FUNDED by tobacco tax revenue, Insure Oklahoma was created several years ago to provide matching funds to the state's small businesses to help them offer private health insurance to employees. Yet lawmakers have since voted to shift millions from Insure Oklahoma to shore up Medicaid, the government health care program for the poor.
Since Medicaid provider payments are historically less than actual expenses, that decision may ultimately shift costs and increase price pressures on private insurance. This year, lawmakers shifted $23.5 million from Insure Oklahoma to other uses. They did the same thing in fiscal years 2009 and 2011. So far, lawmakers have moved $161.7 million out of Insure Oklahoma, mostly to Medicaid.
That money was technically “extra” cash left over due to Insure Oklahoma's current eligibility restrictions. Still, it's a shortsighted move that papers over the financial problems created by Medicaid while limiting efforts to increase access to private health coverage.
Financing Medicaid is a growing problem that threatens state governments. That point is reinforced by a new national report. It shows that maintaining Medicaid, even without the expansion authorized by Obamacare, could require states to cut school funding or levy tax increases.
The Report of the State Budget Crisis Task Force, co-chaired by former Federal Reserve Chairman Paul Volcker, notes national trends. The report doesn't focus on Oklahoma specifically, but local policymakers should still pay attention to its conclusions.
The report notes the cost of Medicaid has been “growing faster than the economy since the program's inception” and costs “generally have grown faster than state revenue as well.” Today, the program is “such a large part of state spending” that its costs “can no longer be absorbed without significant cuts to other essential state programs like education or unpopular tax increases or both.”