WASHINGTON — In deciding against expanding Medicaid in Oklahoma, Gov. Mary Fallin rejected an estimated $3.6 billion in federal funding over seven years, along with the argument that the additional money would generate jobs while improving the health of the poor.
Fallin's spokesman stressed Tuesday that — no matter how much money the federal government contributed for an expansion — the state ultimately would not be able to afford its share of a larger Medicaid program without cutting funding for other essential services, such as education and highways.
The governor's office is already anticipating much higher Medicaid bills beginning in 2014 because the health care law's individual mandate, the requirement that most people have health coverage, is expected to increase enrollment of thousands of Oklahomans who are currently eligible for the program but not participating.
In fact, the costs associated with those people make up more than half of the $475 million in additional state obligations cited by Fallin on Monday when she announced her decision not to expand Medicaid eligibility to an estimated 200,000 uninsured adults.
“The Oklahoma Health Care Authority is expecting an increase in the number of people who are currently qualified for Medicaid coverage but not participating in the program to go ahead and enroll,” Jo Kilgore, spokeswoman for the authority, said Tuesday. “This is based on the assumption that the individual mandate will cause more qualified people to enroll to avoid potential penalties.”
The decision not to expand Medicaid — announced by the governor on Monday — means some portion of those who would have been newly eligible will now have to purchase private insurance or face penalties.
In weighing the financial implications of expanding Medicaid eligibility, the governor assumed that 100 percent of the people already eligible would sign up for Medicaid when the Affordable Care Act mandates that most people have insurance. And she assumed that 100 percent of those eligible under a Medicaid expansion would sign up.
According to the Oklahoma Health Care Authority, there are 44,000 children and 17,000 low-income parents who are now eligible but not participating.
And there would be 200,000 uninsured adults with incomes below 133 percent of the poverty line that would have become eligible under the expansion.
If the governor's assumptions about enrollment were correct, the state's Medicaid bill would rise by $46 million in 2014 and be $103 million higher in 2020.
The state would receive about $600 million a year from the federal government to cover people already eligible and the expansion. The expansion alone would mean nearly $3.6 billion in federal Medicaid money over seven years.
It's a good deal
The Obama administration and some health care providers, including the Oklahoma Hospital Association, have been making an economic argument for expanding Medicaid.
Marilyn Tavenner, the acting administrator of the Centers for Medicare and Medicaid Services, sent a letter to the Republican Governors Association in July noting that the federal government would pay 100 percent of the expansion for the first three years and at least 90 percent thereafter.
“We expect that, as states study their options, they will recognize that this is a good deal,” Tavenner wrote.
“Significant new federal funding will flow to their states. Their hospitals will get paid for what would otherwise be uncompensated care provided to uninsured patients. Their local economies will benefit and jobs will be created when their hospitals remain viable and their workers remain healthy. And the improved health of their residents who gain access to health care will be invaluable.”
The Oklahoma Hospital Association has estimated that, even if only 57 percent of newly eligible people enrolled, expanded Medicaid in Oklahoma would mean:
• $29.8 million in additional state tax collections annually;
• 4,187 direct health care jobs with $150.8 million payroll;
• 5,158 indirect jobs with $131.2 million payroll.
Alex Weintz, the governor's spokesman, said Tuesday, “The Obama Administration has been arguing that ‘Obamacare' is going to boost the economy for quite some time. Governor Fallin disagrees, and we think the majority of Oklahomans do, as well. Tax increases, government bureaucracy and more spending on entitlement programs even as the country approaches a fiscal cliff are not going to help Oklahoma's economy or the nation's economy.”
Weintz said that the advocates for expanding Medicaid “admit that yearly costs to the state will be in the tens of millions of dollars. That is money that will come directly out of the budget for schools, police academies, roads and bridges and even other health services. Any way you slice it, the state of Oklahoma cannot afford this expansion.”