By Paul Shinn and MaryAnn Martin
Oklahomans will be voting on a known quantity on June 30th this year when considering State Question 802, a measure to expand Medicaid coverage to low-income Oklahoma adults between the ages of 19 and 64. Ten years ago, Congress passed the Affordable Care Act that broadly expanded Americans’ access to health insurance in large part due to Medicaid expansion. Since that time, researchers have generated a body of work from innumerable angles that examine the impact of the landmark legislation on Americans’ lives, their health, and the U.S. health care system. Additionally, substantial research demonstrates Medicaid expansion’s continuing financial benefits for states.
This research shows that Medicaid expansion provides significant benefits not only for low-income adults in the U.S., specifically in states that expanded Medicaid, but also across local and state economies. No state has rolled back their expanded coverage through Medicaid, which perhaps serves as the best validation of the program’s strength.
While the future of Gov. Stitt’s proposed Medicaid expansion alternative remains unclear, full expansion such as the type envisioned by SQ 802 would finally allow Oklahoma to see the benefits of Medicaid expansion to our people, our businesses, and our state budget.
This paper provides a summary of the salient research on the impact of Medicaid expansion in order to specifically address remaining concerns, outlining the projected benefits to both the adults in Oklahoma that will be newly eligible for coverage, as well as the positive impacts for local and state economies. Ultimately, as this paper shows, the research demonstrates that full Medicaid expansion will provide financial certainty and return on investment, both in health outcomes, health care access and stability, and economic impact.
Low-income adults living in states that have not expanded Medicaid face substantial barriers to good health and financial stability
The lack of insurance coverage presents a number of substantial barriers for low-income adults aged 19 to 64, hindering their access to personal financial and health security. In turn, this locks many into entrenched poverty. After the passage of the Patient Protection and Affordable Care Act of 2010 and the subsequent expansion of Medicaid to a new population of adults, residents in states that implemented Medicaid expansion realized a number of gains in health outcomes and financial stability.
With states accepting Medicaid expansion in a patchwork manner, an individual’s geography determines their ability to access care. Lack of access, particularly to primary care, undermines health outcomes. It also contributes to exorbitantly higher costs when individuals seek medical care in the emergency room instead of their primary care provider’s office. The out-of-pocket costs of a simple office visit discourage seeking care in a timely manner. Because of financial concerns, these individuals often delay seeking care until health conditions require emergency care. Delays in care lead to pent-up demand — demand alleviated by expansion to newly eligible adults who access primary care more and the emergency room less after gaining coverage through Medicaid expansion.
States that failed to expand Medicaid exacerbated racial disparities in access to care, particularly for Black Americans. Research shows deaths attributable to social determinants (economic stability, social and community context, neighborhood and environment, health care, and education) are at least as high as deaths from disease or injury. In other words, part of the collateral damage of living in poverty is poor health, shortened life spans, and greater likelihood of chronic, untreated health conditions. In turn, it warrants greater public health interventions — and greater costs — to mitigate these factors. Expanding Medicaid can help address racial disparities in health care as well social determinants of health that have harmful, if not fatal, impacts on low-income communities.
These challenges are often worsened for rural Americans, and rural Oklahomans are no different. Low-income adults in rural areas tend to have poorer health than those living in urban areas. In states that have yet to expand Medicaid, nearly 1 in 3 residents of small towns and rural communities are uninsured, more than twice the rate of rural residents in expansion states. Similarly, low-income adults in these areas are less likely to have private coverage and more likely to rely on Medicaid. Risk factors for poor health outcomes — such as smoking, obesity, and people reporting fair or poor health — are more concentrated in rural areas.
In summary, low-income adults in non-expansion states face trenchant challenges to their overall well-being that have been greatly lessened for people in states with Medicaid expansion. Failure to expand Medicaid maintains artificial barriers to upward mobility and well-being — barriers the state can remove. As the following sections of this paper will show, research overwhelmingly demonstrates the connection between Medicaid expansion in overcoming these financial and health barriers, foretelling the benefits Oklahoma can expect from Medicaid expansion .
Medicaid expansion is key to improving access to health care and improving health outcomes
Anyone who has ever lived without health insurance and who needed to see a doctor understands how unaffordable seeking care without health coverage can be. When individuals gain access to insurance through Medicaid expansion, however, they not only seek needed health care earlier and more easily, but also take control of their health and reduce the likelihood of more chronic — and more costly — conditions later in life.
