Oklahoma’s plan to extend health coverage: What we know

It’s now been nearly four years since the U.S. Supreme Court made it optional for states to extend coverage to low-income adults under the Affordable Care Act. Oklahoma has been among the dwindling number of states refusing to act, leaving over 170,000 Oklahomans without insurance options and saddling hospitals and other health care providers with the rising cost of uncompensated care. But a new plan recently announced by state officials means we might finally join the 32 other states that have expanded coverage.

Developed by the Oklahoma Health Care Authority (OHCA) at Governor Fallin’s direction and titled “The Medicaid Rebalancing Act of 2020,” the plan aims to provide private insurance to Oklahoma’s low-income uninsured, providing access to affordable health care while shrinking Medicaid enrollment and averting a recently-announced Medicaid provider rate cut.  Thus far, OHCA has released a fact sheet and held two of four scheduled public forums throughout the state. Many details of the OHCA’s plan are still under development, but here’s what it looks like so far: 

How would the OHCA plan extend health coverage?

The OHCA proposal builds on the success of Insure Oklahoma, a homegrown public-private partnership that uses a combination of state, federal, and private dollars to provide commercial health coverage for some low-income Oklahoma workers.  To extend coverage, the OHCA would create a new Insure Oklahoma program for uninsured Oklahomans earning less than 133 percent of the federal poverty level (almost $27,000 per year for a family of three), regardless of work status. This closely resembles the “Oklahoma plan” recommended by the Leavitt Partners in their 2013 report commissioned by Governor Fallin. Enrollees will have a choice of subsidized commercial insurance plans with optional dental and vision riders, and they may pay premiums based on a sliding scale. In addition, the OHCA will create “HealthStead accounts” to be used for paying deductibles and other health care expenses. Additional state dollars may be added to HealthStead accounts as incentives for a range of healthy behaviors, such as quitting smoking, managing chronic conditions, and getting all recommended screenings.

[pullquote]“The OHCA proposal builds on the success of Insure Oklahoma, a homegrown public-private partnership that uses a combination of state, federal, and private dollars to provide commercial health coverage for some low-income Oklahoma workers.”[/pullquote]

All health care expansions using federal dollars require federal approval, and it’s not certain that some components of the Insure Oklahoma proposal, such as requiring enrollees with incomes below the federal poverty level to pay insurance premiums, would get that approval. However, the OHCA’s plan incorporates elements of coverage expansions that were approved in Arkansas and Indiana. In Arkansas, which expanded coverage in 2014, the uninsured rate has been cut by more than half, and hospitals reported a 55 percent reduction in financial losses from treating uninsured patients. Indiana’s program came into effect much more recently, but uptake has been high, and insurers report that the new enrollees are seeing primary care doctors in high numbers and choosing to pay extra for vision and dental care.

Although OHCA’s proposal is a new model of expanding coverage, we can still expect to see the well-established benefits of coverage expansion in Oklahoma, including the creation of new jobs, more preventive screenings, and better access to mental health coverage and substance abuse services. Expanding coverage in Oklahoma will decrease the state’s uninsured rate and reduce spending on uncompensated care. Other states’ experiences have shown that accepting billions of dollars in federal funds to extend coverage would improve Oklahomans’ health, save the state money, and bring our tax dollars home.

How would the plan would shift families off Medicaid?

The second element of the Health Care Authority’s plan — shrinking Medicaid enrollment to save money — is more controversial. Now, children and pregnant women with incomes up to 185 percent of the federal poverty level (about $37,000 per year for a family of three) can get Medicaid coverage through CHIP (the Children’s Health Insurance Program). The Health Care Authority’s plan would shift this population from Medicaid, where the state pays roughly 30 percent of the cost, to private coverage, which would be entirely subsidized by the federal government. This can’t happen until 2019 when a federal maintenance of effort requirement expires, and the plan assumes the requirement will not be renewed. Because the state would no longer be paying for the health care costs for this group, OHCA estimates $55 million in state savings. 

This is a shaky proposition. It’s hard to predict what CHIP reauthorization will include three years and a new federal administration in the future. We should also be concerned that moving low-income children and pregnant women from Medicaid (with no premiums and limited cost-sharing) to private coverage (with premiums and much higher cost-sharing) will mean increasing the financial burden on these families, putting both health and financial security at risk. For health advocacy groups, that may be a non-starter.

What does it mean for Oklahoma’s budget emergency?

The plan has been unveiled at a time of immense uncertainty for the state’s Medicaid program and the broader health care system as a result of the ongoing budget emergency.  The Medicaid Rebalancing Act of 2020 was released two days after OHCA announced a proposed 25 percent cut in provider reimbursement rates effective June 1st as a way to manage anticipated budget shortfalls and protect existing health care providers. OHCA has suggested various financing options, include increasing the cigarette tax, raising the hospital provider fee, and developing a health carrier access fee, which may be needed both to avert drastic rate cuts and to cover the state’s share for the coverage extension. The federal government is committed to picking up at least 90 percent of the cost of covering newly-eligible populations in perpetuity, leaving the state with a minimal share. While OHCA asserts that extending coverage would cost the state $100 million annually, the Leavitt Report showed net savings for the state budget of some $450 million over ten years.

Finally, it’s important to keep in mind that this plan is still under construction and could change depending on decisions by state leaders and federal regulators. Stakeholders can sign up to receive email updates on OHCA’s webpage for updates on the plan, attend upcoming public forums, and submit written feedback.

While there are many questions left unanswered, the Oklahoma Health Care Authority deserves praise for proposing a path forward. But it’s a path that can only be crossed along a tight political high wire, with no real net to fall back on. The state’s health care system, and the health of hundreds of thousands of Oklahomans, really do hang in the balance.