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ScissorTales: Medicaid expansion wouldn't provide a cure-all

by The Oklahoman Editorial Board Published: March 9, 2013

THE Oklahoma Policy Institute, which advocates for government programs and increased taxpayer funding, includes a lot of useful data and detailed analysis in its communications outreach. This doesn't, however, mean that OK Policy always has the right message.

Its officials argue that Medicaid expansion is worthwhile because they find the current system relatively inexpensive. But Oklahoma's Medicaid program currently covers low-income children and pregnant women, seniors and persons with disabilities. The proposed expansion would add about 180,000 people, potentially including many with serious, long-term health problems. You can't extrapolate the cost of covering a demographically broader (and potentially sicker) population by examining the costs of covering a dissimilar and narrowly tailored group.

Furthermore, in an issue briefing, OK Policy notes that Medicaid costs “have risen at a more modest pace than total health expenditures or premiums for employer-sponsored coverage” and that per capita costs for Medicaid patients “are significantly below” those for patients covered by private insurance.

But a significant reason for the difference in growth rates is that private insurance absorbs cost-shifting created by Medicaid. The market rate paid by private insurers is often up to 140 percent of Medicare rates, which means Medicare rates are unrealistically low. And Medicaid rates are even lower. In Oklahoma, OK Policy notes, Medicaid rates are 96.5 percent of Medicare rates. This points to significant cost-shifting to those with private insurance or paying out of pocket.

Trumpeting the fact that Medicaid's costs are rising more slowly than private insurance is like bragging that your electric bill is lower when you've got an extension cord plugged into your neighbor's outlet.

‘Oh No!'

Restoration of the 2 percent payroll tax cut on Jan. 1 was a type of sequestration, says a blog posting by the Oklahoma Council of Public Affairs, the conservative counterpart to OK Policy. In response to Barack Obama's Chicken Littleism about effects of that other sequestration, the OCPA says average folks took a pay cut when the payroll tax went back to its previous rate. OCPA says the headlines today should be on the order of “Family Eliminates One Movie Outing Per Month” or “Billy Settles for Regular Shoes, Not Air Jordans!” instead of “Sequestration Will Destroy Nation As We Know It!” — or some such. Families react to having less money by making “simple, minor adjustments in their spending practices, with little or no pain and cost, to reflect the 2 percent taxpayer sequester,” the blog says. Obama? The Great Divider reacts with partisan fear-mongering.

What a bargain!

Talk about clearing a low hurdle. Amtrak's Heartland Flyer route, which runs from Oklahoma City to Fort Worth, Texas, is considered one of Amtrak's success stories because it loses only $43 per rider. In the private sector, that's a path to bankruptcy. In government, that's an achievement. A report by The Brookings Institution found that only four Amtrak routes nationwide manage to generate enough revenue to cover costs; most lose far more than the Heartland Flyer. This is one of 15 states that contribute to local Amtrak routes. Oklahoma will take on a larger role after Oct. 1 when states will be required to provide greater financial support for short routes. The only consolation for Oklahomans may be that this deal could have been much worse.

Not cutting enough?

As the sequester neared, Reason magazine editor-in-chief Matt Welch was among those arguing that the looming government budget cuts didn't go nearly deep enough. Writing at, Welch pointed out that the amount being cut would equal “a tiny sliver of the federal budget” and should leave people asking what the country gained from doubling government spending from 2000 to 2010. “If the bureaucrats can't produce an explanation for the price increase of government, then they should not expect their budgets to be rubber-stamped by an already suffering public,” Welch said. Complaints are coming from “a government money machine having difficulty adapting to a political universe that no longer accepts automatic annual increases,” he said, and those will continue until politicians muster the gumption “to align government expenditures within miles of revenue.” Don't hold your breath waiting for that to happen.

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by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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