Many Sizes Fit All: Feds show flexibility in extending coverage

green lightA key component of the Affordable Care Act’s efforts to expand access to health insurance is providing federal funds to extend Medicaid to all adults making less than 138 percent of the federal poverty limit. With the Supreme Court’s ruling last June, the decision of whether to extend Medicaid was left in the hands of each state. The ACA gives states a huge financial incentive to extend Medicaid by committing the federal government to paying 100 percent of the cost of newly-insured individuals for three years and 90 percent from 2020 onwards.

If states do not extend coverage, the result could be a large ‘coverage crater’, where the poorest adults are left uninsured. Failing to extend Medicaid also leaves health care providers on the hook for large amounts of uncompensated care, and adds costly new obligations to employers. Still, the Governors of many states, including Oklahoma, have come out against accepting federal funds to extend Medicaid or have expressed strong concerns.

Now the federal administration is making clear that it is willing to show tremendous flexibility in working with states to find  ways to extend health care coverage to low-income adults. Most notably, the Obama administration has given Arkansas Governor Mike Beebe support in principle for a proposal to use Medicaid dollars to purchase private health insurance.

Under the Arkansas plan, which would take advantage of federal authority to grant what are known as Section 1905a premium assistance waivers, the Medicaid expansion population would enroll in qualified health plans on the new health insurance exchanges that will be operating in each state beginning in 2014.  Medicaid rules regarding cost-sharing and benefit packages would apply for individuals covered through private plans; however, the Administration had already signaled, that “states have considerably flexibility under the law to design benefits for the new adult group and to impose cost-sharing for those individuals above 100 percent of the federal poverty level…” Although many important questions regarding the Arkansas plan remain to be decided, elected officials in several other states, including Ohio, Louisiana, Florida, Texas, and Tennessee have expressed interest in the Arkansas approach. In late March, the federal government issued a series of questions and answers that confirmed its willingness to approve a “limited number of premium assistance demonstrations.”

In many respects, Oklahoma is especially well-situated to take advantage of federal flexibility to design a homegrown solution that meets our needs. Since 2006, we have operated Insure Oklahoma, a successful and popular premium subsidy program that uses state and federal Medicaid dollars to allow low-income workers to buy into their employer’s private coverage.  The program also has an Individual Plan component that offers a modified version of Medicaid to cover workers without access to employer coverage.  Both components of Insure Oklahoma require individuals to cover a portion of the costs of care. 

In explaining her decision not to extend Medicaid last fall, Governor Fallin touted Insure Oklahoma:

Oklahoma has a history of creating innovative solutions to reducing the number of uninsured, for example the Insure Oklahoma program (created in 2006) offers premium assistance to small businesses to support the purchase of private insurance for their employees. Under PPACA the Insure Oklahoma program would be discontinued and qualifying workers (those under 138%) would be required to enroll in traditional Medicaid. Oklahoma small businesses and their employees should have the same option to purchase private insurance coverage as other large employers and their employees.

The Arkansas Plan announcement clearly suggests that the Governor’s assumption that “under PPACA, the Insure Oklahoma would be discontinued and qualifying workers (those under 138%) would be required to enroll in traditional Medicaid” was premature. Indeed, we may be able to use the federal Medicaid dollars to pump new life into this Oklahoma model.

Oklahoma’s circumstances are not identical to Arkansas’, and what would emerge out of consultation with Oklahoma stakeholders and negotiations between Oklahoma and federal officials may not precisely match either the current Insure Oklahoma program or what eventually gets implemented in Arkansas. But it is now increasingly clear that federal officials are willing to be flexible. Will Oklahoma do the same?

Note: This is an expanded and updated version of a column that appeared that in the Journal Record.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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