Substantial research shows that Medicaid enrollment increases access to needed health care for newly-eligible populations     Despite myths otherwise, enrollees are able to easily access care and find the doctors they need, including specialists. Gaining Medicaid increases the likelihood of having a usual source of care, an annual checkup, and annual cholesterol and blood pressure checks — all important indicators of whether people are likely to get the health care they need when they need it. For people experiencing homelessness, early analysis of the impact of expansion shows patients are more easily able to access life-saving or life-changing surgeries or treatments. Likewise, people who gain coverage through expansion show reduced psychological stress, particularly for those experiencing homelessness, and increased overall personal health management.
Medicaid expansion is linked to increased tobacco cessation, self-reported access to care for diabetes management, and significant improvement in overall health status — all issues of particular concern to Oklahoma.
Finally, expansion leads to fewer emergency room visits and greater primary care utilization for enrollees. Between 2001 and 2015, community health centers, which specialize in cradle-to-grave preventive medicine and primary care for low-income communities, saw a nearly 12 percent decline in uninsured visits and a 13.15-percent increase in the patients with Medicaid as their insurance. This corresponded to improvements in a variety of health indicators, namely, asthma treatment, BMI screening, blood pressure control, and other types of key preventive medicine visits. Another study also noted increased access to primary and preventive care:
Expansion was associated with significantly increased access to primary care…, fewer skipped medications due to cost…, reduced out-of-pocket spending…, reduced likelihood of emergency department visits…, and increased outpatient visits …. Screening for diabetes…, glucose testing among patients with diabetes…, and regular care for chronic conditions… all increased significantly after expansion. Quality of care ratings improved significantly…, as did the share of adults reporting excellent health…
In other words, research found that individuals who were newly eligible for Medicaid managed their health better overall after coverage began. In addition to better management of their overall health, as the next section shows, Medicaid expansion also stabilized low-income adults’ finances, leading to better work force participation.
Medicaid expansion increases financial stability for low-income adults
The benefits of Medicaid expansion extend beyond health outcomes for the low-income working age-adults who become newly eligible for coverage. As this section will discuss, Medicaid expansion leads to greater financial stability for these individuals, as well as improved access for their families.
In expansion states, families saved on out-of-pocket medical costs. Researchers noted:
In [a] nationally representative survey…mean out-of-pocket spending decreased by 11 percent in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges.
Moreover, researchers found:
For [the expansion population], living in a Medicaid expansion state was associated with a 4.5-percentage-point reduction in the probability of being uninsured, a $344 decline in average total out-of-pocket spending, a 4.1-percentage-point decline in high out-of-pocket spending burden (that is, spending more than 10 percent of income) [on health care costs], and a 7.7-percentage-point decline in the probability of having any out-of-pocket spending relative to living in a non-expansion state.
The financial benefits for low-income adults, then, apply to out-of-pocket costs related to health care that usually cannot be planned for, alleviating great burdens on families living in financial uncertainty. In fact, the State of Colorado reported greater average household earnings due to Medicaid expansion, projecting an annual increase of $643 in the short term, and an annual increase of $1,033 by 2034-2035. This allows families and individuals to apply these savings to other areas of their lives that have been neglected due to medical costs.
Medicaid coverage constrains out-of-pocket spending on health care expenses, resulting in significant reductions in poverty and greater financial stability, with reductions in difficulty paying medical bills , reductions in unpaid medical debt, and increases in financial satisfaction:
Results demonstrate financial improvements in states that expanded their Medicaid programs as measured by improved credit scores, reduced balances past due as a percent of total debt, reduced probability of a medical collection balance of $1,000 or more, reduced probability of having one or more recent medical bills go to collections, reduction in the probability of experiencing a new derogatory balance of any type, reduced probability of incurring a new derogatory balance equal to $1,000 or more, and a reduction in the probability of a new bankruptcy filing.
Notably, Medicaid expansion led to drastic reductions in potential catastrophic health expenditures among Medicaid patients, particularly compared to those with private insurance. The risk of catastrophic health expenditures fell to less than 1 percent for expansion enrollees, compared to 25.9 percent for the privately insured after receiving treatment for trauma and/or acute illnesses.
Research also indicates expansion reduces the “socioeconomic gap in individuals reporting financial ability in accessing health care…” Further, “health-inclusive poverty” and deep poverty rates are 10 percent lower in expansion states, with poverty reductions for children, those 55 to 64 years-old, blacks, Hispanics, and those who have not completed high school.
In addition, the well-being of families and children improves in states that expanded Medicaid. Rates of “very low food security” improved after the passage of the ACA, suggesting spillover effects that reduce other dimensions of poverty, and uninsured rates for children decreased, suggesting a “welcome mat” effect as the parents of Medicaid-eligible but uninsured children gained coverage through Medicaid expansion. Researchers found that uninsurance rates for mothers fell 4 percent and 1.6 million mothers gained coverage between 2013 and 2014:
Around two in five uninsured mothers cited cost as a reason for not having coverage. Others mentioned disruptions in coverage following pregnancy, when Medicaid eligibility becomes significantly more restrictive, particularly in states that have not expanded Medicaid under the ACA. More than three in five uninsured mothers have incomes at or below 138 percent of Federal Poverty Level, suggesting that lack of eligibility for Medicaid, or lack of awareness among those who are eligible, is one of the primary barriers to connecting more mothers to coverage.
