Insure Oklahoma extended – but we could do so much more

A rare bright spot in health care-related news came early last week with the announcement that Insure Oklahoma, a public-private partnership providing health insurance for some 18,500 low-income Oklahomans and their families, has been given permission by the federal government to continue operating for another year. 

The program had been expected to be discontinued at the end of 2013, with the understanding that the state would accept federal funds to extend health insurance coverage to all eligible low-income Oklahomans, thus negating the need for Insure Oklahoma.  But Oklahoma refused to accept the funds, and for the past two years, the state has negotiated extensions with the federal government. While heartening for those who would lose their insurance were Insure Oklahoma to expire, the current system of negotiated extensions isn’t sustainable. Here’s what’s going on:

What’s Insure Oklahoma?

Insure Oklahoma is a health insurance program launched in 2005 to provide health care coverage for low-income, uninsured working adults who are otherwise ineligible for Medicaid. Insure Oklahoma has two main components:

• Employer-Sponsored Insurance (ESI) covers workers and their spouses at businesses with fewer than 100 employees. It’s available for workers at up to 200 percent of the federal poverty level (FPL; $39,580 for a family of three). Employers and employees pay a portion of the coverage, and Medicaid covers the rest. At present, 4,280 small businesses participate, with 13,610 members enrolled.
• The Individual Plan (IP) allows qualifying adults with incomes below 100 percent FPL ($19,790 for a family of three) and their dependents 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 adults with disabilities. Members pay up to 5 percent of their income towards the cost of coverage, and the remainder is paid by Medicaid. Currently, 4,922 individuals are enrolled on the Individual Plan.

Medicaid is funded by both the state and federal government, but primarily administered by the state. If a state wants to change up how it administers Medicaid, it has to apply for a waiver from the federal government. A number of Oklahoma Medicaid programs, including Insure Oklahoma, operate under such a waiver.

What’s the problem?

Under the Affordable Care Act (ACA), families making more than 100 percent of the federal poverty level can purchase health insurance on the online marketplace, with subsidies to make it affordable for low- and moderate-income families. For those making less, the ACA calls for states to expand Medicaid eligibility. The full cost of expansion is covered by the federal government through 2016, eventually scaling down to 90 percent after 2020. This should be particularly attractive to Oklahoma at the moment given this year’s state budget woes, especially where the health system is concerned.

However, Oklahoma and twenty-three other states have declined the federal funds, leaving millions of people nationwide (some 140,000 in Oklahoma) trapped in what we’ve termed the ‘coverage crater,’ too wealthy to qualify for traditional Medicaid and too poor to qualify for subsidies on the online health insurance marketplaces. If Insure Oklahoma goes away, the Oklahomans currently covered by it who make under 100 percent of the federal poverty level – over 7,000 people – will fall into the coverage crater, having lost access to affordable health care through no fault of their own.

Insure Oklahoma had previously covered people making up to 200 percent of the federal poverty level. However, because Oklahomans making between 100 and 200 percent of the poverty level can get subsidized insurance on the Affordable Care Act marketplace, the Governor’s office negotiated with the federal government to extend Insure Oklahoma’s Individual Plan just for those making below the poverty level. The employer-sponsored option remained unchanged.

While the federal government has allowed the state to continue Insure Oklahoma through 2015, it’s unlikely that the state will be able to continue negotiating extensions of the program indefinitely, unless it expands to cover all low-income Oklahomans.

Would the federal government allow an Insure Oklahoma expansion instead of Medicaid?

The experience in other states suggests that they would. Arkansas has already successfully implemented a similar plan to extend coverage using a private option, insuring nearly 100,000 people in the first year. Last week, Indiana Governor Mike Pence asked the federal government if his state could use the Healthy Indiana Plan, his state’s version of Insure Oklahoma, as a mechanism to extend coverage to all low-income Indianans.

Is the state likely to accept the funds?

No. (Or at least not any time soon.)

Why not?

That’s a good question. Governor Fallin has said that to accept the funds and extend coverage is a “fiscally unsound path.” Yet that contradicts the finding of numerous experts who say accepting the federal funds would come at a modest state cost, and may even save state money, because an infusion of federal funds would replace current programs funded with state only dollars, and the billions in new health care funds would significantly boost the economy. The Leavitt report commissioned by Governor Fallin to develop an “Oklahoma plan” for covering the uninsured said the state would receive a minimum $447 million surplus by 2023 if we expand Insure Oklahoma. That’s not even counting the benefits to human welfare of insuring approximately 140,000 Oklahomans who don’t presently have access to affordable health care – like this man.

Secondly, “fiscally unsound path” in fact perfectly describes the current situation of Oklahoma’s health care safety net. Furthermore, the state government has shown a willingness to take (or demand) federal money for other health care, roads, education, public safety, environmental protection, and other core services – basically, anything that’s not health coverage expansion. This makes it hard to see the policy logic behind her decision.

The bottom line

Insure Oklahoma is a strong program that has proven its worth – but if the state doesn’t plan accordingly, it could disappear. The Governor has two options: to wait for 7,000 Oklahomans to lose access to affordable health care under her watch, or to accept the federal funds, expanding health care access at a substantial net savings to the state. This should not be a hard choice to make.