Oklahoma’s Proposed Medicaid Cut Won’t Pass Federal Muster (Guest Post: Jesse Cross-Call)

Jesse Cross-Call is a Policy Analyst in the Health Policy division of the Center on Budget and Policy Priorities. This post previously appeared on the Center’s Off the Charts blog.

Oklahoma’s Senate is considering legislation, which its House passed last week, to end Medicaid coverage for 110,000 very low-income parents.  But even if Oklahoma enacts the legislation, federal officials almost certainly won’t grant the needed federal approval to move forward.

By federal law, states must provide Medicaid coverage to parents who would have been eligible for cash assistance in 1996 under the old Aid to Families with Dependent Children program, which the welfare law of that year replaced with Temporary Assistance for Needy Families.  Accordingly, Oklahoma limits Medicaid coverage to parents with incomes below about 41 percent of the poverty line, or about $8,270 a year for a family of three.  Under the proposal that Oklahoma is considering, they’d all lose Medicaid coverage.  (Non-elderly childless adults who aren’t disabled are already ineligible for Medicaid in Oklahoma, regardless of income.)

Oklahoma lawmakers say they want to cut parents’ coverage in order to fill a budget hole, and they will request a federal waiver to allow them to make the change.  The Department of Health and Human Services, however, allows waivers for demonstration projects that promote Medicaid’s overall objective — namely, to provide health coverage to vulnerable populations that can’t afford health care.  Saving money isn’t a proper purpose for a demonstration project, and eliminating coverage for poor parents doesn’t further the objective of Medicaid.

Medicaid plays a critical role in providing health coverage to people in poverty because employer coverage generally isn’t available to low-income workers.  In Oklahoma, only 30 percent of poor, non-elderly adults have private coverage.  Simply put, if Oklahoma makes the proposed cuts, the parents who’d lose Medicaid would likely remain uninsured.

Rather than eliminating coverage for poor parents, Oklahoma should pursue an option that has led to dramatic gains in health coverage and net budget savings in many states: adopting health reform’s Medicaid expansion.  In fact, in 2013 a state-hired consultant projected that expansion would save Oklahoma money over the next ten years.  To close its current budget hole, Oklahoma should consider reversing some of its recent tax cuts.

Some 91,000 uninsured Oklahomans are in a coverage gap, with incomes too high for Medicaid but too low to qualify for federal subsidies for marketplace coverage.  Oklahoma lawmakers should focus on helping them, rather than jeopardizing the livelihood of poor parents who have coverage.