OKPOLICY.ORG
For Oklahoma families to prosper, they must be able to take advantage of work and educational opportunities. But working or doing well in school is much, much harder without consistent access to health care. SoonerCare, Oklahoma’s Medicaid program, provides that needed care for more than one million low-income Oklahomans every year, two in three of whom are children. SoonerCare is an effective, efficient system that is funded by a combination of state and federal dollars. This year, Oklahoma was able to reverse a years-long trend of cuts and increase the rates paid by SoonerCare to doctors and other care providers. After this spring’s legislative sessions, the state’s key health care agencies were able to reverse a years-long trend and increase payments to care providers. These rate increases were possible in part because Oklahoma’s federal Medicaid funding is increasing.
Medicaid is a state-federal partnership
Medicaid is the largest funder of health care services for low-income Americans, and states and the federal government divide up the cost. The federal government pays at least half, with the federal share, known as FMAP (Federal Medical Assistance Percentage) depending on the economy of the state in question. The amount of federal aid is calculated according to a formula that compares a state’s per capita income with federal per capita income. States with lower personal income have a higher federal match, while states with higher personal income have a lower match. FMAP is recalculated using a three-year rolling average, so it grows or shrinks depending on how each state’s economy is doing.
In federal fiscal year 2019, which starts in October, fourteen states have an FMAP of 50 percent, the smallest available, while Mississippi will have the highest FMAP at 76.39 percent. Oklahoma’s FMAP will be 62.38, its highest federal share since 2014, and up 3.81 points from 58.57 in 2018. This is by far the largest increase of any state. Projections suggest that Oklahoma will see the largest FMAP increase in 2020 as well, bringing our federal share of Medicaid funding to 65.20 percent.
Federal Medicaid funding responds to need
This funding increase is a good sign for health care funding in Oklahoma, but why is it happening? The answer is in the most recent trends in Oklahoma’s economy. Since our economy has been struggling relative to the nation as a whole, even going into a one-year recession in 2016, the federal government is stepping into help.
However, this also means that as Oklahoma’s economy continues to recover, we should see our federal Medicaid funding decline. Inherent to the FMAP formula is the assumption that as a state’s economy improves, fewer families will need Medicaid coverage, and the state will be better able to handle the costs of those who remain. These are logical expectations, although Oklahoma lawmakers have not always kept up their end of the bargain. It also means state Medicaid financing carries some uncertainty for lawmakers and administrators.
Health care should be a priority
Quality, consistent medical care is a foundation for a successful state. In recent years, the combination of a declining federal FMAP and state budget crises have led to provider cuts, slashed services, and more pressure on low-income families. This year, the state’s main health agencies were able to begin to reverse the trend, with at least small rate increases for providers. However, what goes up eventually comes down. As the state economy recovers, Oklahoma’s federal Medicaid funding will eventually tick downward, and lawmakers may be tempted to cut funding, or otherwise create more barriers to essential health care. Instead, we can learn from our mistakes, and commit to becoming a state where all families have access to basic health services in good years and bad.
