The Duncan Banner

December 17, 2012

Oklahoma hospitals determined to expand state’s Medicaid program

Megan Bristow
The Duncan Banner

DUNCAN — Despite Gov. Fallin’s position against Medicaid expansion, many hospital administrators are still educating themselves with the facts that they say will make Medicaid expansion both affordable and beneficial.

In a press conference on Nov. 19, Gov. Fallin announced that Oklahoma will not be creating a state-based health insurance exchange or participate in the Medicaid expansion.

As a result, the Oklahoma Hospital Association said they would continue to advocate Medicaid expansion.

Under current conditions one in six or 636,000 Oklahomans are uninsured according to numbers released by the Oklahoma Hospital Association. Duncan Regional Hospital’s President and CEO Jay Johnson said that 15 percent of the patients that he sees throughout the year are without insurance, Medicare or Medicaid.

Eligibility in the Medicaid program currently:

n Requires that children up to the age 19 be at no more than 185 percent of the Federal Poverty Level (FPL)

n Requires that pregnant women be at no more than 185 percent of FPL

n Requires that parents of dependent children be at no more than approximately 37 percent of FPL

n Requires that a single parent transitioning from welfare to work be at no more than 185 percent of FPL

n Requires that the aged, blind and disabled be at no more than 100 percent of FPL.

With the current Medicaid eligibility rules, the general adult population is not eligible for benefits unless they are a pregnant woman or the parent of a dependent child at approximately 37 percent FPL.

“There is almost no adult coverage,” Johnson said.

Because of the number of uninsured and underinsured patients in the state, Oklahoma hospitals provide an estimated $600 million annually in uncompensated care. Johnson said at Duncan Regional Hospital alone, they provided $20,362,000 in uncompensated care last year.

The expansion of Medicaid in Oklahoma would provide health insurance to anyone that was at 133 percent FPL. The Oklahoma Hospital Association said this equals an annual income of $20,123 for a family of two. Under the Medicaid expansion, an additional 180,000 to 200,000 additional Oklahomans would be eligible for Medicaid. If each of these Oklahomans enrolled, the number of uninsured Oklahomans would decrease by 28 percent.

“If you just look at Stephens County as a percent of the state population, you can assume somewhere between 2,142 and 2,380 of the projected 180,000 to 200,000 people that would be helped by expansion live locally,” Johnson said. “These are people who work, but earn up to 133% of federal poverty guidelines or less than $30,657 for a family of four annually. This group of folks are caught in between not being able to afford commercially available health insurance and not qualifying for the state Medicaid program.”

According to a document by the Kaiser Family Foundation “Key Facts on Medicaid and the Uninsured,” pregnant women that are currently covered at 185 percent of FPL could lose coverage if they were between the 133 percent and the 185 percent FPL.

“Individual states would have the option to lower that income level from 185 percent to 133 percent,” Oklahoma Hospital Association Vice President of Finance and Information Services Rick Snyder said.

“The KFF document says states can reduce the income limit for eligibility for pregnant women to 133% of FPL after the exchanges are up and running in 2014,” Snyder said.

Under President Obama’s Affordable Care Act (ACA), the expansion of a state’s Medicaid program would not affect the care of children even if children come from families that are above the 133 percent FPL. States will be required to maintain eligibility and enrollment policies in place at the time the reform was enacted until Sept. 30, 2019. Oklahoma is already one of only four states that limit children’s coverage to families that make below 200 percent of the FPL.

Johnson said that the ACA is a result of negotiations between national legislature and health care leaders.

“Hospitals negotiated with the President and that Congress and agreed that if they (the government) would expand insurance coverage then hospitals would agree to nationally $155 billion in cuts,” he said. “It translates down to Oklahoma hospitals over 10 years basically agreeing to $2 billion dollars less coming to us from Medicaid.”

To compensate from those cuts, hospitals will either have to continue to raise the cost of health care prices, an area where the ACA would help.

“The Affordable Care Act overall was designed to get to where 95 percent of the country has access to health insurance or has health insurance,” Johnson said.

“We know at Duncan Regional right now that 15 percent of everyone that comes to us throughout the course of the year has no health insurance. What we stand to pick up through the ACA even though what we get paid is going to drop significantly, the idea is that we only have 5 percent that come to us without health insurance. That is what we could gain.”

