New Report Finds State Costs Under Health Care Reform Are Likely to be Modest

Contact: David Blatt, Director

Office: (918) 794-3944; Cell: (918) 859-8747

Projections that the new federal health care law will impose billions of dollars of additional cost on the state budget are way out of line with other studies and based on mistaken assumptions and methodologies, according to a new issue brief released today by the Oklahoma Policy Institute.

The report finds that most studies of the fiscal impact of the Affordable Care Act prepared by health care policy experts have calculated the cost to Oklahoma of increased Medicaid enrollment to be modest, ranging from $200 to $800 million between 2014 and 2019 or 2020. Several studies that considered a broader range of costs, savings, and revenue factors have concluded that the cost of the health care law will be even less for states and could yield net savings. By contrast, a recent report from the Oklahoma Council of Public Affairs and Cato Institute came up with a mind-boggling $11 billion price tag to the state for the period from 2014 to 2023.

 “We think that anyone who looks carefully at the assumptions and calculations of the various studies will agree that the federal government is on the hook for the lion’s share of the cost of health care reform,” said David Blatt, Director of OK Policy and the author of the report. “Although we cannot precisely calculate the fiscal impact of the Affordable Care Act, the fact that the federal government will take over funding responsibility for functions now borne by the state, such as health care for adults with mental illness, will help the state budget and offset some of the expense of a larger Medicaid population.”

 OK Policy’s issue brief carefully shows how the OCPA/Cato Institute study is built on flawed and exaggerated assumptions about who will enroll in Medicaid under the new law and how much they will cost. For example, their report projects that some 145,000 individuals who are currently eligible but unenrolled in Medicaid will sign up under the Affordable Care Act. This population of “old eligibles” will only receive the traditional federal match rate and so will be considerably more expensive to the state. Yet official estimates of the total population of currently eligible but unenrolled individuals in Oklahoma is barely 60,000.

 “All of the studies take into account the effect of enhanced outreach efforts and the individual mandate to bring those currently eligible but unenrolled out of the woodwork. But the enrollment surge among the ‘old eligibles’ assumed by OCPA/Cato goes well beyond any ‘woodwork effect’ and appears to be more of a pure ‘thin air effect’,” noted Blatt.

 “There is no doubt that paying for health care at a time of scarce resources will remain an ongoing challenge for the state. However, by significantly reducing the number of Oklahomans without health insurance, the Affordable Care Act will reduce the strains that uncompensated care places on our health care providers and will provide better health care and greater financial security to Oklahoma families,” Blatt concluded.“These benefits will far outweigh the modest costs to the state budget.”

Full issue brief

1-page summary

Oklahoma Policy Institute (OK Policy) is a 501(c)(3) think-tank that provides timely and credible information, analysis and commentary on policy issues affecting Oklahoma. 


Oklahoma Policy Insititute (OK Policy) advances equitable and fiscally responsible policies that expand opportunity for all Oklahomans through non-partisan research, analysis, and advocacy.

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