There are no good reasons not to expand Medicaid

It’s been over seven years since states first began expanding Medicaid to cover low-income working-age adults. To date, 37 states (including the District of Columbia) have opted to expand coverage, and not a single state having done so has since reversed course.  Oklahoma, however, remains one of 14 holdout states, even as the state’s uninsured rate has climbed to second-highest in the nation. An initiative petition effort now underway, State Question 802, would give Oklahomans the chance to decide on Medicaid expansion in 2020.

Expanding Medicaid substantially reduces the number of uninsured, and many benefits follow. States that have expanded Medicaid have seen much larger reductions in their uninsured rates than hold-out states. By 2017, the uninsured rate for working-age adults in expansion states had fallen to 9.1 percent, less than half the rate (19.0) in non-expansion states, with the gap growing wider over time.  Along with lowering the uninsured rate, there is also extensive research showing the wide-ranging health and economic benefits of expansion.  “Most research demonstrates that Medicaid expansion has improved access to care, utilization of services, the affordability of care, and financial security among the low-income population,” according to the Kaiser Family Foundation. Medicaid expansion promises to provide greater access to treatment and care for those struggling with mental illness, opioid addiction and cancer.

Still, despite these wide-ranging benefits, there are some who still have questions and concerns about expansion. Here we answer some of the frequent questions and major concerns.

Will the federal government uphold its funding commitment?

For the population that is newly eligible for Medicaid under the Affordable Care Act, the federal government initially covered 100 percent of the cost; as of 2020, by law, the federal share will be 90 percent in perpetuity. This is a much higher federal match rate than for the traditional Medicaid population, for whom the federal share varies but is typically between 60 and 70 percent in Oklahoma.

Some worry that the federal government will renege on its commitment, leaving Oklahoma on the hook for a greater share of the cost. In reality, Medicaid is a longstanding state-federal partnership, and in the program’s more than 50-year history, the federal government has not once reneged on its funding obligation. It’s revealing that during efforts to overturn the Affordable Care Act in 2017, neither the Trump administration nor Congress called the Medicaid match rate into question.

However, there’s an easy fix if lawmakers are still concerned that the feds may someday stop paying their share. Arizona and Nevada have built in a “circuit breaker” to roll back expanded coverage if the federal match ever drops below 90 percent. Oklahoma could easily do the same.

Will the cost to the state be too high?

Even if the state is responsible for just one-tenth of the cost of Medicaid expansion, will that still be unaffordable?

Numerous studies have found that expanding Medicaid is producing net savings for states. This is primarily because states can move adults who are in existing state-funded health programs into expansion coverage and reduce their spending on uncompensated care as uninsured people gain coverage. Reviewing the research, Mark Hall of the Brookings Institute notes:

Accordingly, several credible and expert evaluations (including one in the New England Journal of Medicine) show that states such as Arkansas, Indiana, Kentucky, Louisiana, Michigan, Montana, New Mexico, Ohio, and West Virginia (among others) have actually reduced, not increased, state spending as a result of expansion.

In Oklahoma, a 2012 report by the Leavitt group projected state savings in excess of $400 million over 10 years, due primarily to capturing federal dollars to cover those without insurance whose services are currently funded entirely with state dollars by the Department of Mental Health and Substance Abuse Services or other state agencies.

A 2018 study estimated that Medicaid expansion would require about $110 million in additional state spending per year, while injecting $1.1 billion of federal funds into the Oklahoma economy annually. There are various options for generating the requisite state match, including by assessing a provider fee on hospitals, who would be a major beneficiary of Medicaid expansion.

Will too many people enroll?

States that have expanded Medicaid have not seen surges in enrollment that exceed projections. A peer-reviewed paper that examined the effect of expansion in its first two years found that, “States’ advance budget projections were also reasonably accurate in the aggregate, with no significant differences between the projected levels of federal, state, and Medicaid spending and the actual expenses as measured at the end of the fiscal year. Reviewing the findings of studies in numerous states, Mark Hall reports:

Contradicting this source’s claim that “each and every state that opted into ObamaCare expansion is facing a surge in Medicaid enrollment far higher than ever anticipated,”officials or agencies from  Indiana, North Dakota, and Ohio (here and here)  have flatly stated (and documented) that expansion enrollment, or overall enrollment, has either fallen short of, or not substantially exceeded, expectations.

Does expanding Medicaid to healthy adults divert resources from the truly needy?

There’s no evidence that Medicaid expansion means worse care or access for children and people with disabilities; in fact, Medicaid expansion appears to actually increase access to care and employment for people with disabilities because they can qualify for health care through a less onerous eligibility verification process. Researchers have found a significant increase in the percentage of adults with disabilities who are employed in expansion states, while non-expansion states have seen no comparable change.

Medicaid expansion can also strengthen the financial situation of providers who serve children and people with disabilities as well as working-age adults. For example, rural hospitals are far more likely to remain open and solvent in states that expand Medicaid.

Does expanding Medicaid remove the incentive for people to climb out of poverty?

Some also claim that Medicaid expansion removes the incentive for working-age adults to seek employment and climb out of poverty. There is scant evidence that it is true, and substantial evidence that it is not. For instance, in an exhaustive study of its Medicaid expansion population, Ohio found that people who were not working when they got Medicaid through expansion said Medicaid made it easier for them to find work; people who were already working said that expansion made it easier to remain employed.

Should we expand coverage differently?

Governor Stitt and some legislative leaders say that rather than just adjust our Medicaid program’s eligibility proposed by State Question 802, we should instead seek federal permission to do a more creative expansion through what’s called a Section 1115 Medicaid demonstration waiver.

Under previous Administrations, federal regulators only allowed these waivers if the state stayed within important guardrails designed to protect Medicaid enrollees. However, the Trump administration is encouraging states to radically change the way their Medicaid programs work by offering them a green light to impose new barriers to care, such as work reporting requirements or monthly premiums, as a condition of eligibility. In Arkansas, the first state to implement a work reporting requirement, many people who are working or should be exempt lost coverage because they were unable to navigate the bureaucratic obstacles needed to meet the reporting requirement. These reporting obstacles are greatest for individuals with physical disabilities, mental health conditions, and substance abuse disorders, as well as for rural residents with less access to the Internet. As of now, Arkansas and Indiana are the only states to implement a Medicaid work requirement, although seven other states have had work requirement waivers approved with implementation pending, and seven others, including Oklahoma, have applications pending.

Because these waivers create new bureaucracy, they are expensive for states to operate. They also invite expensive litigation.  So far, every work reporting requirement waiver has been struck down when challenged in court, although the Administration has continued to grant them. Furthermore, the current administration has a habit of verbally promising states that certain waivers will be approved and then disapproving them, as happened to Utah this summer.  In short,  waivered expansions are proving to be risky, expensive, and complicated. Simply filing a State Plan Amendment alerting the federal government that the state intends to expand Medicaid per the Affordable Care Act, which SQ 802 would instruct the state to do, is the best way to ensure that Medicaid expansion takes effect as quickly and efficiently as possible. 

The Bottom Line

Over 200,000 Oklahomans would gain health insurance coverage through a Medicaid expansion. The result would be more regular and affordable access to health care, a healthier and more productive workforce, and greater financial stability for our health care providers. After too many lost years, there is simply no excuse for Oklahoma not to expand Medicaid.