Archive for 2013

What’s unaffordable?

by | February 26th, 2013 | Posted in Blog, Education, Healthcare | Comments (2)

In her 2013 State of the State address, Governor Mary Fallin reiterated her opposition to accepting federal dollars to provide coverage to uninsured Oklahomans through Medicaid, as provided under the Affordable Care Act. In states that extend Medicaid, the federal government will pay 100 percent of the cost for the newly-eligible population for three years (2014-16) and 90 percent from 2020 onwards. Yet the Governor claims that extending Medicaid would impose large and unaffordable costs on the state:

According to a report from the Kaiser Commission on Medicaid and the Uninsured, the proposed expansion of Medicaid would result in a $689 million increase in state Medicaid costs between 2013 and 2022. Expanding Medicaid as proposed by the president would mean that a huge sum of money would be diverted from other priorities, like education and public safety, as well as existing health care programs.

The Governor’s assertion that extending Medicaid is unaffordable to Oklahoma is unconvincing in at least two respects. First, the study on which she bases her cost estimates makes clear that extending Medicaid would have a very modest fiscal cost to the state and would bring in over twelve new federal dollars for every additional dollar of state spending. Secondly, the state cost of extending Medicaid would be less than half the cost of the Governor’s proposed 0.25 percentage point cut to the top income tax rate over the same period.

In November, the Kaiser Commission on Medicaid and the Uninsured released the report which estimated that Oklahoma would spend $689 million more from 2013-2022 by extending Medicaid under the ACA (1). This estimate is significantly higher than the one developed by the Oklahoma Health Care Authority (OHCA), which had previously formed the basis of discussions of the cost of Medicaid expansion. In part, this is because the Kaiser Commission’s projections run through 2022, adding two years when the state share would be 10 percent. In addition, unlike OHCA, the Kaiser Commission assumes that extending Medicaid eligibility to 138 percent of the federal poverty level for working age adults will lead some people who  currently have employer-sponsored coverage or individual coverage to drop that coverage and enroll in Medicaid instead. The Kaiser Commission projects 204,000 more Oklahomans will enroll in Medicaid, of whom 126,000 are currently uninsured.

A careful look at the full Kaiser Commission report shows, however, that the actual cost to Oklahoma of extending Medicaid are modest and would yield tremendous benefits:

  • Kaiser_federal&stateFrom 2013-2022, the federal government would spend an additional $8.561 billion on the newly-eligible Medicaid population, or more than $12 for every dollar in state spending. The federal government would assume 92.5 percent of the total cost from 2013-2022.
  • The $689 million state cost of Medicaid expansion would be offset by $205 million in savings in reduced uncompensated care costs, reducing the net cost to $485 million (Table ES-4). This does not take into account savings from shifting services currently paid for with state-only dollars to Medicaid; Oklahoma currently spends an estimated $48 million annually on health services for low-income adults who could become Medicaid-eligible. Nor does it include revenue gains from the boost to state economic activity resulting from increased federal dollars.
  • The state costs would be especially modest in the early years. The state cost is projected to be just $11 million in 2016, which is less than the $23 million the state would save that year in uncompensated care costs (Table 15).
  • Extending Medicaid eligibility would increase state spending on Medicaid by just 2.7 percent from 2014 – 2022 (Table 6).
  • Medicaid payments to Oklahoma hospitals alone would increase by $3.6 billion from 2013-2022, an 18.5 percent increase  (Table 13).
  • Medicaid expansion would reduce the number of uninsured Oklahomans by 126,000 (Table 12). Currently nearly one in two working age Oklahomans with income below 133 percent of the federal poverty level are without insurance.

cost-tax-cut-MedicaidAccepting the Kaiser Commission’s cost estimates, Oklahoma can expect to spend an additional $485  million between now and 2022, net of reduced uncompensated care costs. The Governor contends that this spending would detract significantly from Oklahoma’s ability to make necessary investments in education, public safety, and other health care programs. Yet the Governor proposes cutting Oklahoma’s top income tax rate from 5.25 to 5.0 percent. This tax cut would cost about $125 million in 2014 and $1.48 billion from 2013-2022 (see Table), which is double or triple the state cost of extending Medicaid over the same period. More than two in five Oklahoma households would get no benefit at all from the tax cut, and the median benefit would be just $39 per household in 2014, as we discussed in this blog post. By contrast, extending Medicaid would provide health coverage for 125,000 uninsured Oklahomans. The economic benefits of an infusion of $8.56 billion in federal funds for health care over nine years would dwarf those of a $1.48 billion tax cut.

If we want to make the best decision for our state’s health and prosperity, turning down federal dollars to extend Medicaid to low-income Oklahomans is the truly unaffordable choice.

