What you need to know about coverage expansion

Oklahoma’s uninsured rate is among the highest in the US. State lawmakers have the power to change that – earlier this spring, SB 605, a bill outlining a coverage expansion plan, passed committee unanimously. It wasn’t heard before the next legislative deadline, but that bill kicked off serious discussion of expansion both inside and outside the Capitol. Later, in April, more than 300 Oklahomans rallied at the Capitol to urge legislators to expand coverage.

Although time is running out, legislators could still advance a bill this session – or they may punt to a summer working group, putting the issue on a collision course with an initiative petition that could put Medicaid expansion on the ballot for voters to decide in 2020. Regardless, this is a complex issue that inevitably raises a lot of questions. Some of the most common questions, and their answers, are below.

What does expanding coverage mean for state budgets?

Expanding coverage to more than 100,000 Oklahomans can seem daunting. However, expansion comes with a powerful incentive for states in the form of a 90/10 funding split, with the federal government paying 90 percent of the costs of expansion. Given that the federal government’s share of most Medicaid funding in Oklahoma is 62.38 percent, this is an opportunity to bring home many more federal dollars. Put another way, the federal government usually pays about $6 for every $4 the state puts down. But for every $1 states spend on expansion, the federal government will pay $9. 

Expansion will also likely generate state savings. That’s because in many cases, people who would gain coverage through expansion are already getting some form of health care through the state – but the care they’re getting is patchwork, only covers certain acute issues, and is paid for entirely or almost entirely by the state. An Oklahoman who gets access to mental health treatment through state-funded services but no other consistent health care will, after expansion, gain comprehensive health coverage – and the federal government will pay 90 percent of the cost. This is in part why consultants hired by the Governor’s office in 2013 estimated state savings of $400 to $600 million over a decade if the state expanded care. Those are funds that the state could then reinvest into other underfunded core priorities such as criminal justice and community mental health.

The experiences of other states bear this out. Numerous states, including Arkansas, Michigan, Montana, and Virginia, have found that expansion generates significant budget savings. A large-scale review by the health research powerhouse Kaiser Family Foundation reported that “states expanding Medicaid under the ACA have realized budget savings, revenue gains, and overall economic growth,” and that “Multiple studies suggest that Medicaid expansion can result in state savings by offsetting state costs in other areas, including state costs related to behavioral health services, crime and the criminal justice system, and Supplemental Security Income program costs.”

Could the federal government not pay its share?

Making expansion a real option for states hinges on the 90/10 enhanced federal match, and lawmakers in some states have expressed concerns that the federal government might not hold up their end of the bargain. The simplest way for states to deal with this concern is to build a “circuit breaker” into their exchange plans that freezes enrollment if the federal match ever drops below 90 percent, as Arizona and Nevada have done.

However, there’s a little reason to expect that this could be a problem for states. The federal government has never reduced eligibility for any Medicaid program and has never backed out of its statutory funding match. The only way this could be a concern is if Oklahoma were to request that its Medicaid program be cut by converting it to a block grant or per capita cap, which would give the state greater program flexibility in exchange for decreasing the amount of money from the federal government. Some proposed Affordable Care Act replacements would cut Medicaid funding to states through block grants or per capita caps, but none of these plans have been successful in Congress, even under unified Republican control. Now that Democrats hold the majority in the U.S. House, Congressional changes to the federal role in Medicaid funding are highly unlikely.

Who would enroll?

Estimates vary, but between 153,000 and 196,000 Oklahomans who are currently uninsured would gain coverage if the state expanded eligibility. Of those, some 111,000 Oklahomans don’t have access to health coverage. The majority of people in this group are childless adults who don’t earn enough to qualify for subsidies on Healthcare.gov. The remainder are parents who earn too much to qualify for SoonerCare but not enough for Healthcare.gov subsidies.

Others who would be covered by expansion may currently be eligible for but not enrolled in subsidized Marketplace coverage. Roughly an equal number are enrolled in other coverage – most likely subsidized Marketplace coverage – but would transition to expansion coverage. That’s because in expansion states, expansion coverage covers individuals up to 138 percent of the federal poverty level ($17,236 for a single person), with subsidies for Marketplace coverage available at incomes above that cutoff. But in nonexpansion states, subsidies are available to lower-income enrollees, from 100 percent of the federal poverty level ($12,490 per year for a single person) and up. When states expand coverage, those enrollees shift from the Marketplace to expansion coverage, which typically has lower out-of-pocket spending and cost-sharing – both important factors for low-income enrollees.

