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Health Insurance and the Future of Medicaid in Oklahoma

July 14th, 2014

Credit: That Hartford Guy via Flickr under Creative Commons

Credit: That Hartford Guy via Flickr under Creative Commons

This past week, the Oklahoma Health Care Authority, announced a round of deep cuts to the state’s Medicaid program reimbursement rates. The cuts will result in a total reduction of about 7.75 percent to reimbursements with an estimated $48 million in savings for the Sooner State.

However that is not necessarily good news for providers participating in the state’s Medicaid program. These cuts could trigger more doctors and hospitals to drop out of the public health insurance program. An outcome like that could make life harder for thousands of low income Oklahoma residents who rely on the program to find a doctor or hospital to treat them.

Medicaid in Oklahoma

The reimbursement cuts come at a time when Oklahoma is wrangling with the federal government over the future of the state’s Medicaid program. Oklahoma is one of about two dozen states that did not accept the formal Medicaid expansion that was originally mandated under the Affordable Care Act (ACA). This has caused problems for Oklahoma, and a number of other states who are trying to continue their Medicaid programs without accepting the ACA’s new version of the program.

Prior to the Supreme Court’s 2012 ruling on the ACA, the legislation’s Medicaid expansion was mandatory for every state. Despite the court upholding the majority of the ACA, they invalidated the mandatory expansion of Medicaid . Thus it was made optional for the states to expand their programs according to the ACA.

The move put Oklahoma in a unique position this year. Because Oklahoma’s Medicaid program did not technically meet the federally mandated standards of the program (they did not accept the ACA expansion), they would have been forced to shut down their state’s entire Medicaid program in 2014.

However thanks to some last minute negotiating with the Centers for Medicare and Medicaid (CMS), Oklahoma has secured permission for the future of its Medicaid program in its current form, known as Insure Oklahoma, at least until the end of 2015.

At that point Oklahoma will either need to accept the ACA version of Medicaid or attempt to renegotiate with CMS. Federal officials have already express their ire at the current arrange, which makes a renegotiation unlikely. Regardless of how things play out next year, the short term future and well being of those enrolled in Medicaid in the Sooner State could be in jeopardy because of these reimbursement cuts.

Medicaid and Health Insurance Reimbursement Rates

Medicaid and Medicare doctor reimbursement rates are typically the lowest in the country. This means those providers accepting Medicaid and Medicare patients are paid less for each patient than they are for patients with private health insurance. It’s also worth noting that private health insurance companies take their cues to raise or lower reimbursement rates based off of what the Medicaid and Medicare rates are.

Many doctors and hospitals do not choose to accept Medicaid with the aim of getting rich. But they still accept it nonetheless. For Oklahoma doctors already treating Medicaid patients this will mean a substantial reduction is what they are paid per patient treated. Likely the result will be that the network of doctors and hospitals accepting Medicaid will shrink.

The Oklahoma Health Care Authority estimates that the cuts will save the state around $48 million. Another way to look at it is that doctors and hospitals accepting Medicaid patients will lose $48 million with these cuts in place.

Sadly  health care in the United States is a for profit system. Meaning the doctors and hospital need to turn a profit in order to keep their doors open. Contrary to parts of the mainstream media, the ACA does very little to change this. In fact the ACA has left the majority of the U.S. health care system intact, but that is a topic for another day.

The Oklahoma Health Care Authority is seeking more cuts than just the ones voted on this past week. In total they’re hoping for more than $100 million of budget cuts. This 7.75 percent reimbursement cut is just the start.  The agency cited a $55 million loss in federal funding, a growing caseload that has added around $40 million in program costs, and a loss of tobacco tax dollars of around $13.7 million because of declining smoking rates as reasons for the cuts.

At the moment 805,000 people receive health insurance through the state’s Medicaid program. With this round of cuts, these people are in danger of losing their access to health care. Without a doubt many providers will take these reimbursement cuts into consideration when they are renegotiating their contracts for 2015.

Is the ACA Medicaid Expansion the answer?

The main reason the Oklahoma Health Care Authority is seeking these cuts is a huge loss in federal funding for Medicaid. Would the state accepting the full expansion of the ACA’s Medicaid program help solve their fiscal problems? The answer is very likely yes.

The ACA expansion of Medicaid includes expansion of the program to those individual with incomes up to 138 percent of the Federal Poverty Level (FPL). Currently the Insure Oklahoma Medicaid program includes coverage for individuals with incomes up to 200 percent FPL. However Insure Oklahoma has a cap on the number of enrollees per year whereas the ACA expansion does not.

Along with the expansion would be a flood of federal money to help implement the program and fund it for the next several years. That sort of extra federal funding is just what  Oklahoma needs to keep its Medicaid program going in a sustainable manner beyond 2015. Of course the ACA expansion of Medicaid does not come with mandated larger reimbursement rates for providers. This could prove to be a sticking point with bringing new providers on to accept Medicaid.

In any event time is running out before the start of 2015 open enrollment in November. There is still time to restore the cuts and find other ways to fund the Medicaid Program. Unfortunately though it doesn’t seem likely to happen any time soon.