For a fact sheet version of this blog post, click here. For more analysis and information on expanding Medicaid, click here

(1) This number does not include  the “woodwork” population of those currently eligible but not enrolled in Medicaid. This population is expected to enroll in Medicaid whether or note the state extends Medicaid eligibility.

Wither Insure Oklahoma?

by | January 16th, 2013 | Posted in Blog, Healthcare | Comments (6)

Insure Oklahoma2In announcing that Oklahoma would not take advantage of the opportunities provided by the Affordable Care Act (ACA) to expand Medicaid to cover low-income adults, Governor Mary Fallin stated she was committed to developing an “Oklahoma Plan to reduce the number of uninsured and the costs of healthcare”. According to several news reports, the options under consideration include expansion of Insure Oklahoma.

Insure Oklahoma involves a mix of public and private funding, and includes a modified benefit package compared to traditional Medicaid, along with greater cost-sharing responsibilities for participants. These features of the program have made Insure Oklahoma popular with some elected officials who are typically less than fully supportive of traditional Medicaid, and have led some to hold out Insure Oklahoma as an alternative to expanding Medicaid under the ACA.

However, with the full implementation of the Affordable Care Act in 2014, the future of programs like Insure Oklahoma becomes highly uncertain. The federal government is unlikely to extend Insure Oklahoma in its present form and may not extend it at all. Even if the program could be continued in some form, its financial terms are far less favorable to the state than the Medicaid expansion proposed by the Affordable Care Act. Rather than trying to preserve Insure Oklahoma, the state would be much better off by expanding Medicaid in a way that takes advantage of federal willingness to provide flexibility regarding benefit packages and cost-sharing for the newly-eligible Medicaid population, and by pursuing premium assistance options within the Medicaid program.

Insure Oklahoma is a 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 that generates over $40 million annually for the program. There are two components of Insure Oklahoma:

  • 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 in Insure Oklahoma. 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 30,693 members, of whom 54 percent (16,620) are insured through Employer-Sponsored Insurance and 46 percent (14,073) through the Individual Plan. Currently, 96 percent of IO members are adults, with the remainder being dependent children and students.

The Affordable Care Act has, in some ways, made a program like Insure Oklahoma redundant. 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 8,600 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. With Governor Fallin’s rejection of Medicaid expansion, IO members with incomes below the poverty level are likely to join the ranks of the roughly 130,000 uninsured working-age Oklahomans who will be stuck in a coverage crater, earning too little to qualify for tax credits.

What will happen to Insure Oklahoma beyond 2013? The Tulsa World reported in December that federal officials informed the Oklahoma Health Care Authority they are not interested in continuing partnerships like the Insure Oklahoma program once the ACA’s new coverage options kick in. More recently, sources have indicated that states have been told they can request extensions of premium assistance waiver programs, although waivers are unlikely to be approved in their present forms. Yet even if Oklahoma were to gain approval for an extension of Insure Oklahoma, it would be fiscally irresponsible to follow that route since the state would be required to pay the traditional Medicaid state match of roughly 35 percent, rather than having the federal government foot 90 to 100 percent of the bill.

At the same time, the federal government is signaling a clear willingness to allow states that expand Medicaid increased flexibility in shaping coverage for those newly eligible for Medicaid.  In a recent set of Questions and Answers to Governors, Health and Human Services Kathleen Sebelius wrote:

For the newly eligible adults, states will have flexibility under the statute to provide benefits benchmarked to commercial plans and they can design different benefit packages for different populations. We also intend to propose further changes related to cost sharing.

In addition, Oklahoma could retain a premium assistance component as part of its Medicaid expansion through what are known as  Section 1906 premium assistance programs, which many other states already do as part of their regular Medicaid program.

The Governor has said publicly that she plans to reduce the number of uninsured and the costs of healthcare.  Yet by rejecting Medicaid expansion, Oklahoma gives up the chance to have federal funds cover the lion’s share of the costs of insuring a large share of the state’s uninsured population, while leaving itself in a worse position to continue the Insure Oklahoma model in some future form. That sounds like no plan at all.


Guest Blog (Dr. John Schumann): 'Help Wanted' for Medicaid expansion

by | July 30th, 2012 | Posted in Blog, Healthcare | Comments (3)

John Henning Schumann is a writer and doctor in Tulsa. He runs the Internal Medicine residency at the University of Oklahoma School of Community Medicine. He created the blog and is on Twitter @GlassHospital.

Despite its complexities and its politics, I support the Affordable Care Act (aka “Obamacare”).  As I’ve written elsewhere, I think it would be both morally and economically wrong for Governor Fallin and the Oklahoma legislature to opt out of the ACA’s vast Medicaid expansion – a position shared by Oklahoma Policy Institute.  So if Oklahoma does the right thing and opts to expand Medicaid for adults with incomes at or below 133 percent of the federal poverty level, what will happen?

