exceeded projections by an astounding $7.1 billion so far.
The latest state data show that the Obamacare Medicaid expansion has signed up more than double the number of people predicted—110 percent more. These people were not all uninsured; many canceled private insurance to move on to the welfare program. The total cost overrun in expansion states is 157 percent more than what was initially promised.
A 2013 report commissioned by the Oklahoma Health Care Authority showed that 628,000 Oklahomans would be eligible for expanded Medicaid. Given the average cost overruns from previous expansion states and total possible enrollment, Oklahoma taxpayers could be on the hook for as much as $321 million annually. And every additional dollar means spending less on education or another program, or paying more in taxes.
Even without the Obamacare expansion, Oklahoma’s Medicaid population has grown 132 percent since 1997. Our state’s population grew just 17 percent during that time. As the number of people on medical welfare grew, the federal government’s reimbursement rate dropped from 71 to 59 percent. Oklahoma’s massive growth in enrollment, coupled with lower federal reimbursement rates, has increased our share of Medicaid costs from $536 million in 1997 to $2.3 billion in 2017 (adjusted for inflation).
Obamacare proponents have tried to lure Oklahoma into expanding Medicaid with a federal waiver, claiming they can craft a “conservative” option. But other state experiments relying on temporary federal waivers and blending private insurance and government subsidies have been failures.
Arkansas’ “Insure Oklahoma”-style expansion plan cost taxpayers $778 million more (from 2014 to 2017) than if the state had opted for the traditional Obamacare Medicaid expansion. Indiana’s “Insure Oklahoma”-style expansion plan cost taxpayers an additional $365 million in the first year. And any unique benefits of these states’ plans can be eliminated with the stroke of a pen by the next liberal president. In fact, the Obama Administration did just that to the Insure Oklahoma plan when it forced changes on the state that dumped thousands of people out of that successful program and into the failed Obamacare health insurance exchange. This is what it means to rely on a federal waiver.
Sadly, Obamacare’s Medicaid expansion and other Obamacare provisions have served to provide big urban hospitals more cause to buy rural hospitals. Instead of begging for more federal funds—which simply adds to the national debt—Oklahoma should reform health care. An easy reform would be to redirect future tobacco-settlement dollars to cover actual losses at rural hospitals and to incentivize doctors to serve rural communities. Another would be to set Medicaid payments to providers based on need, since providing care in smaller communities is often more expensive.
Oklahoma can improve health care, especially for our rural communities, without expanding an entitlement program to create more dependence on government. Let’s learn from other states’ mistakes—not join their failed experiment.
WHAT TO DO
- Avoid Obamacare’s Medicaid expansion, including via a federal waiver under the guise of an alternative, more “conservative” or “Oklahoma specific” plan.
- Dedicate all new tobacco settlement payments to improving Oklahoma’s rural health-care infrastructure.
Kaitlyn Finley and Curtis Shelton
are policy research fellows at OCPA.
