What’s really behind Oklahoma’s rising Medicaid costs (Capitol Updates)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol. You can sign up on his website to receive the Capitol Updates newsletter by email.

A meeting of the House Appropriations and Budget Committee last week examined why Federal Medicaid Assistance Percentages (FMAP) funds are going down in Oklahoma while at the same time those enrolled in Medicaid are increasing or remaining the same. The rationale of the federal Medicaid matching formula is that if incomes in a state are going up fewer people in the state should need Medicaid. Therefore the federal government reduces its assistance to the state. In Oklahoma incomes are up so the federal match goes down. But the number of people enrolled in Medicaid is not going down, thereby adding to the state’s budget miseries. Why?

The answer is that the increase in income is not finding its way down to the people who must rely on Medicaid to cover their medical expenses. The numbers are pretty astonishing. The Oklahoma Healthcare Authority reported to the committee that from 1979 to 2007 income in Oklahoma grew, on average, 33.9 percent; but that growth was not proportionate. During that 28-year stretch income growth for the top 1 percent of earners was 149.6 percent. Income of the remaining 99 percent was just 20.3 percent.

Even during the Great Recession, according to OHCA, from 2009 to 2012 incomes for the wealthiest 1 percent of Oklahomans grew 39.6 percent with the remaining 99 percent seeing just 3.5 percent income growth. As a result, the average income for the top 1 percent in Oklahoma was $1.1 million in 2012, 26.3 times greater than the $41,995 average income of everybody else, the OHCA data shows.

These are averages, not intended to pit the 1 percent against the 99 percent. There are many doing quite well earning less than $1.1 million per year, while others are struggling while earning above the $41,995 average of the 99 percent. But, the numbers explain how the Oklahoma economy is showing overall improvement while Medicaid use is failing to decline. The challenge of this generation of policymakers is to find a way raise the income of those at the lower end of the socio-economic spectrum and restore a better balance. It’s in everyone’s interest.