A top official at the Oklahoma Health Care Authority says Gov. Kevin Stitt’s Medicaid-expansion plan will include substantial exemptions from the cost-sharing and work-requirement provisions that have been touted as the plan’s major selling point.
Traylor Rains, deputy state Medicaid director at the Oklahoma Health Care Authority (OHCA), also made clear that Stitt’s plan involves traditional Medicaid expansion that imposes no work requirements or cost-sharing provisions for at least a year.
“We will have full expansion July of 2020, and then we will implement premiums and work requirements in 2021,” Rains said during a virtual public hearing on Stitt’s Medicaid-expansion plan.
The expansion will begin in July 2020, while work requirements could be imposed no sooner than July 2021. If federal waivers allowing work requirements are approved, beginning in 2021 able-bodied adults earning up to 46 percent of the federal poverty level (FPL) would pay no premiums, Rains said. Those earning between 46 percent and 100 percent of FPL would pay $5 per month per individual or $7.50 per family, while those earning 100 percent to 133 percent of FPL would pay $10 per month for an individual and $15 per family.
Rains noted that is substantially less than the premiums charged to individuals in the Insure Oklahoma plan, which uses Medicaid dollars to help subsidize private insurance for employees and some small businesses. That program involves a mix of employer payments, employee payments, and state and federal tax dollars. Rains said individuals receiving coverage through Insure Oklahoma pay $30 to $40 per month in premiums today.
“These are significantly below what we currently assess for individuals in the Insure Oklahoma individual plan as well as the employer-sponsored insurance benefit,” Rains said.
In contrast, other Oklahomans buying private insurance on the market can face monthly premiums of around $600 per month, according to healthmarkets.com.
Individuals added to Medicaid through expansion could also face copays of $4 per outpatient visit under Stitt’s plan, but Rains said providers will be required to treat individuals even if they do not pay the copay.
In addition, Stitt’s plan would exempt a significant number of adults from premium requirements, including groups who often generate the largest medical bills. Rains said the exemptions will include drug addicts, the mentally ill, and those with HIV/AIDS.
The proposal would require up to 80 hours per month in work activities starting in 2021, although that phrase is defined to include a wide range of activities, including volunteering.
Rains said the OHCA expects only 200,000 individuals to be eligible for Medicaid expansion and that just 160,000 will sign up in the first year.
Both figures are 20,000 fewer than what the Oklahoma Health Care Authority predicts online and dramatically less than the figures included in a previous report on Medicaid expansion commissioned by the OHCA. That report predicted up to 628,000 Oklahomans would become Medicaid-eligible under the program. Based on current Medicaid expenses, that translates into a state cost of $374 million annually. The Stitt administration has said its plan will cost state taxpayers $150 million per year.
Rains said officials expect to cover the state costs of expansion through the Supplemental Hospital Offset Payment Program (SHOPP), which is effectively a tax on hospital revenue, and cost-shifting. Currently, the state pays 100 percent of the cost for the treatment of some individuals in state prisons and some people served through the state’s mental health agency. Many of those individuals would be placed in Medicaid, where the state would cover just 10 percent of costs with the federal government now covering the remainder. That will generate savings on paper for state government even though the overall taxpayer cost would remain the same.
The SHOPP proposal has drawn opposition from hospitals and some lawmakers. Senate Minority Leader Kay Floyd, D-Oklahoma City, recently noted SHOPP is an indirect tax on Oklahomans with private insurance.
“Why would we put an increase in SHOPP on the hospitals, which is just going to be passed along to the patients, if they could even get it done in such a short period of time, when we’ve got money in savings?” Floyd said.
Rains said state savings could be tapped to cover Medicaid-expansion costs during times of economic challenge that reduce state tax collections, an event most budget experts believe is underway today.
“The governor has taken great strides to fill our Rainy Day Fund to the largest capacity that it’s had in, I believe, state history, so that we can be prepared for economic downturns and the costs associated with that,” Rains said.
Rains said state officials expect the Stitt plan to cost 5 percent less than traditional Medicaid expansion thanks to the imposition of cost-sharing provisions and the savings generated when individuals are temporarily kicked out of the program due to not meeting minor work requirements.
He predicted the Stitt plan would reduce costs within three years.
However, that would defy the experience of comparable Medicaid-expansion programs in other states. Stitt’s plan appears to be substantially modeled after Indiana’s Medicaid expansion, which included nominal cost-sharing and work requirements.
Indiana’s state actuaries projected the modified Medicaid expansion would cost taxpayers nearly $366 million more than traditional Medicaid expansion in the first year alone, and in 2019 subsequent surging Medicaid costs were projected to consume 66 percent of all new state revenue in 2020 and 30 percent in 2021, which was cited as one reason Indiana teacher pay raises did not advance in 2019.