Oklahoma faces a serious shortage of primary care access. The Oklahoma Health Care Authority, the agency in charge of administering Medicaid, recently compiled county-by-county maps, color-coded to classify areas of severe physician shortage based on presumptive levels of Medicaid expansion.  At a glance, these maps reveal something we already know: rural areas are hurting for physicians and populous counties seem to have more capacity.  In my opinion, however, the maps don’t paint a full picture of the eventual shortfall.

continue reading Guest Blog (Dr. John Schumann): 'Help Wanted' for Medicaid expansion

Medicaid 101: The SoonerCare Safety Net

by | January 17th, 2012 | Posted in Blog, Healthcare | Comments (2)

Our health care system is experiencing an unprecedented period of upheaval. Decades of rising costs, an ever-increasing share of citizens without insurance, and an aging baby boom generation are putting immense pressure on payers, providers, and patients alike.  A new policy brief from Oklahoma Policy Institute underscores the importance of SoonerCare/Medicaid as the primary safety net health care program for low-income Oklahomans who would otherwise go uninsured, primarily children, the elderly, and persons with disabilities.  The five-page brief, Medicaid 101: The SoonerCare Safety Net, outlines the program and its eligibility requirements, breaks down its funding sources, and debunks common Medicaid myths.

One popular myth is that Medicaid costs are rising exponentially and the program is riddled with waste.  In fact, scholarly research has demonstrated that Medicaid costs about 20 percent less on average per person than private insurance, so the program is quite lean.  While it is true that health care costs are rising, it’s important to remember that they are rising across the board, not just for the Medicaid program.  The state can also take advantage of a favorable federal matching rate to leverage their health care investment.  For every $1.00 the state government invests in SoonerCare in FY 2012, the federal government will contribute $1.77.

continue reading Medicaid 101: The SoonerCare Safety Net

State cost of health care reform likely to be modest and could yield net savings

by | October 26th, 2011 | Posted in Blog, Healthcare | Comments (2)

Under the new national health care law, the Patient Protection and Affordable Care Act (ACA), one major strategy for providing health insurance coverage to the 50 million Americans who are currently uninsured is an expansion of eligibility in the Medicaid program. Even though the federal government will assume the lion’s share of the costs of insurance for those who gain Medicaid coverage, this expansion has created concern and uncertainty about the impact the law will have on state budgets.

We do not yet have a comprehensive study of the projected costs and savings of the Affordable Care Act for Oklahoma’s state budget. However, as a new OK Policy issue brief shows, most studies of the impact of the Affordable Care Act have concluded that increases to state Medicaid budgets will be modest. National studies from the Urban Institute and projections developed by the Oklahoma Health Care Authority have estimated that state spending on Medicaid may grow by $200 to $800 million between 2014 and 2019 or 2020, depending on various assumptions, while increasing state Medicaid spending by under 10 percent.  The federal government will assume over 90 percent of total costs of expanded Medicaid coverage. To cite the conclusion of the study by John Holahan and Irene Headen, the Urban Institute’s experienced and widely-respected health policy analysts:

continue reading State cost of health care reform likely to be modest and could yield net savings

Making more bricks with less straw: Agency heads share thoughts on operating in hard times

by | October 18th, 2011 | Posted in Blog, Children and Families | Comments (5)

At last week’s Fall Legislative Forum organized by the Oklahoma Institute for Child Advocacy, a panel of state agency directors discussed some of the accomplishments and continuing challenges facing Oklahoma government. Taking part in the panel were leaders from the Department of Mental Health and Substance Abuse Services, Department of Human Services, the Office of Juvenile Affairs, the Health Department, and the Health Care Authority. The panelists discussed several ways we have made progress in Oklahoma despite tough budget times.

Commissioner Terri White, Department of Mental Health and Substance Abuse Services

White said that preventing addiction is the biggest public health problem facing Oklahoma. She expressed concern that the current discussion on allowing sale of strong beer and wine in grocery stores has concentrated on economic development issues without taking into account increased risk of underage access to alcohol.

“The younger someone uses alcohol, the more likely it is they’ll use as adults,” White said.

Over the course of the budget crisis, she said $30 million had been cut from the mental health budget, 90 percent of which goes directly to care providers. On the positive side, she praised new investments of $3 million for a Smart on Crime initiative and $2 milion to Systems of Care, which coordinates services between agencies for children with the highest needs.

