Last Friday, Oklahoma received formal word that the federal government has agreed to extend Insure Oklahoma, the state’s publicly-funded premium assistance health insurance program, until the end of 2014, subject to certain program changes. This one-year extension means that individuals and businesses that participate in the program will not face an imminent loss of coverage. However, the decision’s greater significance is that it reveals that a longer-term solution to provide health coverage for a greater number of people at less cost to the state may be readily available – if the state is willing to accept it.
Insure Oklahoma is a health insurance program created in 2005 to provide coverage for low-income working adults who were otherwise ineligible for Medicaid. The program, which operates under a federal Medicaid waiver, 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 in Insure Oklahoma. Employers and employees pay a portion of the cost of coverage, and Medicaid covers the rest. Currently, 4,600 small businesses participate and 16,000 members are enrolled;
- The Individual Plan (IP) 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. As of August, 13,300 members were enrolled in the Individual Plan.
The state contributes the traditional Medicaid match rate for Insure Oklahoma participants – about 36 percent of the cost. Because the state share of the program is funded with a dedicated revenue source – a portion of tobacco tax revenues approved by voters in 2004 – program enrollment has been capped at under 40,000 participants.
With full implementation of the Affordable Care Act in 2014, the future of programs like Insure Oklahoma became highly uncertain. The ACA aims to make affordable coverage available to everyone, and provides generous federal funding to do so. Beginning in January, individuals with incomes between 100 and 400 percent of the federal poverty level will be eligible for tax credits, paid for entirely with federal funds, to subsidize the purchase of commercial insurance on the new health insurance marketplaces known as exchanges. Adults with income below the poverty level were 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. Oklahoma, however, has refused to expand Medicaid, leaving the lowest-income adults at risk of falling into a “coverage crater” in 2014.
In May, Oklahoma received a letter from the federal government’s Centers for Medicare and Medicaid Services (CMS) stating that, “an extension of the Insure Oklahoma program without any changes is not possible.” This led to several months of negotiations between the state and federal officials to preserve the program, culminating an last week’s announcement of a one-year extension. The agreement preserves Insure Oklahoma’s Employer-Sponsored Insurance (ESI) in its current form. The Individual Plan (IP) will continue only for participants – currently some 5,300 – with incomes below the federal poverty level, but with reduced co-payments for doctors visits, outpatients services and prescription drugs. IP participants with income above the poverty level – currently some 8,000 individuals – will no longer be eligible for Insure Oklahoma but instead, like others at that income level, will qualify for tax credits to help purchase coverage on the exchange.
Although the extension of Insure Oklahoma is temporary, it contains the seeds for a long-term solution. In June, the state received a report developed at the request of Governor Fallin by a national consulting company headed by Michael Leavitt, the Secretary of Health and Human Services under President George W. Bush. The Leavitt report calls for using federal Medicaid funds under the Affordable Care Act to extend and expand Insure Oklahoma. Adapting the approach developed in Arkansas, most individuals would receive premium assistance to subsidize the purchase of private insurance either through their employers or on the new health insurance marketplaces.
Expanding Insure Oklahoma could extend coverage to some 200,000 – 250,000 low-income Oklahomans, according to the Leavitt group’s projections. These are mostly working Oklahomans who are not offered health insurance through their employers in sectors like food service, nursing home care, child care and retail. While the state would be required to put up a small state match after 2016, the report shows that “over a 10-year period, the overall net effect is positive due to program savings and increased tax revenues. Total economic impact is expected to range from $13.6 to $17 billion.”
By extending Oklahoma’s premium assistance program, the federal government continues to signal a strong willingness to work cooperatively with states to reach practical solutions that will ensure coverage for low-income individuals. Oklahoma state leaders should be applauded for their commitment to preserving health coverage for participants in Insure Oklahoma. They now need to show an equal commitment to the rest of the low-income adult population.