The Governor's claim (in November) that extending Medicaid would cost the state up to $475 million over seven years (2014 to 2020) is greatly exaggerated and misleading.
It includes costs the state will incur even if it doesn't expand Medicaid. Over 60 percent of the total cost cited by the governor is attributable to people who can already get Medicaid but are not enrolled. This includes some 45,000 children and 15,000 adults. Since Oklahoma will be on the hook for this population whether we expand Medicaid or not, their cost is not properly attributable to an expansion.
It is based on unrealistic participation assumptions. The Governor assumes 100 percent participation of every individual who is eligible for Medicaid — both the newly eligible and those currently eligible and not enrolled. This is contrary to all prior experiences with participation in public programs.
The Oklahoma Health Care Authority projects that the total state cost for newly eligible Oklahomans from 2014 to 2020 will range from $120 million, if 57 percent of those eligible participate, to $158 million, if 75 percent participate. At an average annual cost of $17.1 to $22.5 million, this is equivalent to less than 0.5 percent of current state appropriations.
It ignores savings to the state budget. The state currently spends close to $50 million annually providing health care services to uninsured adults through the Department of Mental Health and Substance Abuse Services, Corrections Department and Health Department. Expanding Medicaid would transfer 90 to 100 percent of the cost of services for newly insured adults from the state budget to the federal government.
It ignores state revenues that will be generated from increased health care spending. Expanding Medicaid would bring hundreds of millions of additional federal dollars each year to Oklahoma that will be spent on health care. This spending will generate additional jobs, which in turn generates additional tax revenues. State tax collections will jump $29.8 million in 2014, assuming that 57 percent of those newly eligible for Medicaid join, according to an OSU estimate.
Bottom line: If we set aside the population that is already eligible for Medicaid, use realistic participation assumptions, and consider offsetting savings and new revenues, the state will be looking at very modest spending increases by expanding Medicaid and could enjoy net savings. Instead of being a deal we can't afford, Medicaid expansion is a deal we can't afford to pass up.