January 29, 2013

Responses from Governor’s Office and an Advocacy Group

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In reporting a story about a Shawnee clinic for the uninsured run by Gov. Mary Fallin’s aunt, Oklahoma Watch contributing writer Warren Vieth contacted the governor’s office seeking comment.

Fallin’s spokesman, Alex Weintz, provided an eight-paragraph statement to Oklahoma Watch from the governor as well as his own perspective.

Fallin’s and Weintz’s responses are below.

Oklahoma Watch does not take editorial positions on issues and strives to ensure that its content is fair, balanced and comprehensive. In the interest of balance in this case, we also are posting below most of an article by the Oklahoma Policy Institute, an advocacy group, that presents a different view on Medicaid expansion.

David Fritze

Executive Editor

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Gov. Mary Fallin to Oklahoma Watch:

“Oklahoma has a long tradition of investing in the health needs of our citizens. In Fiscal Year 2013 alone, the state spent $2 billion on Health and Human Services, supporting programs like Medicaid, Medicare, health clinics, mental health treatment and other health initiatives.  Together that spending accounted for almost one third of our total state budget. As governor, supporting our health care and mental health programs is a priority of mine, which is why I will propose a substantial increase in funding to health-related initiatives in my next executive budget.

“In the last year, it has become clear that many of our health improvement programs are working. The state has thankfully moved from 49th to 43rd in health rankings. While we still have much work to do, our focus on improving the overall health of our citizens and our financial commitment to health related services is moving the state in the right direction.

“Much of this progress can also be attributed to the many Oklahomans who choose to work in the fields of health care or mental health services. One of these individuals is my aunt Dorthea Copeland, a wonderful lady who has spent much of her career dedicated to helping other Oklahomans.  We are blessed to have many caring, compassionate and professional individuals like her working hard to help their neighbors.

“While all of us would like to do more to help low-income Oklahomans get better access to affordable health care, the way President Obama has proposed to do so – through a massive expansion of Medicaid – is unaffordable and unworkable. The state of Oklahoma has rejected this plan for three reasons:

“First, it is unaffordable for the state.  According to a report from the Kaiser Commission on Medicaid and the Uninsured, the proposed expansion of Medicaid would result in a $689 million increase in state Medicaid costs between 2013 and 2022. Expanding Medicaid as proposed by the president would mean that a huge sum of money would be diverted from other priorities, like education and public safety, as well as existing health care programs.

“Second, President Obama’s plan is unaffordable for the country at a time when we are already experiencing a long-term spending crisis.  The same Kaiser Commission report shows Medicaid expansion would cost the federal government $800 billion nationally. This comes at a time when it is universally acknowledged that Washington must make large cuts in government spending.

“Finally, the Medicaid expansion offers no real reform to a flawed and inefficient system. Expansion should be tied to more flexible policies that reduce waste and fraud.

“Moving forward, my administration will continue to support an ‘Oklahoma Plan’ that focuses on improving the health of our citizens, lowering the frequency of preventable illnesses like diabetes and heart disease, and improving access to quality and affordable health care.”

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Alex Weintz, a spokesman for Fallin, to Oklahoma Watch:

“I … want to point out some things that I think are generally underrepresented in the reporting on Medicaid expansion…

“There is a program in Oklahoma designed to help working, low-income Oklahomans get health insurance: Insure Oklahoma. Governor Fallin is supportive of this program, which has proven to be a success. The long-term viability of Insure Oklahoma has been called into question by the Obama administration, which has threatened to pull federal funds. One could just as easily write a story on all the people who will lose their coverage if the White House goes through with that decision.

“Second, it is often asserted that the federal government is going to pay for ‘all of’ the costs of Medicaid expansion for the first three years, and ‘most of’ the costs moving forward. That is incorrect. The federal government will not pay for the millions of dollars in annual administrative costs if Oklahoma expands Medicaid. Furthermore, the 90 percent they will pay in the future still leaves Oklahoma on the hook for almost $700 million between now and 2022 (according to the Kaiser report). Saying ‘most of,’ I believe, obscures the magnitude of what we will indeed be paying for.

“Finally, we anticipate adding more Oklahomans to the Medicaid rolls as a result of ‘woodwork eligibles’ signing up in response to the Affordable Care Act. Therefore, Oklahoma will be incurring a large amount of new costs (the Health Care Authority estimates between $20 million and $36 million per year) regardless of the decision not to expand Medicaid. Expansion would only increase those new costs.”

***

David Blatt

Director, Oklahoma Policy Institute

Excerpt from Nov. 27, 2012, article:

“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 is based on unrealistic assumptions of how many people will enroll in Medicaid, includes costs that the state will absorb whether we expand Medicaid or not, and ignores savings and new revenues that will benefit the state budget. When we consider benefits of increased coverage for the health of our citizens and financial well-being of our health care providers, Medicaid expansion is clearly affordable and urgent.

“The Affordable Care Act expands Medicaid coverage up to up to 133 percent of the federal poverty level for all individuals. Currently in Oklahoma, working-age adults are eligible for Medicaid only if they are parents of dependent children and have incomes below 37 percent of the poverty level. Nearly 50 percent of  Oklahoma adults with income below 133 percent of poverty are uninsured, and the Medicaid expansion would make some 180,000 uninsured adults Medicaid-eligible. Most of this population is not eligible for premium subsidies to purchase private insurance through the new health insurance exchanges, which only assist individuals with incomes between 100 and 400 percent of the federal poverty level.

“To encourage states to expand Medicaid, the federal government will pay 100 percent of a state’s cost for covering the newly-eligible population from 2014 to 2016, and then phase down to paying 90 percent on a permanent basis after 2020. While upholding the Affordable Care Act and Medicaid expansion, the U.S. Supreme Court that the federal government could not withdraw all of a state’s Medicaid funds if it opted not to expand Medicaid. This effectively leaves states the choice to expand coverage for low-income adults.

“The Governor’s projected state costs of up to $475 million over seven years if Oklahoma chooses to expand Medicaid is misleading for several reasons:

  • “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. As the Center on Budget and Policy Priorities notes: No means-tested public program has ever achieved a 100 percent participation rate. Even Medicare, a popular universal program, has a participation rate of 96 percent. More credible estimates prepared by the Urban Institute assume that of the uninsured individuals who will be eligible for Medicaid, 10 to 40 percent of those who are currently eligible but not enrolled and 57 to 75 percent of those who will be newly eligible, will sign up for coverage.

“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.”