OK Policy has argued repeatedly  that next year’s budget outlook, with shortfalls equal to cuts of 12 percent across all agencies of state government above those already enacted this year, threatens to have catastrophic consequences for the state’s economy, businesses, and families (see our budget page for an op-ed, issue brief and fact sheet, or this blog post). Here we examine the especially grim options for dealing with budget shortfalls faced by the Oklahoma Health Care Authority (OHCA), the state agency responsible for administering the state Medicaid program that serves nearly 700,000 low-income Oklahomans, primarily low-income children, seniors, pregnant women, and persons with disabilities.

At recent legislative hearings, the agency outlined next year’s budget situation. This year, the agency’s state funding – after budget cuts and including $33 million in additional funds that were authorized as part of the mid-year “supplemental” approved by the Legislature – is $980 million. As a result of increased enrollment and utilization, OHCA estimates that it will need $1.098 billion in state appropriations to maintain the Medicaid program in FY ’11 at its current levels. If, as is possible, the Legislature were to remove the supplemental from OHCA’s base and cut funding by an additional 10 percent, its appropriation for FY ’11 would be some $850 million. Thus, OHCA anticipates that it could be facing a shortfall for the coming year of some $250 million in state funds. With the corresponding loss of federal matching funds, the program would face the challenge of enacting total cuts of at least $1 billion. Read the rest of this entry »