A budget committee hearing last week laid out in stark terms what’s at stake in the coming legislative session and made clear that in preparing next year’s budget, bold measures will be needed to avoid potentially devastating cuts.
On the same day news broke that Governor Mary Fallin would propose another cut to the state income tax, a joint appropriations Subcommittee on Health and Human Services invited agency directors in for budget and performance hearings. Over the course of the afternoon, Nico Gomez, CEO of the Oklahoma Health Care Authority (OHCA), which oversees Medicaid, and Terri White, Commissioner of the Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) provided grim assessments of the budget challenges facing their agencies. Due to increasing caseloads, rising health care costs, declining federal support, and other factors, both agencies require significant new funding just to continue existing programs. OHCA needs an additional $144.5 million for FY 2015, while ODMHAS needs $20.9 million.
If these added funds are not appropriated, the agencies face no good options. Over one million Oklahomans were enrolled in Medicaid at some point last year, most of them low-income children, seniors, pregnant women, and individuals with disabilities. State Medicaid programs must adhere to federal requirements regarding which populations they must serve and which benefits they must cover. As we noted the last time OHCA faced eliminating optional services to address budget shortfalls:
Eliminating such core medical benefits as prescription drugs, behavioral health services, diabetes supplies, and kidney dialysis treatment will severely impact the medical condition of tens of thousands of low-income adult Oklahomans without providing any real budgetary savings as more people turn to hospitals and nursing home for care.
The alternative to eliminating services is to cut provider rates for doctors, hospitals, and others who serve Medicaid patients. To address a $144 million shortfall, all providers would be looking at rate cuts well above 10 percent. Not only would this significantly harm the bottom line for many health care professionals, but it would likely drive many out of the Medicaid program, endangering access to necessary services.
ODMHSAS faces equally unenviable options. In recent years, the Governor and legislature have provided additional funds to address severe shortages in mental health treatment in Oklahoma. Money has gone to new crisis centers, the state’s nationally-recognized systems of care program, suicide prevention efforts, prescription drug initiatives, and alternatives to incarceration. Without the additional $20.9 million needed to maintain current programs, the Department could undo all these critical investments. Alternately, it could cut off some 7,000 Oklahomans in need of mental health services. As the Department wrote in a document distributed at the meeting, “the Oklahomans in danger of losing services are among our state’s most seriously ill. These thousands of people represent the headlines that all of us have worked so very hard to reduce and eradicate in our state.”
The need for additional health care funds comes as the legislature faces an especially grim budget outlook, with the possibility of up to $170 million less available for appropriation. Medicaid and Mental Health are far from the only agencies in desperate need of additional funds. The legislature must address the staffing and overcrowding crisis in our correctional system; low pay for state troopers, teachers, and other public employees; child welfare reform; education funding, and other urgent priorities. The state never fully recovered from the last downturn – adjusted for inflation, this year’s budget is $572 million less than in 2009. Slashing budgets even further would have serious and lasting effects on our families, businesses, and communities.
In this context, not only should tax cuts be be a non-starter, but we must be open to fresh approaches to help bridge the budget gap. Of particular importance to health care budgets is the opportunity to accept federal funds to expand health insurance coverage for working-age adults with incomes below the poverty level. The federal government would pick up 100 percent of the cost through 2016. ODMHSAS spends an estimated $34 million annually on this population, so shifting their cost to the federal government would both improve care for the indigent (who would gain comprehensive health coverage) and go much or all of the way towards addressing its budget hole. Overall, the Leavitt report projects that accepting federal funds to expand coverage would save Oklahoma close to $500 million over the next decade.
Thus far, the Governor and legislative leaders have shown little openness to expanding health insurance,but the grim scenarios facing the programs that serve our most vulnerable populations, and the absence of clear alternatives, should persuade them to reconsider.