“If we don’t make sure the brain health of our children is our highest priority, we’re going to be paying for those problems over and over with more tax dollars than we can afford to come up with,” White said.

continue reading Making more bricks with less straw: Agency heads share thoughts on operating in hard times

Short-changed on a health exchange

by | May 4th, 2011 | Posted in Blog, Healthcare | Comments (9)

In the new national health care law (the Affordable Care Act, or ACA), exchanges are state-level competitive marketplaces for individuals and small businesses to purchase insurance. After winning a $54 million Early Innovator grant earlier this year, Oklahoma was poised to become a national leader with a high-quality, consumer-oriented health insurance exchange. In a state that ranks 46th in overall citizen health and where almost one in  six residents are without health insurance, the decisions our leaders make regarding the exchange are critical to our efforts to expand coverage and improve our state’s health care infrastructure.

Governor Mary Fallin and legislative leaders’ recent decision to reverse course by rejecting the federal grant and relying instead on state and private money to build an “Oklahoma Health Insurance Private Enterprise Network” is a symbolic victory for the most vocal opponents of  health reform.  Unfortunately, this puts unnecessary strains on the state budget and sends Oklahoma on a collision course with federal law. More importantly, it is likely to deprive Oklahomans of access to a strong, well-regulated, consumer-friendly marketplace to purchase private insurance coverage and will do nothing to actually make health insurance more affordable for Oklahomans.

continue reading Short-changed on a health exchange

Gov. Fallin to Insurance Underwriters: Like it or not, health reform is the law of the land

by | March 25th, 2011 | Posted in Blog, Healthcare | Comments (5)

The Tulsa Association of Health Underwriters hosted Governor Mary Fallin and Insurance Commissioner John Doak at a forum on how health care reform would affect the insurance industry.  Addressing a packed house at the Tulsa Country Club, Governor Fallin repeated her opposition to the law and support of Oklahoma’s pending legal action challenging the ‘individual mandate’.  She didn’t mince words about what that meant in the short term for implementation:

The fact of the matter is until a court, and the Supreme Court, rules on the health care bill itself, it’s still the law of the land, unfortunately.  I don’t like it, but it’s still the law of the land.

However, the biggest point of contention for this group didn’t seem to be the individual mandate.  Underwriters, agents, and brokers sell insurance, so if everyone is suddenly required to buy insurance, it stands to reason that they will benefit.  Luncheon attendees were instead most concerned about insurance exchanges.

continue reading Gov. Fallin to Insurance Underwriters: Like it or not, health reform is the law of the land

Health Care Reform (6): Implementing Insurance 'Exchanges'

by | February 10th, 2011 | Posted in Blog, Healthcare | Comments (14)

This is the sixth in an ongoing series of posts examining the Affordable Care Act, including previous posts on the Temporary High Risk Pool and tax credits for small businesses.  You can also visit the health care reform page on our website for more resources and information.  If you have thoughts on health care reform, we encourage you to comment below or contribute a guest blog.

One of the most important provisions of the federal health care reform law, officially known as the Affordable Care Act (ACA), is the requirement that states establish private insurance marketplaces, or ‘Exchanges’, to sell plans to individuals and small groups in their state.  Health insurance exchanges were written into the law to ensure that these particularly vulnerable segments of the market – individuals and small groups – could obtain affordable coverage.  What is unique about these segments?  Well, consider how insurance works for a large group employer:  every employee is covered regardless of medical history and all employees pay roughly the same premiums.  This is possible, and perhaps more importantly profitable, because the risk of covering the sicker/costlier employees is offset by the ease of covering healthier/cheaper employees.

continue reading Health Care Reform (6): Implementing Insurance 'Exchanges'

New Medicaid online enrollment puts Oklahoma out in front

by | December 13th, 2010 | Posted in Blog, Healthcare | Comments (3)

“Is there anyone here from Oklahoma?”

I was at a national conference of health care policy experts and advocates last month when the morning’s plenary speaker, Cindy Mann, Medicaid Director for the Centers for Medicare and Medicaid Services, posed that ominous question. “Uh-oh. What have we done this time?”, I wondered, as I tentatively lifted my hand.  But this time, Oklahoma was being singled out for major praise, not ridicule. What Oklahoma had done that had Mann and several others at the conference gushing was launch a new streamlined enrollment system for the Medicaid program that may be the most user-friendly in the nation – and that positions Oklahoma at the front of the pack as states face the challenges and opportunities of implementing health care reform in the coming years.

Until the launch of the new enrollment system, applicants for SoonerCare health insurance coverage, the state’s Medicaid program, submitted a paper application to the Oklahoma Department of Human Services (DHS) during regular office working hours. In most cases an eligibility determination would be made 20 to 30 days later after information was entered into the agency’s legacy mainframe computer and verified. Policies and procedures were handled at least slightly differently in each county office and by each caseworker, and the client numbering and tracking system was prone to errors.

continue reading New Medicaid online enrollment puts Oklahoma out in front

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