In addition, Medicaid expansion helps children keep their care. As child uninsured rates ticked up nationwide from 2016-2018 (the most recent two-year period for which data is available), the uninsured rate for young children in non-expansion states increased nearly three times as fast as their peers in expansion states. This decrease in the uninsurance rates for mothers and children reflects the overall decline in uninsurance rates after the passage of the ACA. Improving health care coverage rates provides greater economic stability and security for individuals who gained health insurance, and also strengthens the surrounding economic sectors that intersect with health care.
In other words, when low-income adults gain access to health insurance through Medicaid, their financial well-being blossoms, which encompasses their dependents and crosses racial lines. This is the definition of a rising tide lifting all boats. As the next section will show, expanding Medicaid also fortifies the labor force, countering the harmful myth of low-income adults as listless, careless, and unemployed.
Labor force participation rates were positively impacted by Medicaid expansion
Contrary to popular myths, most working-age adults covered by Medicaid are employed. Medicaid expansion further empowers and enables greater workforce participation.
Individuals with disabilities are able to work at greater rates because Medicaid expansion removes the need to maintain artificially low income levels to maintain eligibility and access to needed health care. Medicaid expansion also benefits individuals with behavioral health diagnoses, who were able to perform better at work or seek new employment due to new coverage.
In fact, substantial research shows greater labor mobility, not a reduction in labor participation, after Medicaid expansion, casting “…doubt on earlier claims that the ACA would lead to large reductions in labor force participation and employment.” For working-age adults, the ACA had no negative effects “on labor force participation, employment, or hours worked per week.” On the contrary, labor force participation increased following the ACA, even for part-time work. There is also no evidence of a reduction in an “employment lock” in response to the expansion of Medicaid; individuals do not voluntarily exit the labor force with the newly available access to Medicaid. One study notes:
Results of our study indicate that…these substantial changes in insurance coverage were, in general, associated with few significant changes in labor supply. Estimates of the effect of Medicaid on labor supply were, in general, small and not statistically significant, and most were positive. Overall, there was very little evidence that the Medicaid expansions decreased work effort (p. 7).
Medicaid expansion also makes it easier for the expansion population to find and maintain new employment because they are able to better manage chronic health conditions. A study on the impacts of expansion in Ohio found that more than half (52.1 percent) of expansion enrollees had an easier time maintaining employment following enrollment, and three in four (74.8 percent) were able to more easily search for employment. Expansion in Michigan brought similar results: 69.4 percent of enrollees who were surveyed said they performed better at work and 54.5 percent reported an easier job search experience.
For individuals experiencing homelessness, expansion and the subsequent easier access to insurance had improved their ability to work and maintain stable housing due to better management of health conditions, as well as improved access to other services and programs, including disability services.
With demonstrated evidence that coverage improves the ability to find and keep a job, we can expect that expanding Medicaid will be beneficial for both Oklahoma workers and businesses. The research demonstrates it fosters a more stable workforce with members who are free to pursue opportunities and manage their health and worklife better due to fewer financial constraints.
After expanding Medicaid, rates of uninsurance decreased and outcomes improved in multiple areas for the expansion population
By 2016, two years after major provisions of the ACA were enacted, individuals and families across demographics had seen increases in access to coverage after the implementation of the ACA. Insurance coverage disruptions declined in expansion states, with men, people of color, and those without chronic illnesses gaining a greater continuity of insurance coverage. There were a number of other areas of improvement once Medicaid coverage expanded, namely, racial disparities in coverage improved  ; however, expansion to additional states would help lower racial disparities even more. Access to care improved in expansion states, reduced socioeconomic disparities in coverage when compared with non-expansion states.
Medicaid expansion also has targeted benefits for certain populations:
- Veterans, particularly homeless veterans and those with chronic health conditions, saw drastically improved outcomes after Medicaid expansion. Researchers note that increases in out-of-pocket costs and work requirements would pose significant challenges to these individuals with complex health needs and limited resources.
- Medicaid coverage for people with HIV increased significantly nationwide after ACA passage — particularly in states that expanded — due to high rates of individuals with HIV living at income levels that placed them in the coverage gap.
- Access to care for opioid use disorder treatment was positively impacted by expansion. Research found that admissions to treatment facilities increased by 18 percent in expansion states. Admissions for those with Medicaid insurance increased 113 percent, without limiting access for those with private insurance.
