In 2012, Gov. Fallin announced that Oklahoma would reject a central feature of the Affordable Care Act, refusing to expand health insurance coverage for low-income adults the infusion of federal funds that would have accompanied expansion. Two years after the Governor’s announcement, the experience in the state shows it was the wrong decision.

Expanding the state’s Medicaid program would have extended insurance coverage to roughly 150,000 people – approximately 1 in 5 of the state’s uninsured. Now, those 150,000 Oklahomans are caught in the “coverage crater.” They earn too much for traditional Medicaid, but don’t qualify for subsidies to purchase health insurance on the online marketplace.

Comparing Oklahoma to similar states that did accept expansion clearly shows that the Governor made the wrong choice. Arkansas, Kentucky and New Jersey are just three of the 28 states that have expanded their Medicaid programs, and are using the accompanying funding to in innovative ways to improve not only their states’ health outcomes, but also their local economies and state budgets.

States that expanded Medicaid are lowering their uninsured rate and improving health outcomes.

chart 1When the Medicaid expansion and online health insurance marketplace provisions of the Affordable Care Act went into effect in 2014, expansion states reported a record drop in their uninsured rate: Arkansas and Kentucky saw their uninsured rates drop by 10.1 and 8.5 percentage points respectively, the largest decreases in the US. Meanwhile, Oklahoma’s uninsured rate dropped less than  4 percentage points over the same period.

Like Oklahoma, Kentucky boasts a high rate of life-threatening but preventable health problems – but with Medicaid expansion, Kentucky saw utilization of some basic preventive care services nearly double. In Oklahoma, however, continued widespread inability to access health care means that preventive care often falls by the wayside.

States that expanded Medicaid are boosting their economies.

The huge infusion of federal money that comes with Medicaid expansion grows local economies. A healthier workforce, increased consumer demand, and the infusion of federal funds together drive job creation and grow the whole economy.

An analysis by Families USA predicts that Medicaid expansion will create 14,500 jobs in New Jersey and 16,700 new jobs in Kentucky by 2016. Similarly, the Leavitt Report commissioned by Governor Fallin estimates that by 2023, Medicaid expansion would create between 12,000 and 15,000 jobs in Oklahoma, with a total economic impact of $14.2 and $17.9 billion.

In fact, accepting expansion funds is vastly more efficient than what Oklahoma already spends on economic development. In 2012 alone, the state paid $896 million in incentives to attract private businesses to the state – more than the total ten-year cost to the state of expanding Medicaid ($689 million).

Governor Fallin has said that “improving the health and wellness of Oklahoma’s workforce” is a priority of her administration. If she wants to turn that promise into something more than words, accepting federal funds to expand health coverage is the clear path forward.

Accepting Medicaid expansion funds is a net benefit for state budgets.

The experience in states that accepted Medicaid expansion funds show that it is a good deal for state budgets. In all states, uncompensated care costs will drop as more people gain health coverage, and new federal money going to private health care providers will also be subject to income tax. And some of the money that previously would have been spent on health care will be spent on consumer goods subject to sales taxes.

The Leavitt Report totals the savings created by expansion at between $446 and $485 million by 2023.”

Finally, some health care expenditures currently being paid for with state dollars would be completely covered by federal funds if the state expands Medicaid coverage. According to the Leavitt Report, expansion would result in significant cost savings to the state Department of Mental Health and Substance Abuse Services, the Department of Corrections, and the Department of Health. The Leavitt Report totals the savings created by expansion at between $446 and $485 million by 2023.

Meanwhile, Oklahoma’s is cutting funding to community health centers, slashing provider rates, raising copayments to the federal maximum, and seven thousand Oklahomans with disabilities wait years for assistance. Instead of the “state-based solution” Gov. Fallin promised, the current reality is no solution at all: the state is opening new holes in the health care safety net even as we turn down billions to fill its gaps.

The bottom line

Oklahoma is at a crossroads. Accepting federal funds to expand Medicaid in Oklahoma is the fiscally and morally responsible choice. It will release pressure on the state’s underfunded health budget, boost the state economy, and make health care more accessible and affordable for all. Other states have leveraged Medicaid expansion to constructive ends in their states. Oklahoma should do the same.

  • Click here to download the full issue brief as a PDF.
  • Click here for the two-page summary.
  • Click here for other resources and analysis on Medicaid and the Affordable Care Act.