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Oklahoma Considering Medicaid Expansion

By Marissa Evans, CQ Roll Call

May 16, 2016 -- Oklahoma legislators are racing against the clock in an effort to agree on a budget that could expand Medicaid and spare medical providers from severe payment cuts.

The Republican-led legislature and GOP Gov. Mary Fallin are working to pass a budget that will plug a $1.3 billion budget hole. Lawmakers have until May 27 to pass the budget before the session ends.

The Medicaid policy reversal, put forward by sharp Obama administration critics who have opposed the 2010 health law, could expand coverage for an additional 175,000 low-income residents. Medicaid is the federal-state program for the low-income and people with disabilities. The health care law gave states the choice of whether to expand the program.

The unusual move by Republicans is driven by budget realities and a looming cut for hospitals and other medical providers. The Oklahoma Health Care Authority (OHCA), which oversees the state's Medicaid program, has proposed a 25 percent rate cut for providers that would go into effect June 1, a move that could put hospitals and nursing homes out of business. Legislators want to prevent that cut by expanding Medicaid, which will bring federal dollars into the state.

Under the plan that OHCA is proposing to expand Medicaid instead of proceeding with the hospital payment cut, the state would apply for a federal waiver to cover 175,000 uninsured adults and offer them help to pay for a health plan using a subsidy under Oklahoma's Medicaid program. The expansion would take effect by Jan. 1. Enrollees would also be allowed to have an individual health savings account that would help them pay for copays, deductibles and more. The plan also would prepare to shift into Medicaid children and pregnant women who could lose coverage under the Children's Health Insurance Program after Sept. 30, 2019. 

Now that the plan has been presented to the legislature, Nico Gomez, CEO for OHCA, has been visiting the statehouse buttonholing lawmakers.

"We believe the components of the plan could help stabilize the state's Medicaid program," Gomez said in an emailed statement Monday. "OHCA will continue to provide information to state leaders during the final weeks of session as they consider all of the components."

Under the health law, states could expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost of covering the additional beneficiaries is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have implemented expansion.

Republican governors expanding Medicaid is not new. Alabama Gov. Robert Bentley and South Dakota Gov. Dennis Daugaard also are mulling the idea.

Gene Perry, policy director for Oklahoma Policy Institute, a non-profit that looks at issues in the state, said that the organization has been pushing for expansion for years. He said Oklahoma Republicans' resistance to Obamacare is waning now that provider closures are on the line.

"We're looking at a $1.3 billion hole so we're not surprised this is the year that the [Medicaid expansion] situation has broken down some," Perry said. "It seems like it's a matter of when and not if we're going to accept that."

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