- The benefits extended to rural communities and increased their access to coverage. The gap in the uninsured rate between rural and urban residents is smaller in expansion states, and the uninsured rate in non-metro areas in expansion states dropped 19 percentage points. One report found that the reduction in the rural uninsured rate in expansion states was nearly double that of non-expansion states.
- American Indians and Alaska Natives in Oklahoma would benefit greatly from Medicaid expansion. Almost 35,000 American Indians and Alaska Natives in the state could be eligible for Medicaid if the state expanded.Oklahoma is home to 39 federally-recognized Native American tribes and one of the largest populations of American Indians and Alaska Natives (AI/AN) in the United States. The Indian Health Service (IHS), as well as tribal health systems and urban clinics, provide health care and preventive services as promised to AI/AN through centuries of treaties with the U.S. federal government. This system of health care for Native citizens is chronically underfunded by Congress, putting limits on the capacity of these services. In fact, the IHS often runs out of funds before the fiscal year ends.
Given that, Medicaid expansion in Oklahoma would increase the range of health care services available to tribal members in our state, while further increasing the federal dollars the state receives. A number of tribal citizens would be newly eligible for Medicaid, and their access to comprehensive health care services through Medicaid would increase. Medicaid expansion does not replace services through the IHS, but instead supplements it, with coverage increasing drastically for AI/AN populations in expansion states.
In addition, medical services for AI/AN Medicaid members receive a 100 percent match from the federal government, as opposed to the 90 percent federal match for the rest of the expansion population. In other words, AI/AN covered by Medicaid expansion would not cost the state a single penny. Their share would completely be covered by the federal government.
Overall, current AI/AN enrollment in Oklahoma’s SoonerCare is 10 percent, or 81,413 AI/AN of the total population of SoonerCare members. Nationally, nearly a quarter of the AI/AN population lives at the poverty level, and an estimated 44.7 percent of AI/AN in non-expansion states live at or below 133 percent of the federal poverty level. Many of the current population of AI/AN SoonerCare members are either children (with income eligibility levels up to 200 percent of the federal poverty level) or parent/caretakers (with income eligibility only up to 46 percent of the federal poverty level). With approximately 360,000 Native Americans in the state, there is a potential that thousands of Oklahomans of Native American heritage will benefit greatly from increased access to the stability of health care through Medicaid.
Expanding Medicaid also expanded state economies
This paper, so far, has focused on the impact of Medicaid expansion on member’s health and financial stability. Indeed, expansion’s purpose is to increase access to health care and improve outcomes. However, it also dramatically improves state economies. As this section will show, expansion is one of the most effective economic development programs available to states.
Medicaid expansion grows state economies in two related but different ways. First, additional federal spending on health care increases jobs, income, and facility expansion in the health care sector. Second, the federal funds reduce existing state and private spending. As summarized by the University of Montana’s 2019 analysis:
Even without Medicaid expansion, beneficiaries would have received some health care. Medicaid expansion changes who pays for this health care. Without expansion, the state, the federal government, employers, providers, and the beneficiaries themselves all paid for some of the care that is now paid via Medicaid. With expansion, the federal government pays for nearly all expansion beneficiaries’ health care.
Expansion has dramatically improved the economy in many states. In Louisiana, for example, the $1.7 billion in additional federal funding supported 14,000 new jobs, about 8,000 of which were outside the health care sector. Earnings from these new jobs totalled $889 million in 2018. In New Mexico, new Medicaid spending accounted for 24-46 percent of all personal income growth in the state. Just three years after expansion took place in Colorado, it created more than 31,000 jobs, added $3.8 billion in economic activity, increased average household income by $643 per year, and added $102 million in tax revenue. Expansion in Kentucky, with a similar population to Oklahoma’s, added more than 12,000 jobs in the first year, more than double estimates before expansion. The gap between the state and national unemployment rates virtually disappeared as a result of expansion.
Oklahoma can expect the same economic development from Medicaid expansion. In 2013, the Oklahoma Health Care Authority commissioned Leavitt Partners to project enrollment, costs, state revenues, and economic impact from expansion. Leavitt Partners estimated that expansion will create 12-15,000 jobs and add $1.6 billion per year to the state’s economy. A 2020 study for the Oklahoma Hospital Association estimated a larger economic impact ($2.5 billion) and more jobs (17,000) than the Leavitt Partners report in the first year of expansion with continuous growth in later years.
