With just one week left until the legislature’s scheduled adjournment, Governor Mary Fallin has called on legislators to approve last-minute changes to the Insure Oklahoma program. These questions and answers explain what is being proposed and the vital issues that are at stake:
Question #1: What is Governor Fallin’s proposal?
The Governor proposes to provide health insurance coverage to some 9,000 people with state-only dollars by redirecting close to $50 million that are currently being spent to match federal Medicaid dollars for the Insure Oklahoma program.
Question #2: What is Insure Oklahoma?
Insure Oklahoma is a public-private health insurance program created in 2005 under a Medicaid 1115 waiver to provide coverage for low-income adults. The state’s share of funding for Insure Oklahoma comes from a portion of the tobacco tax revenues approved by Oklahoma voters in 2004, and is matched with federal Medicaid funds. In FY 2011, the program received $46.0 million in state funds. Insure Oklahoma has two components:
- Employer-Sponsored Insurance (ESI) provides premium assistance to employees and their spouses with income up to 200 percent of the poverty level to purchase employer coverage. Businesses with fewer than 100 employees are eligible to participate. Employers and employees pay a portion of the cost of coverage, and Medicaid covers the rest;
- The Individual Plan (IO) allows qualified adults and their dependents with incomes below 200 percent of the poverty level to buy into Medicaid coverage. It is available to employees of small businesses with fewer than 100 employees who are not eligible for employer-based coverage, self-employed adults, the temporarily unemployed, and some adults with disabilities. Members pay up to 5 percent of their income towards the cost of coverage, with the remainder paid for by Medicaid.
Insure Oklahoma currently covers 29,984 members, of whom 56 percent (16,699) are insured through Employer-Sponsored Insurance and 44 percent (13,286) through the Individual Plan. Currently, 96 percent of IO members are adults, with the remainder being dependent children and students.
Question #3: Why is the future of Insure Oklahoma at risk?
Full implementation of the Affordable Care Act fundamentally alters the health care landscape. Beginning in January 2014, IO members with income above 100 percent of the federal poverty level – some 22,000 individuals – will qualify for tax credits, paid for entirely with federal funds, to purchase insurance on the new health insurance exchanges, which, in Oklahoma, will be operated by the federal government. IO members with incomes below the poverty level – some 8,400 current members – were expected to become eligible for Medicaid, with the federal government assuming 100 percent of the cost for the first three years (2014-16) and 90 percent from 2020 onwards. However, Governor Fallin’s rejection of Medicaid expansion has left Insure Oklahoma members with incomes below the poverty level at risk of losing coverage and being in the same situation as some 130,000 – 180,000 other low-income working-age adults who would be stuck in a “coverage crater.” Oklahoma’s current waiver for Insure Oklahoma is set to expire December 31, 2103.
Question #4: What is the federal government’s position on extending Insure Oklahoma?
In early May, the Centers on Medicare and Medicaid Services (CMS) sent Oklahoma a letter stating that implementation of the Affordable Care Act means that “an extension of the Insure Oklahoma program without any changes is not possible.” In particular, the federal government will no longer provide federal funding for programs with enrollment caps, as these contradict the Affordable Care Act’s efforts to make coverage available to all low-income adults.
CMS did, however, strongly emphasize its willingness to work with Oklahoma on options to ensure that those currently enrolled in the program would continue to have coverage. In particular, CMS indicated its openness to approaches, such as those being pursued in Arkansas, to use federal Medicaid dollars for premium assistance to subsidize the purchase of private insurance:
Should the state be interested in exploring the use of premium assistance for the new adults group under the Medicaid expansion, given Oklahoma’s history of using Medicaid premium assistance to provide coverage options to Oklahomans, we would welcome working with you on such a model, consistent with our guidance.
Question #5: Is there an alternative to the Governor’s plan that would keep existing Insure Oklahoma members from losing coverage?
Yes. In early May, Leavitt Partners, the national consulting firm the Governor tasked with developing an Oklahoma Plan, delivered a preliminary report to the Oklahoma Health Care Authority Board. It recommends using Insure Oklahoma “as the base for a premium support program for adults up to 138 percent of the federal poverty level.” It envisions maintaining both components of Insure Oklahoma: premium subsidies for commercial employer-sponsored coverage and a modified public Individual Plan. The preliminary report also sketches out a number of reforms to improve care delivery and reduce costs. The proposal is intended to allow Oklahoma to access federal funds to expand coverage.
The Leavitt Partners proposal recommends January 2015 as a realistic time frame for launching a new program. In the meantime, it suggests extending Insure Oklahoma past its current December 2013 expiration date. This would require negotiating changes to comply with new federal requirements, such as lifting the program’s existing enrollment cap, prior to the date (July 15th) when the state would have to submit a phase-out plan for Insure Oklahoma to CMS. The Oklahoma Health Care Authority believes it will be able to negotiate a program extension. Since the program would only be responsible for covering those with income below 100 percent of poverty who are ineligible for subsidized coverage on the exchange, current state funding should be adequate in the short-term, even if enrollment caps are lifted.
Question #6: What is the bottom line for Oklahoma taxpayers and citizens?
Governor Fallin is proposing to use close to $50 million in state-only dollars to cover fewer than 10,000 people when we have the opportunity to access federal funds to cover some 130,000 – 180,000 people at little or no state expense within the framework of the Insure Oklahoma program. This is not a responsible use of taxpayer dollars and it does not offer the best opportunity to improve the health and well-being of Oklahoma’s citizens or to boost to Oklahoma’s health care providers and businesses.