THOSE who bemoan public school funding cuts need look no further than Medicaid to identify a major cause. In 2011, Oklahoma government expenditures on health services exceeded spending on education. Although the budget for K-12 schools was cut in recent years, the budget for the Oklahoma Health Care Authority, which administers Medicaid, increased.
The trajectory of Oklahoma's Medicaid program is unsustainable. It's grown from $333 million in state appropriations in fiscal year 2000 to $922 million this year. Policymakers are currently considering an expansion of Medicaid; it would be better to make the existing program more effective.
Fortunately, Medicaid reforms pioneered in Florida may provide a way to not only reduce costs, but also improve benefits for the poor. Officials with the Florida Foundation for Government Accountability, a conservative think tank, were in Oklahoma recently to tout this patient-centered approach to saving taxpayer money.
In traditional Medicaid, the government determines services covered and payment rates. The Florida reforms provide patients a choice of private plans (which bid to participate) that offer different benefits, although all are required to provide medically necessary services. Patients in traditional Medicaid are limited to a single plan; those covered by the Florida reform project enjoy as many as 11.
Under the Florida reforms, providers are paid more for treating patients with the greatest medical challenges. That incentivizes providers to treat the sickest of the sick while improving coordination of care to reduce waste.
Those incentives are working. One plan offered to Florida Medicaid recipients focuses on patients with HIV; another is designed for children with severe physical and developmental health needs (think autism or acute medical conditions). Florida's reform pilot plans have featured up to 12 additional services not available to those in traditional Medicaid. The program also provides participants financial incentives for healthy behavior, such as immunizations and annual physicals.
Because patients can leave one plan for another, providers must keep enrollees happy through top-notch service. There has been some turnover among providers in the reform program — but that's a good thing. Plans that fail to satisfy Medicaid patients are falling by the wayside. On the other hand, the only alternative for those displeased with traditional Medicaid is to go uninsured — take it or leave it.
The Florida reforms were championed by former Gov. Jeb Bush and took effect in five counties in 2006; they are scheduled to go statewide next year. Individuals served through the pilot program reported higher satisfaction than those in traditional Medicaid. More importantly, 64 percent of health outcomes were better for those in the reform pilot. For Florida taxpayers, the Medicaid reforms saved $118 million annually, a sum that could jump to more than $1 billion statewide.
That success shows why Oklahoma lawmakers should take a long, hard look at the Florida model as they grapple with the challenges of Medicaid, especially since these reforms have received support from both the Bush and Obama administrations. Oklahoma's Medicaid spending averages $3,171 per recipient. If our costs were comparable to Florida's reform program, Oklahoma could save more than $700 million per year (in both state and federal dollars).
Those savings could make a big difference for other needs such as schools, roads and public safety, while also giving the poor better medical care.