Expansion is not just an economic development program, but one of the most effective economic opportunities available to states. A report from New Mexico estimated that the costs associated with Medicaid expansion were of “similar magnitude to…many individual tax expenditures that have far less sweeping impacts.” The Urban Institute has estimated that Oklahoma’s cost of expansion is $117 million, and state leaders have estimated the cost at $164 million. Expansion thus compares in cost to the Capital Gains Deduction Tax Credit. In 2018, this credit cost the state $115 million, supported an estimated 515 new jobs, and was claimed by slightly more than 16,000 taxpayers, most with incomes exceeding $200,000. For about the same costs as the capital gains credit, expanding Medicaid would benefit at least 10 times as many Oklahomans and create nearly 30 times as many jobs. Additionally, it would serve residents with much lower incomes, for example, single parents who earn just under $24,000 and have one child.
Medicaid expansion strengthens hospitals and other health care providers
Medicaid expansion supports the hospitals and other providers by reducing uncompensated care for services, which are medical costs that providers don’t recover either because they provided charity care or could not collect on medical debt. The American Hospital Association estimated that Oklahoma hospitals spent $592 million in care for which they were not paid. In contrast, in the first two years of expansion, hospitals in expansion states gained $6.2 billion when uncompensated care declined from 3.9 to 2.3 percent of their operating costs. Michigan hospitals saw uncompensated costs decline by nearly half after expansion. In Montana, uncompensated care fell by $103 million (45 percent) in the first year and continued to fall after that. New Mexico experienced a 30 percent drop in uncompensated care in the first year of expansion. Many other states saw similar declines. Across expansion states, the average hospital is estimated to have increased its Medicaid revenue by $5 million and reduced uncompensated care costs by $3.2 million. The 2013 Leavitt Partners report indicated uncompensated care would be reduced by $324 million. That same year, the Centers for Medicare & Medicaid Services (CMS) estimated that Oklahoma hospitals had $490 million in uncompensated costs, which would be reduced by two-thirds if the Leavitt Partners estimate is correct
Expansion is particularly important to community health centers, which provide medical services to many low-income families. In Montana, expansion increased revenue and dramatically reduced the number of uninsured patients at these centers. In Oklahoma, community health centers have hundreds of thousands of encounters with low-income adults and their children, regardless of their ability to pay. Not only are community health centers well-positioned to continue treatment of this population, but the added financial stability from Medicaid reimbursements for care will allow them to increase access and care for their patients.
Oklahoma hospitals, particularly the safety net hospitals and critical access hospitals in rural Oklahoma, will benefit tremendously from expansion after years of a precarious financial picture that has led to the closure of numerous hospitals throughout the state. Like community health centers, safety net hospitals provide care to all regardless of ability to pay, accruing millions of dollars in uncompensated care. On average, revenue from Medicaid makes up 21.8 percent of safety net hospitals’ revenue, which is more than double the share for other hospitals. Hospitals in expansion states saw an improvement in their operating costs, likely due to a decrease in uncompensated care and an increase in Medicaid revenue, while non-expansion state safety net hospitals did not see these improvements. Similarly, rural hospitals were positively impacted by expansion. In rural counties, expansion has led to better financial performance for hospitals and a smaller likelihood of closure. Since 2010, 94 rural hospitals have closed, most of them in non-expansion states. The National Rural Health Association estimates that, in some places, hospitals can provide up to 20 percent of a local rural economy, as they are often top employers in the community. This means that loss of hospitals can substantially disrupt local and state economies.
In New Mexico, expansion has led to the creation of a new non-profit health care facility, as well as million-dollar investments in hospitals and health centers around the state.
Expansion creates new jobs for providers and increases provider income
Expansion has created new jobs for both health care providers and social assistance workers. In the first year of New Mexico’s expansion, 1,874 new health care jobs were created, and this number is expected to increase as the program progresses. These new jobs were found across the health care sector, in ambulatory care, hospitals, and nursing facilities.
While results on provider capacity after expansion are mixed, many studies have found that expansion leads to greater appointment availability, the likelihood of physicians accepting new Medicaid patients, greater access to care, and improved quality of care. In Louisiana, providers seeing at least 10 Medicaid claims per month jumped 13 percent. For primary care physicians, this number increased 22 percent, indicating greater access to care after expansion.
Expansion did not affect private insurance, but may have increased waits for some patients to access care
Contrary to some concerns, Medicaid expansion does not reduce other forms of insurance or overwhelm existing health care services. Some studies of changes in employer-sponsored insurance (ESI) in expansion states show that expansion has little or no effect on whether employers offer insurance, whether employees take that insurance, or the cost of ESI. Others suggest that Medicaid expansion does reduce use of ESI and individually-purchased insurance, but with only a small decrease in takeup of ESI. Additionally, this was only prevalent in the lowest income group and is only likely in cases where patients are better off with Medicaid than other coverage options available to them.
