Medicaid expansion cost understated, group says
BY WAYNE GREENE World Senior Writer
Friday, September 07, 2012
9/07/12 at 7:45 AM
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A Heritage Foundation study shows Oklahoma's cost of accepting a Medicaid expansion under the Affordable Care Act could be much, much higher than promised.
"State legislators cannot afford to be myopic when assessing the costs and benefits of expanding Medicaid," said Heritage Foundation health economist Drew Gonshorowski. "Aside from problems already apparent in Medicaid, such as patient access, states must also face uncertainty in how much the expansion will actually cost."
The Heritage Foundation is a conservative think tank founded in 1973.
The Affordable Care Act - "Obamacare" to its opponents - proposes to assure health insurance for the poorest Americans by making everyone who earns less than 133 percent of the poverty level eligible for Medicaid.
Originally mandated by the law, the Medicaid expansion became optional under a U.S. Supreme Court ruling earlier this summer.
The law's promise is that the federal government will cover 100 percent of the costs of newly eligible Medicaid patients for the first three years, and then gradually increase the states' contributions to a cap of 10 percent in 2020.
But Gonshorowski points out that in his fiscal year 2013 budget, President Barak Obama proposed reducing the federal match on the Medicaid expansion.
The Heritage Foundation study ran computer model estimates of state costs under a number of scenarios in which the federal government shifts more of the Medicaid cost.
The foundation's estimate of Oklahoma's 2014-2022 costs under the promised ACA funding scheme is $319.3 million. In the first six years, the cost would be $109 million.
Under the most severe scenario considered - in which the state's share is shifted to a blended rate of the ACA formula, the state's current state Medicaid rate, and the state's enhanced match for the Children's Health Insurance Program - Oklahoma's 2014-2022 costs rise to more than $1 billion.
The Heritage Foundation's figures are based strictly on potential Medicaid costs for the expansion. It doesn't include other costs, such as currently Medicaid-eligible patients who come out of the woodwork with the law's implementation.
Those patients are charged to the state at its current rate, which is about 36 percent.
It also doesn't include savings the state would likely realize in mental health, prison and public health programs and increased state tax revenue that some groups estimate would result from the increased number of medical professionals the state would need to serve new Medicaid patients.
A 2011 Urban Institute study suggested that those factors could actually leave states including Oklahoma with a net increase in funds as a result of the ACA Medicaid expansion.
Gov. Mary Fallin has put off making a decision on whether the state should accept the Medicaid expansion funding until after November's election, but she has said she thinks the Affordable Care Act is unaffordable, unworkable and should be repealed.
State Rep. Jason Nelson, R-Oklahoma City, said the report's findings concerned him although they weren't shocking because they echo information gathered by a joint legislative committee on the health care law's impact.
Medicaid costs are already one of the state's top cost drivers, and they limit the state's ability to deal with other spending needs, said Nelson, chairman of the House budgetary subcommittee that oversees human services spending.
David Blatt, director of the Oklahoma Policy Institute, said the report looked at several scenarios, but only one of those conformed with the federal law, and in that case, Oklahoma's cost for the first six years was less than $20 million a year without accounting for other state savings or additional tax revenue.
"When one compares these modest costs for huge economic and health benefits of expanding Medicaid for some 150,000 uninsured low-income Oklahomans, we see this would be an outstanding deal for Oklahoma," Blatt said.
Original Print Headline: Study: Medicaid plan costly
Wayne Greene 918-581-8308
Gov. Mary Fallin: She has put off a decision on whether the state should accept Medicaid expansion funding until after the election