| November 14, 2013
Obamacare Medicaid Expansion Wrong for Oklahoma
Across the country, state policymakers are debating whether or not to implement the Medicaid expansion featured in the Affordable Care Act (Obamacare). So far, Oklahoma’s leaders have declined to expand Medicaid—a reasoned decision that we applaud.
However, proponents of Medicaid expansion in our state, such as hospitals and some businesses, argue the law includes “money on the table” for states, since under Obamacare the federal government says it would pay for 90 percent of the expansion population in perpetuity.
But a future Congress is not bound by current law; they can simply rewrite it. Congress has a history of overpromising funding for states, so it would be folly for states to build their budgets around a promise Congress is unlikely to keep.
Consider a policy analogy from education. In 1975, when Congress passed the Individuals with Disabilities Education Act, Uncle Sam promised to pay 40 percent of each state’s costs. However, over the last two decades the federal government has paid less than half of what it originally promised. For the past decade, the shortfall has cost states nearly $175 billion.
In Washington, it’s an “open secret” that Congress has to reduce Medicaid outlays. That’s why virtually every major bipartisan plan includes recommendations to reduce the federal dollars given to states for Medicaid.
It’s not like the federal government is exactly flush with cash. According to the Government Accountability Office, total governmental unfunded liabilities tally more than $88 trillion. Even scarier, under generally accepted accounting principles, that number is closer to $124 trillion. In this environment, a clear-eyed view of the future suggests Congress will seek ways to curb Medicaid spending.
In addition to Congress writing a check that will bounce, the federal government’s promise to pay 90 cents of every dollar for a Medicaid expansion obscures real costs to states. This is like Uncle Sam fleecing the states by offering to give them a new product they realistically cannot afford, by offering the first few months for free.
The fact is Oklahomans already struggle to pay for the current Medicaid program in our state. According to data from the Oklahoma Health Care Authority, roughly one in four Oklahomans were enrolled in the program last year. When one out of four people are enrolled in Medicaid, state taxes have to be increased on the three remaining individuals outside the program, just to pay for it.
Medicaid already pays for two-thirds of births in our state, as well as two-thirds of the occupied beds in long-term care facilities (when measured by length of stay). The program’s budget is already bigger than state spending on all schools and universities combined. The program costs and number of enrollees in Medicaid have grown each year since 1995, and the speed of the program’s growth has exceeded the growth in our state’s population, even through periods of economic growth.
Based on last year’s enrollment data, expanding the program could result in nearly one in three Oklahomans on Medicaid. Jagadeesh Gokhale, a member of the Social Security Advisory Board, estimates that could cost Oklahoma taxpayers $1.6 billion the first 10 years. By 2023, he projects Oklahoma’s bill for Medicaid would come in at $6.5 billion annually—a sum equal to the entire state appropriated budget in fiscal year 2012!
One important reason not to expand Medicaid in our state is that doing so could threaten access to health care for the people who depend on the program. While SoonerCare has above-average access to providers for patients on the program, nationally, about 40 percent of primary care physicians and about 65 percent of specialists do not even accept Medicaid patients. What good is it to offer Oklahomans health coverage if, in reality, they cannot access care in a timely manner? For too many Medicaid patients in other states, their care is routinely delayed and denied.
Before Obamacare, some states already tried expanding Medicaid and nearly bankrupted themselves in the process. The State of Tennessee had an epically painful experience with its state Medicaid program, TennCare. The program nearly bankrupted the state and thousands of individuals were eventually cut from the rolls. States like Maine and Arizona experienced cost overruns more than double their estimates, resulting in arbitrary program caps that displaced needy patients. Meanwhile, states like California and Illinois had to implement huge tax increases and slash provider reimbursements, leaving their states far less competitive and many patients struggling to see a doctor.
The lessons of history and the hard numbers are clear: It is not fiscally responsible or wise to expand a strained entitlement program and rely on federal funding that is unlikely. While it has been tempting for some consultants and lawmakers to try to dress up Medicaid expansion as “program redesign,” it is simply not in our state’s long-term interest to expand Medicaid, whether that’s under the guise of additional federal funding or creative program designs. Given the economic facts, any expansion of Medicaid under the Affordable Care Act would be a step in the wrong direction.
Rather than expand Medicaid, policymakers should work to mend Medicaid by pursuing reforms to better manage and coordinate care and promote medical price transparency. This can help create an environment in which the number of our fellow Oklahomans enrolled in Medicaid can be reduced, not increased.
Former OCPA trustee Tom Coburn is a U.S. Senator and a Muskogee physician who has cared for thousands of Medicaid patients. He specializes in family medicine, obstetrics, and the treatment of allergies. Dr. Coburn has personally delivered more than 4,000 babies.
Jonathan Small, C.P.A., is the vice president for policy at OCPA. He previously served as a budget analyst for the Oklahoma Office of State Finance, a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department.