KGOU

Budget Cuts Impact People With Rare Diseases; Tax Implications Of OU Retirement Proposal

Feb 5, 2016

There’s no shortage of issues to address when it comes to the $900-million-and-counting budget shortfall over the next four months of legislative session.

The number could grow larger when the Board of Equalization certifies new numbers later this month. In Gov. Mary Fallin’s executive budget unveiled Monday during her State of the State address, most state agencies will see a 6 percent cut. Some, like the Oklahoma Health Care Authority, will take a smaller 3 percent hit.

For people with incredibly rare diseases, the cuts could be devastating. Tonia Sina’s atypical hemolytic uremic syndrome is literally a one-in-a-million diagnosis. Less than 300 people in the U.S. have the disease, according to The Journal Record’s Sarah Terry-Cobo:

She had two kidney transplants and spent years in dialysis. The medication she takes every two weeks costs $20,000 per dose. She is hospitalized about once a month because of complications with the disorder.

Her disability makes her eligible for Medicaid. She relies on the government-sponsored insurance program that typically covers elderly adults to pay for what her husband’s private insurance won’t, such as co-payments at doctors’ appointments and hospitalizations, and some prescriptions.

Sina and her husband discuss moving from Oklahoma every year, and that conversation is more poignant as the state cuts funding for health agencies, she said. But they could move only if her husband found a job with insurance that would cover her, she said.

“We’re stuck here and I’m going to make it fit as well as I can, to turn the state to a place that is welcoming for me,” she said.

“More budget cuts just means providing fewer services,” said The Journal Record’s managing editor Adam Brooks. “People with rare diseases were rallying at the Capitol earlier this week to make sure that legislators understand that they're the ones who are going to be directly affected by these problems.”

The 3 percent cut in Fallin’s proposed budget would mean a $28 million cut to the OHCA, and spokeswoman Jo Kilgore says agency isn’t sure how it would address the reduction just yet:

From Terry-Cobo:

Agency executives are examining all possible solutions, including cutting reimbursement rates to providers, she said. HCA’s board approved in December a 3-percent cut to providers in anticipation of the state’s budget deficit.

Kilgore said she’s glad the governor considers her agency a priority.

Oklahoma Policy Institute Executive Director David Blatt said the HCA doesn’t have many options on where to reduce its budget. Nearly $450 million has been cut from the Medicaid program since 2010, and the agency has increased co-payments and eliminated benefits for some recipients.

“If they have to cut further, they will have to provide fewer services and cut rates to providers,” Blatt said. “So there will be fewer providers to serve Medicaid patients.”

Credit Brian Hardzinski / KGOU

Retirement Reluctance?

The University of Oklahoma Board of Regents approved a $20 million budget reduction plan last month that includes a $10 million voluntary retirement buyout plan.

As we’ve reported, eligible salaried participants would receive a lump sum payment of 75 percent of their annual base salary, or $100,000 – whichever is smaller.

“That can be a big change to their tax status, so if anybody's going to do that, they need to prepare. They might be in a higher tax bracket,” Brooks said.

Craig Russell, a professor in the Price College of Business, told The Journal Record’s Dale Denwalt what OU is offering potential retirees is very different than what you’d see in the private sector:

If two major businesses merge and swaths of positions need to be eliminated, he said, the buyout would be for people within five years of retirement. OU’s offer is only for those who are already eligible.

“In a public sector context, we have to answer to voters, and voters might be chagrined if someone gets three years’ worth of salary to retire five years early, in order to save two years’ worth of salary,” Russell said. “In the private sector, it’s an economic decision. Period.”

Russell said there’s also no way to know how many people might take the offer. Corbin Wallace, spokesman for OU President David Boren, said that deeper cuts may have to be taken if the goal isn’t reached.

“There are so many factors that go into decisions to retire,” Russell said. “At best, I’m imagining it’s going to influence folks that are just on the cusp and need a little bit of a sweetener to make them do it this year instead of next year. If that’s true, there are going to be fewer folks retiring next year, because we used them all up this year.”

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