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The Economic Benefits And Perils Of Adopting Medicaid Expansion In Oklahoma

Jackie Fortier
StateImpact Oklahoma
Martha Nell Jones (right) is quick to sign the Medicaid expansion petition because she has several friends “who are in the poverty level who have problems with medical bills and they have been saying how much they need it.”";s:

The campaigns on both sides of State Question 802 have made numerous claims about the potential benefits and perils of Medicaid expansion. Independent producer Dan Epstein checked out some of those claims for Oklahoma Engaged.

Medicaid expansion is just one complex element of the larger even more complex healthcare machine. There’s not enough time to look at every potential economic impact Medicaid expansion may have. But perhaps the best starting point is something no one disputes. Oklahoma would get a little more than one billion dollars from the Federal government.

“That one billion dollars is Oklahoma taxpayer money that we’ve been sending to Washington, DC that we’ve just been leaving on the table,” Yes on 802 campaign manager Amber England said.

Every state helps fund Medicaid expansion through the provisions of the Patient Protection and Affordable Care Act, or ACA. England argues that Oklahoma should reap the benefit of that investment just as 36 other states have done. That billion dollars is ninety percent of the cost to cover the estimated 200,000 thousand people who’d become eligible for Medicaid. Kaitlyn Finley is a policy research fellow at the Oklahoma Council on Public Affairs, an organization opposed to Medicaid expansion. She argues the state’s ten percent share is a new expense Oklahoma can’t afford and that State Question 802 amounts to an unfunded mandate.

“We saw from the legislature earlier this year that they were unable to pass a funding mechanism for even Governor Stitt’s plan to expand Medicaid. So there’s just no good fiscal reason to expand something that doesn’t have any funding behind it,” Finley said. “It could create many budgetary problems next year especially because of all the fallout to COVID and oil prices tanking in Oklahoma.”

A peer-reviewed study of Medicaid expansion’s impact on state budgets was recently published by the New England Journal of Medicine. One of its authors is Doctor Benjamin Sommers, a professor of health policy and economics at the Harvard School of Public Health. The study found that expansion did lead to a big increase in total state spending.

“But when we broke it out by source of funds, the federal revenue…bore the full cost of this expansion,” Sommers said. “States were not spending any more of their own state revenue based on the Medicaid expansion. One of the fears of states that are considering expansion is, well, if we do this, we’re gonna run out of money for our schools or for transportation and other sorts of infrastructure. We see no evidence that states that expanded Medicaid had to cut back in those areas.”

Sommers says the ninety percent Federal match paid for care and subsidies previously funded entirely by state dollars. And it enabled states to tackle uncompensated care because more patients were covered. But Kaitlyn Finley of the Oklahoma Council on Public Affairs calls this cost shifting a shell game.

“Shifting costs from the states to the Federal government is not really saving any taxpayer money, Finley said. “It’s more like putting it on a different credit card because in the end we are all Federal taxpayers.”

The money from Medicaid expansion means healthcare providers get reimbursed for services they might have just written off. And that could help rural hospitals, more than one hundred of which have closed across the country since 2010. But Finley contends Medicaid can’t shore up healthcare in rural areas because of Medicaid’s low reimbursement rates.

“That money doesn’t necessarily entice more doctors to start up practices in those areas because they lose money on those types of patients,” Finley said. “And then rural hospitals, like I said, they’re expanding their pool of patients they lose money on.”

However, researchers at the University of Colorado’s School of Public Health published findings in the journal Health Affairs showing a lower likelihood of rural hospital closure in states that have expanded Medicaid compared to those that haven’t. But Doctor Sommers said lower risk doesn’t mean zero risk.

“And so yes, you can find hospitals that have closed in rural areas in states that expanded Medicaid,” Sommers said. “But to attribute it to Medicaid expansion doesn’t really make any sense. It flies in the face of the evidence that these closures are happening more often in non-expansion states.”

These aren’t the only economic issues surrounding State Question 802. The Oklahoma Hospital Association commissioned a study that predicts expansion will create more than 27,000 jobs. Dr. Sommers thinks it’s plausible. But he’s seen no direct evidence of a link between expansion and job creation. For its part, the Oklahoma Council on Public Affairs would like to see ever increasing health care costs addressed before expansion is considered. But amidst all the research and position papers, all the claims and counterclaims, one fact remains. No state that’s expanded Medicaid has undone that decision. 

Dan Epstein’s reporting for KGOU is part of Oklahoma Engaged, a collaboration among Oklahoma’s NPR stations focusing on the 2020 primary and general election. For more information, visit kgou.org. 

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