Through the estimates calculated by the Oklahoma Hospital Association, Duncan Regional Hospital would gain about $1 million in revenue each year.

Johnson said that it is important that citizens realize that those cuts and changes in health care will be happening in Oklahoma despite Oklahoma’s current refusal to expand Medicaid.

“Whether we expand Medicaid or not, those cuts are happening,” Johnson said. “What is going to happen now is our taxes are going to up to pay for the Affordable Care Act. Part of what we are supposed to get back in our state is expanded Medicaid.”

If the expansion in Oklahoma is to occur, it will take place on Jan. 1, 2014. For the first three years, the expansion is funded entirely by federal funds.

Beginning in 2017, states will partially fund the project with a beginning rate of five percent and increasing by one percent each year until it jumps to 10 percent in 2020

Using 200,000 as the number of new Oklahomans that would be eligible for benefits:

n It would cost the state $32 million to expand Medicaid in 2020 with $4.8 million administrative costs but federal revenue to Oklahoma in 2020 would be $290 million if 57 percent eligbles enrolled.

n It would cost the state $42 million to expand Medicaid in 2020 with $6.4 million state administrative costs but federal revenue to Oklahoma in 2020 would be $382 million if 75 percent eligibles enrolled.

n It would cost $57 million to expand Medicaid in 2020 with $8.5 million in  administrative costs but federal revenue to Oklahoma would be $500 million.

The Congressional Budget Office qualifies a 57 percent participation level as a standard participation scenario and a 75 percent participation level as an enhanced outreach scenario for Medicaid Expansion.

“Such an expansion would be unaffordable, costing the state of Oklahoma up to $475 million between now and 2020, with escalating annual expenses in subsequent years,” Gov. Fallin said.

According to Oklahoma Hospital Association’s “Medicaid Expansion: Understanding the Numbers,’ “The $475 million amount assumes 100 percent of eligibles would enroll in all years between 2014 and 2020, in addition to all of the 44,000 children and 17,000 low income parents in Oklahoma who are currently eligible but not enrolled in Medicaid, and also includes all applicable administrative costs.”

The Oklahoma Hospital Association’s information also noted that with the governor’s assumption of $475 million cost to the state, Oklahoma would receive $3.89 billion in federal matching funds.

This is an investment return of 8:1 that could be amplified that by estimated savings of $34 million in the Department of Mental Health and Substance Abuse Services, $11.2 million in the Department of Correction and $2.4 million in the Department of Health.

“I do not think there is a government program out there that gets that kind of return,” Johnson said.

Johnson said he sees this not only as an opportunity to help Oklahoma’s health care industry and their patients but as a great opportunity for economic development in the state.

“We take federal tax dollars for our roads,” he said. “We take it for our military bases. Why would we not take it for health care?”

Johnson said that even without the Affordable Care Act, Medicaid expansion would have helped the health care industry.  

However, he said it is especially important now because of the additional taxes that citizens will have to pay even if they do not live in a participating state.

“We are all going to pay the taxes whether Oklahoma expands Medicaid or not,” he said.

“As we pay into this program, it would be like us opting out of Social Security and sending all of our social security dollars to someone else in other states. It would go to the federal government to use as they chose at that point.”

Using only a 57 percent of 180,000 eligibles in 2014, a 2007 Oklahoma State University Study estimated that $286.3 million in additional federal funds would also mean $29.8 million in state tax collection, 4,187 in direct health care jobs with $150.8 million in payroll and 5,158 indirect jobs with $131.2 million in payroll.

Despite the Gov. Fallin’s and the state legislature’s continued negative stance on this issue, Johnson said that he and other health care leaders across the state would continue to fight for this expansion.

“The way it was explained to me is that this is a position statement by the governor that she does not believe our state should expand Medicaid,” he said. “We believe as the hospitals in Oklahoma we should try to change her mind and convince the legislature to expand Medicaid in Oklahoma.”

Those lobbying for the expansion of Medicaid will speak to not only the state’s leaders but also the general public.

“We will be talking to our senators and representatives, talking to the press and trying to educate the public,” Johnson said.