Coverage expansions also result in “welcome mat” enrollment, when people who were previously eligible for, but not enrolled in, coverage sign up. Nineteen thousand Oklahomans are currently eligible for but not enrolled in SoonerCare, and many would be likely to enroll if the state were to expand coverage. 

Who would benefit?

Most of the currently uninsured Oklahomans who would enroll are childless adults earning poverty or near poverty-level wages, working in jobs like home health aides, child care workers, and food servers and preparers. More than 7 in 10 are working or are in a family with someone who works. Almost 4 in 10 are middle-aged (age 35-54) and 17 percent are near-elderly (age 55-64). While the majority are childless adults, fully 23 percent are parents or otherwise responsible for a dependent (grandparents raising a grandchild, for instance).  

Children would be key beneficiaries. Oklahoma’s child uninsured rate is the fourth-highest in the US, which follows the trend of nonexpansion states having higher child uninsured rates. Many uninsured children in Oklahoma are eligible for SoonerCare, but aren’t enrolled, often because parents don’t know that their children qualify for coverage. Expanding coverage would make it more likely parents will enroll – and enroll their child as well. But expansion helps insured children whose parents are uninsured or underinsured, too. Being able to see a doctor or fill a prescription makes it easier to be a better parent, and that’s good news for Oklahoma kids.

Oklahoma veterans would also gain access to needed health care through expansion. As of 2015, nearly 12,000 Oklahoma veterans – more than 1 in 12 veterans in the state – were uninsured. Expansion is critical to veterans: they are not all eligible for services through the Department of Veterans Affairs (VA) and some, especially in rural areas, struggle to access VA facilities. Uninsured veterans report significant unmet medical needs. Veterans also have a higher risk of experiencing homelessness than the rest of the population, especially those who are low-income or who have a disability, chronic medical issue, mental illness, or history of substance use. Expansion coverage helps both veterans experiencing homelessness and those at risk of homelessness get the medical care they need.  

What kind of coverage will they get?

Expansion coverage should be comprehensive, affordable, and easily available. Medicaid coverage, which is the foundation of expansion coverage, is required to cover a wide range of services and has historically had strict limits on cost-sharing and eligibility restrictions. The Trump administration has been encouraging states to apply to waive federal requirements. That’s why some states have sought to charge enrollees premiums and higher copayments, to impose “healthy behavior screenings” and work requirements, and to duck covering important services like non-emergency medical transportation.

However, those federal guardrails exist for important reasons. Individuals and families who qualify for expansion coverage are by definition low-income, doing their best to get by. Health coverage is an important part of helping families build financial security – in fact, people who have gotten coverage through expansion say that it helped them find a job. Adding new and unnecessary red tape to their health coverage means people will lose needed health care because they can’t navigate complex bureaucracy. That’s an inefficient and harsh use of taxpayer dollars. As Oklahoma lawmakers set about building an Oklahoma plan, they should ensure that the plan they are building is the best plan for the people who will use it.   

What can I do?

Your legislators need to hear from you! You can use our easy form to contact your legislators, join a Together Oklahoma chapter to be part of an advocacy team, or reach out on your own. Your legislators hear from lots of constituents and interest groups on a broad range of issues. Make sure they’re hearing from you, too.

ABOUT THE AUTHOR

Carly Putnam joined OK Policy in January 2014. She previously worked as an OK Policy intern. A Kansas City native, Carly graduated from the University of Tulsa in December 2013 with a BA in Sociology and Women’s and Gender Studies. As a student, she was a participant in the National Education for Women (N.E.W.) Leadership Institute and interned with Planned Parenthood. She is a graduate of the Oklahoma Center for Nonprofits Nonprofit Management Certification Program, the Oklahoma Developmental Disabilities Council’s Partners in Policymaking program, and The Mine, a social entrepreneurship fellowship in Tulsa. She previously served as board president for United Campus Ministry at the University of Tulsa. At OK Policy, Carly supervises policy staff and conducts research focusing on health care and the safety net.

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