In health care as in any sector, when additional funding is available, it can take suppliers (in this case doctors, clinics, and hospitals) time to catch up with new demand.If that occurs, it may be more difficult for all patients to get the services they desire. Indeed, a multi-state study in early years of expansion showed that waits for appointments were longer after expansion. Its authors suggested that a combination of new demand for services and providers’ reluctance to take Medicaid patients may have caused these delays. However, increased pressure on the health care system from Medicaid expansion does not spill over or negatively impact access to care for people insured by Medicare. Fortunately, the predictable and reliable nature of the demand assures that providers will expand to meet it as quickly as possible.
Medicaid expansion is affordable for states
As nearly 40 states have expanded Medicaid, we can estimate how many people will enroll in Oklahoma and what it will cost to serve them. In Oklahoma, the additional state costs are likely to be less than 2.5 percent of the state budget. However, the cost is less than half the picture. States save more money than it spends given both cost savings and tax revenues from the additional $1 billion-plus in federal spending on expansion. These findings are derived from national research, experience in nearby states, and Oklahoma’s exhaustive study of expansion.
How many and which Oklahomans will be covered
Medicaid expansion’s impact on Oklahoma’s budget — both the cost of Medicaid expansion and the savings in other state programs — depends on how much and when Medicaid enrollment increases. While we won’t know for sure for several years, experience in other states and several detailed studies provide excellent estimates. Adding confidence to the state’s own estimates, current national studies suggest very similar enrollment to the 2013 Leavitt Partners report “medium estimate” of 217,000-249,000 new members. A 2016 report from Manatt Health estimated that enrollment would increase from 179,000 in the first year to 275,000 in later years. The most recent estimates from national organizations indicate the state’s Medicaid enrollment would increase by up to 34 percent, with between 178,000 and 233,000 more Oklahomans covered by Medicaid, an increase of up to 34 percent from current enrollment. Under the most optimistic highest estimate, the share of Oklahomans who are uninsured would drop from 20 percent (2nd highest in the US) to 15 percent (approximately 10th highest)./p>
Oklahomans who will benefit from expansion are a varied group. According to the Kaiser Family Foundation, the following is a snapshot of Oklahomans who would be eligible:
- 78 percent are adults without children,
- 64 percent are in a family with at least one worker,
- 73 percent have incomes below the poverty level ($17,240 for a family of two),
- 54 percent are white, 11 percent Black, 9 percent Hispanic, and 26 percent other races or ethnicities, and
- 46 percent are ages 19-34 or younger, while 54 percent are 35-64.
Oklahoma’s Medicaid expansion-eligible population likely covers a wide range, from the relatively healthy to the highly vulnerable. For example, the following is a snapshot of Oklahomans with wages under $25,000 in 2011:
- 47 percent did not have health insurance,
- 37 percent had fair or poor health (a rate 6 times higher than for those with wages over $50,000),
- 46 percent were smokers,
- 41 percent were obese,
- 33 percent had high blood pressure,
- 38 percent had high cholesterol,
- 14 percent have diabetes, and
- 14 percent have asthma.
The federal government will pay for the majority of Medicaid expansion under the Affordable Care Act. When that act passed, the federal share was 100 percent for three years. Then from 2017 to 2020, the federal share tapered down to 90 percent starting in 2020. Moving forward, the federal government will cover 90 percent of the cost of covering the newly eligible population in perpetuity. This is a much higher federal match rate than for the traditional Medicaid population, for whom the federal share varies but is typically between 60 and 70 percent in Oklahoma. Expansion would increase Oklahoma’s annual federal funding for Medicaid by 23 percent, or $1.1 billion.
Some worry that the federal government will renege on its commitment, leaving Oklahoma on the hook for a greater share of the cost. In reality, Medicaid is a longstanding state-federal partnership, and in the program’s more than 50-year history, the federal government has never reneged on its Medicaid funding obligation. It’s revealing that during efforts to overturn the Affordable Care Act in 2017, neither the Trump administration nor Congress called the Medicaid match rate into question. In addition, there is the possibility for the federal match to increase in the event of widespread economic distress or health crisis.
After the 90 percent federal match funding, state costs for expansion are likely to be less than $200 million, or about 2.5 percent of the state’s FY 2020 budget. A 2016 Manatt Health report estimated the nominal state cost at $148 million per year. The Urban Institute released the most recent estimate for full implementation, which was $117 million. The Oklahoma Health Care Authority recently provided the Legislature with an updated initial cost estimate of $164 million for the state’s share of expansion.
