Why Oklahoma is losing Medicaid funding (Guest post: JeVonna Caine)

JeVonna_CaineJeVonna Caine,one of OK Policy’s 2013-14 Research Fellows,  is pursuing a Masters of Public Health in Health Administration and Policy from the OU Health Sciences Center, while also working at the State Department of Health in the Health Planning & Grants department. She has an extensive background in community health education and research with previous positions at Georgetown University and Youth Services of Tulsa.

With the state already facing a budget shortfall, Oklahoma lawmakers got unwelcome news last November, when they found out Oklahoma’s Medicaid program will need an additional $150 million just to continue current services. The extra costs are due to an expected increase in the number of Oklahomans eligible for Medicaid and a $56 million drop in federal funds coming to the state Medicaid program, Soonercare.

The reduction in federal funds is happening because of some otherwise good news — an increase in Oklahoma’s per capita income. The federal match for programs such as Medicaid, CHIP and TANF is calculated using a Federal Medical Assistance Percentages (FMAP) formula. This formula assesses each state’s economy relative to the country as a whole and provides a smaller federal share for states with rising income.

So why is the need for Soonercare increasing even as our incomes are rising? Unfortunately, the formula doesn’t account for the cost differences between different populations of Medicaid beneficiaries. For example, the costs of serving disabled seniors are significantly higher than those associated with adults and children. Even though most Soonercare recipients are children, Oklahoma ranks sixth in the nation for the share of our population aged 50 or older with a disability.

The formula also doesn’t account for the widening gap between the “haves and have-nots” in our state. Even while our state outpaced the nation for gains in per capita income, we saw poverty in Oklahoma reach a 10-year high.

The shortcomings of the FMAP have been examined by the Government Accountability Office (GAO). They proposed that the federal government could more fairly allocate Medicaid funding by considering the demand for services, geographic cost differences, and additional state resources such as corporate income and capital gains.

However, even if the current formula were updated, Oklahoma would not be out of the woods. Given the state’s low cost of living and significant corporate resources held by the oil and gas industry, an updated formula may be just as likely to award less funding.

That reflects an important truth. Although we may be used to thinking of ourselves as a poor state, Oklahoma has made real gains in wealth in recent years. We have benefited greatly from new technologies that are fueling a boom in domestic energy production.

Yet state revenues have not seen comparable growth. Appropriations to public services have been flat or declining for years, and in real dollars they remain hundreds of millions of dollars below 2009 levels. This year’s general revenue collections look likely to fall again.

This poses the question of why Oklahoma, with our wealth of resources and growing personal income, is unable to adequately provide for our poorest residents. The problem is not that have we don’t have the resources to meet our budget needs; it’s that repeated tax cuts and growing tax breaks have crippled our ability to keep up our investment in Oklahomans.

The opinions stated above are not necessarily those of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.


The opinions stated in guest articles are not necessarily those of OK Policy, its staff, or its board. To see our guidelines for blog submissions, click here.

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