Possible paths to fund Medicaid expansion (Capitol Update)

It is good news to see that most of the legislative leadership who have spoken have said the legislature is now obligated and will find a way to fund the state match for Medicaid expansion, despite the narrow margin of victory for State Question 802. It is likely that legislators saw the need for Medicaid expansion, but many felt obliged to follow what they knew were the wishes of a clear majority of their constituents.

Those legislators, especially those representing rural districts, either remained on the sidelines or expressed a preference for the “no” side of the issue. Legislators understand that even when the people are wrong, they have a right to be represented. That’s the job. Only rarely can legislators knowingly go against a majority of their constituents and hope to convince them later it was the right thing to do.

At any rate, when the votes were cast, a statewide majority voted “yes” so now it is equally the obligation of legislators to follow the law. With leaders free to lead and many believing the right result occurred, funding should get done. The people will have a chance to help by passing SQ 814 that is on the November ballot. Oklahoma receives money annually from tobacco companies under the 1998 Master Settlement Agreement (MSA). 

It is a tribute to former Attorney General Drew Edmondson that, after successfully prosecuting the civil case against the tobacco companies, he led the state in passing a constitutional amendment placing the money in trust protecting it from being diverted by the legislature for other purposes. Of the total MSA payments to the state, 75 percent is deposited into the Tobacco Settlement Endowment Trust (TSET) Fund — which was designed to fund tobacco use prevention and smoking cessation programs — and 25 percent is deposited into a special fund, the Tobacco Settlement Fund, which is subject to appropriation by the state legislature.

SQ 814 would switch the deposit percentages so that 25 percent of MSA payments would be deposited in the TSET Fund and 75 percent would be deposited in the Tobacco Settlement Fund. SQ 814 directs the legislature to appropriate the money in the special fund to secure federal matching funds for the Medicaid program. This can help fund Medicaid expansion without raising taxes.

Another source of possible funding will be an increase in the Supplemental Hospital Offset Payment Program (SHOPP) funding rate. SHOPP is a fee some hospitals pay to provide Medicaid state matching funds. This fee — together with the savings in medical programs now being paid for 100 percent by state funds and the additional revenue an increase of $1 billion in federal funds will inject into the Oklahoma economy — should assure funding for Medicaid expansion. So long as there is the will to do it.