Expansion does not cost states money; it saves them money
The cost of Medicaid expansion is largely an academic question, since most states save money by expanding Medicaid. Savings are realized through:
- reduced costs of uncompensated care,
- higher federal matching rates when existing Medicaid members (those receiving family planning, pregnancy, and breast and cervical cancer treatment) move from coverage that had a lower match,
- increased tax revenue from additional spending on health care, and
- lower demand for state-funded programs.
These findings are consistent with a recent report showing Medicaid expansion in Michigan yielded clear fiscal benefits for the state. When looking at states neighboring Oklahoma, we can see:
- New Mexico saw savings in mental health, which were reinvested to expand mental health services and increased tax revenue, and
- Arkansas cut the cost of serving pregnant women by more than half when it shifted their care to the 90 percent federal rate, and it received additional federal funding for community health centers.
- Louisiana saved $190 million during the first year of expansion and expects to save nearly double that in the second. Savings came from using Medicaid rather than state funds for many services provided by Corrections and other state agencies, and reduced payments to hospitals for uncompensated care
Some have argued, accurately, that enrollment and costs have exceeded projections in some states. Despite this, these states are still seeing net savings. In New Mexico, for example, enrollment in the second year exceeded the highest projections by 60 percent, but savings and tax revenues still exceeded costs in the first few years. While costs were expected to exceed savings when the federal share tapered to 90 percent in 2020, an independent analysis described the program as “basically paying for itself,” even with unexpected enrollment. Similarly, a study of the first year of expansion in Kentucky found that while enrollment far exceeded estimates, so did the reduction in the share of uninsured residents, and the economic impact was double original estimates.
an average of Leavitt Partners’ 2013 report estimated costs and savings during the first 10 years of the expansion in Oklahoma. They estimated Oklahoma expansion’s total costs ($1.2 billion annually an average of over 10 years) and state costs ($85 million annually). It also showed these impacts that either reduce costs or provide new state revenues in the following ways:
- $21 million per year saved through ending Insure Oklahoma and other state insurance plans that cover newly-eligible persons while shifting services to pregnant women from lower to higher federal share,,
- $48 million in savings from other state agencies, including the departments of Mental Health and Substance Abuse, Corrections, and Health, and
- Contribute $62 million per year to the state budget through additional state tax revenue on new jobs and purchases described above.
Taken together, the estimated savings exceeded the state costs by $464 million over 10 years, or an average of $46 million per year. It is important to note that Leavitt Partners’ estimates are now seven years old and that the federal match for expansion, 90 percent, is less than it was when Leavitt Partners completed its analysis.
Our estimated costs and savings are shown in the figure below, based on the 2013 Leavitt Partners’ report. OK Policy recalculated the state share at a constant 90 percent, leaving intact all other Leavitt Partners assumptions and estimates. These estimates are thus seven years old, so all expenses and costs can be expected to be larger. However, experience in other states and more recent analyses all suggest the fiscal impact of Medicaid has not changed since Leavitt Partners made its estimates. OK Policy uses these estimates since they are the most detailed, Oklahoma-specific information available.
Source: OK Policy Calculations from Leavitt Partners, Covering the Low-Income, Uninsured in Oklahoma
We estimate that savings and additional revenue will exceed the cost of expansion each of the first 10 years of expansion and will total $130 million over that time period. Costs and savings are likely to be higher over the coming decade but the balance between those costs and savings is not likely to change.
Later reports, taking into account the lower federal share for expansion, have indicated that expansion could have a net cost to the state, but considerably less than the nominal cost of expansion. In 2016, Manatt Health projected the state would spend $739 million on expansion the first five years, but save $491 million and bring in $52 million in new fee revenue by moving current SoonerCare members into the expansion group, savings in other state agencies, and hospital fee revenue. In five years, the estimated net cost of $196 million, or $39 million per year, is 26 percent of the nominal cost of expanding. This analysis excludes significant growth in tax revenue from new jobs and business investments resulting from expansion.
The impacts of COVID-19
One aspect of expansion that states have no experience with is how Medicaid is affected by a pandemic. Estimates for the number of Oklahomans losing health insurance during the pandemic range from 213,000 to 396,000 depending on the level of unemployment, according to the Urban Institute. High unemployment will increase the enrollment and cost of Medicaid, both because thousands of Oklahoma families have lost employer-sponsored health insurance and lost wages may make more families income-eligible for Medicaid. Timely expansion can insure Oklahoma families and provide them more financial security when they need it most. This is particularly true for low-wage workers, who are least financially secure and most exposed to the health dangers of COVID-19
Medicaid expansion is affordable for Oklahoma even with the growth in unemployed and uninsured households. Without expansion, an estimated 70-130,000 of these would shift to Medicaid, while 93-172,000 would become uninsured. Families USA (link to come) estimates that 48,000 more Oklahomans will be covered by expansion due to high unemployment. This would increase expansion enrollment by 21 percent, but will also increase federal funding by the same percentage. By Families USA’s estimates, the additional federal funding would add $500 million and 5,500 jobs to the state’s economy. Enrollments, costs, and economic impact can all be expected to return to the estimates used elsewhere in this paper once the state’s economy reaches previous levels.
