Before he takes Oklahoma into a Medicaid block grant program that we may later regret, Gov. Kevin Stitt might want to take a closer look at what’s going on in Puerto Rico.
Puerto Rico is part of the United States, but it isn’t a state. It’s a territory. The distinction is real in a number of ways. The people there are U.S. citizens. They pay the same Social Security and Medicare taxes as you and I, but they generally don’t pay the personal income tax. They also don’t get full representation in Congress or a vote in presidential elections outside of the primaries.
They also don’t get the same Medicaid funding or services as most states.
A reduced variation of Medicaid in Puerto Rico and other U.S. territories is funded through annual block grants. The territorial governments get a set amount of money — $367 million in the case of Puerto Rico for fiscal year 2019 — which is matched with local taxes to pay for anyone who is eligible for the program.
The critical issue here is that federal funding is capped. If more people need Medicaid services (last year the total bill was closer to $2.5 billion in Puerto Rico) than the block grant anticipated, there’s a problem.
There’s a problem.
You may have heard a recent National Public Radio story about what’s happening in American Samoa, where Medicaid money is running out. With no safety net, cancer patients in American Samoa are in danger of having their chemo therapy cut off; others could be denied any services.
Puerto Rican leaders have told Congress that it is also in danger of running out of Medicaid money well before the fiscal year ends. Puerto Rico would cut 125,000 people with incomes below $800 a month from its program and reduce dental and prescription drug benefits for others.
But don’t worry, Oklahoma.
Here in the states, Medicaid is a flat-out government entitlement. Anyone who is eligible gets served. For people currently eligible in Oklahoma — income-eligible children, pregnant women and the elderly and disabled — the federal match is roughly two-thirds of the costs. (If we accepted Medicaid expansion to cover income-eligible working age adults, the federal match would be 90% forever.) Those programs are open-ended. If more people show up than anticipated, the feds pay their share.
But that’s not how Gov. Stitt thinks it should be.
He’s stepped forward with the idea of expanding Medicaid in the state with a block grant, a legally dubious move that is being pioneered by Tennessee.
Oklahoma would negotiate a set amount for Medicaid services with federal officials and then hope that it can bring the program in under that number. If costs exceed the block grant, Oklahoma is left holding bag. If costs are under the block grant, Oklahoma would get to keep a negotiated portion of that money, probably half. That gives the state a financial incentive to push eligible people off Medicaid or find other ways to stint on services.
It’s like Medicaid expansion, only not as good.
And potentially it’s very expensive, if the state screws up its negotiated block grant amount.
Ah, Puerto Rico! You lovely island. Island of tropical breezes. Always the pineapples growing. And Medicaid budgets blowing.
Judy Solomon, a senior fellow at the Center on Budget and Policy Priorities, is a health policy expert who has written about the Puerto Rico mess and the Tennessee plan.
Oklahoma would be crazy to negotiate a deal as bad as Puerto Rico’s funding, but the territory’s problems remain a cautionary tale about the potential pitfalls of block grant funding, she told me.
There’s a fundamental logic flaw behind the block grant idea: Both sides are negotiating toward a figure that they think will save their side money; both can’t be right. To bring the state’s Medicaid costs in below the block grant amount, the state’s incentive is to eliminate patients, reduce services and provide lower quality care.
Again, it’s like Medicaid, only not as good.
If that gives Medicaid expansion opponents an opportunity to say that the program doesn’t work, just like they said it wouldn’t, all the better.
Oklahoma needs to accept available federal money to fund Medicaid expansion.
Our working poor are uninsured at a rate second only to Texas. That keeps our state sick and unable to meet its workforce needs. It means ordinary middle class Oklahomans are one medical disaster away from bankruptcy. It means our rural hospitals are teetering on failure.
Block grant funding would be better than nothing at all, but there’s an obviously better alternative on the table, straightforward acceptance of federal Medicaid funding at a permanent rate of 90% no matter how many people sign up. That’s the plan proposed in a state constitutional amendment likely to go before voters in November, and it ought to be Gov. Stitt’s choice too.