From a budget standpoint, expanding Medicaid is a classic no-brainer. Oklahoma can reduce its high uninsured rate and dramatically improve health, while saving the state money. Experience in other states shows that the worst that could happen is that more people than expected will need and want health insurance. In that scenario, the uninsured rate will drop even further, more Oklahomans will receive much-needed health care, and the state will save even more.
Conclusion: Medicaid expansion works
A decade of research overwhelmingly shows success for states that have expanded Medicaid. The expansion population, after living years without access to health care, sees demonstrable improvements in health and financial outcomes. Moreover, expansion due to income limits has increased children’s access to health care as their parents and caretakers enroll in Medicaid.
To improve the lives and health of low-income adults in Oklahoma and their families, the choice should be easy to expand Medicaid. Critics have questioned whether expanding Medicaid will somehow put the state budget at risk or if our state can afford it. On the contrary, our state can no longer afford not to expand Medicaid. We have lived through the deleterious impacts failure to expand has brought on Oklahoma, our health care system, and our residents for more than a decade.
Research shows economies in Medicaid expansion states expand due to the infusion of federal dollars and the corollary impact on economic and tax revenue growth. The state will receive higher compensation when full coverage is expanded to groups that are covered now with state-only dollars, including Oklahomans with substance use and mental health disorders, pregnant women, and some people who are incarcerated. Approximately 35,000 American Indians and Native Americans in Oklahoma also would see increased access to care and improved health outcomes if the state fully expands Medicaid.
In short, states’ costs decrease with an investment in their residents through Medicaid. The health care sector, in particular, stabilizes due to the resulting decrease in uncompensated care. Furthermore, Medicaid expansion is stable: never once has the federal government reneged on its commitment to match state dollars in the Medicaid program’s nearly 70 year history. It is a tried and true program that our state can further capitalize on.
With the surety of Medicaid’s financing and the stability it offers Medicaid recipients and providers, expanding Medicaid is the fiscally smart choice for Oklahoma. There is no other option for states to improve health outcomes while also maintaining state budgets. The status quo for Oklahoma would only exacerbate our state’s poor health outcomes and disparities, while holding our health care system back from stability and fiscal soundness.
About the Authors
Paul Shinn, Ph.D., is a Budget and Tax Senior Policy Analyst with OK Policy. Shinn has held budget and finance positions for the Oklahoma House of Representatives, the Department of Human Services, the cities of Oklahoma City and Del City and several local governments in his native Oregon. He’s also taught political science and public administration at the University of Oklahoma, University of Central Oklahoma, and California State University Stanislaus. While with the Government Finance Officers Association, Paul worked on consulting and research projects for the U.S. Environmental Protection Agency, the U.S. Department of Transportation, and several state agencies and local governments. He also served as policy analyst for CAP Tulsa. He holds a Ph.D. in Political Science from University of Oklahoma and degrees from the University of Oregon and the University of Maryland College Park. He lives in Oklahoma City with his wife Carmelita.
 How Have State Medicaid Expansion Decisions Affected the Experiences of Low-Income Adults? Perspectives from Ohio, Arkansas, and Missouri, June 15, 2015, https://www.kff.org/medicaid/issue-brief/how-have-state-medicaid-expansion-decisions-affected-the-experiences-of-low-income-adults-perspectives-from-ohio-arkansas-and-missouri/
 Findings from the Field: Medicaid Delivery Systems and Access to Care in Four States in Year Three of the ACA, September 20, 2016, https://www.kff.org/medicaid/issue-brief/findings-from-the-field-medicaid-delivery-systems-and-access-to-care-in-four-states-in-year-three-of-the-aca/
 Medicaid Expansion Increased Coverage, Improved Affordability, And Reduced Psychological Distress For Low-Income Parents, May 2017, https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.1650
 Health and Access to Care during the First 2 Years of the ACA Medicaid Expansion, March 9, 2017, https://www.nejm.org/doi/full/10.1056/NEJMsa1612890
 Did the Affordable Care Act Reduce Racial and Ethnic Disparities in Health Insurance Coverage?, August 21, 2019, https://www.commonwealthfund.org/publications/issue-briefs/2019/aug/did-ACA-reduce-racial-ethnic-disparities-coverage
 Effect of the Affordable Care Act on Racial and Ethnic Disparities in Health Insurance Coverage, August 2016, https://pubmed.ncbi.nlm.nih.gov/27196653/