Projecting Oklahoma's Medicaid Expenditure Growth Under the Patient Protection and ACA

May 2011

Oklahoma Council of Public Affairs

About OCPA The Oklahoma Council of Public Affairs (OCPA) is an independent, nonprofit public policy organization— a think tank—which formulates and promotes public policy research and analysis consistent with the principles of free enterprise and limited government.

Executive Summary

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nless repeal attempts succeed, the Patient Protection and Affordable Care Act of 2010 (PPACA) promises to increase state government obligations on account of Medicaid by expanding Medicaid eligibility and introducing an individual health insurance mandate for all U.S. citizens and legal permanent residents. Once PPACA goes fully into effect in 2014, the cost of newly eligible Medicaid enrollees will be almost completely covered by the federal government through 2019, with federal financial support expected to be extended thereafter. But PPACA provides states with no additional federal financial support for new enrollees among those eligible for Medicaid prior to implementation of the law. That makes increased state Medicaid costs from higher enrollments by “old eligibles”— those already eligible for Medicaid but not enrolled—virtually certain as they enroll into Medicaid to comply with the mandate to obtain health insurance. This paper reports our projections of PPACA’s effect on future state Medicaid spending in Oklahoma.

State-operated Medicaid programs provide health care coverage to low-income and disabled populations. In Oklahoma, Medicaid spending has

grown rapidly during the last three decades to constitute 14 percent of the state’s general fund expenditures and to enroll 23 percent of the state’s population.2 At a time when the state’s budget deficit is 10 percent of its general fund3, PPACA will only exacerbate the state’s future budget problems by rapidly increasing its Medicaid spending commitments—even faster than Oklahoma’s historical Medicaid spending growth.

PPACA’s effect on Oklahoma’s Medicaid commitments is estimated by constructing and comparing Medicaid spending projections with and without PPACA rules. Based on detailed projections of Oklahoma Medicaid expenditures, our assessment shows that implementation of PPACA would increase Oklahoma’s Medicaid spending by $11.4 billion during the law’s first ten years (2014-23), which would represent a 35-percent increase over estimated ten-year Medicaid spending without PPACA. Total state Medicaid expenditures under PPACA would be more than $40 billion during the first 10 years. We also compare Oklahoma’s historical Medicaid spending growth with Medicaid spending growth in other states—California, Florida, Illinois, New York and Texas.

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Background

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reated in 1965 under the Social Security Act, Medicaid is an optional state operated health program for children, elderly, people with disabilities and low-income families. The program is financed with state revenues and federal matching grants determined by a formula that is more generous toward poorer states. Oklahoma’s regular federal Medicaid matching assistance percentage (FMAP) for 2011 is 64.9 percent—slightly higher than the average FMAP rate across all states.4 The 2009 American Recovery and Reinvestment Act (ARRA) is providing temporary relief through higher federal matching of state Medicaid expenditures, increasing Oklahoma’s matching rate to 76.1 percent. But high enrollments during the recent recession mean that state general fund Medicaid expenditures are likely to surge when matching rates revert to normal levels in July 2011.

To receive federal funds, states must satisfy minimum federal coverage rules—such as covering those who receive Supplemental Security Income, are deemed disabled, or are over 65 and below 135 percent of the federal poverty income level (FPL).

Children under age six, pregnant women with family incomes below 133 percent of FPL, and children

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age 6-18 and below 100 percent of FPL must be covered. States must also cover those eligible for their Temporary Assistance for Needy Families (TANF) program.5 These rules ensure that those most medically and financially vulnerable can receive health care support when needed. Beyond certain federal constraints, each state is free to determine the additional population groups and types of health expenses that will be covered under Medicaid.

Prior to PPACA, nondisabled adults were only eligible for Medicaid if they had a child and the household was eligible for cash assistance or the state received a special waiver. Beginning in 2014, PPACA expands Medicaid to include all U.S citizens earning less than 133 percent of FPL6 whether or not they have children or are disabled. Beyond Medicaid expansion, PPACA also creates an individual health insurance mandate, which will induce most of those already eligible for Medicaid under pre-PPACA laws to enroll. The federal government intends to pay almost the entire cost for expanded eligibility, but new enrollees among those eligible under pre-PPACA laws will place an additional strain on the Oklahoma budget.

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How Things Stand Today

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klahoma spent $3.9 billion on Medicaid in 2009—14 percent of its general fund revenues. After subtracting federal funds at the ARRA enhanced matching rate of 76.1 percent, Oklahoma’s share of that spending was $930 million, which amounts to $580 of taxes per Oklahoman worker.7 Currently, 23 percent of the Oklahoma population is enrolled in Medicaid (828,000 enrollees) at an average cost of $4,195 per person. A nondisabled adult on Medicaid in Oklahoma costs nearly $4,500 annually. Figure 1 provides a sense of how Oklahoma compares with the most populated states in terms of spending per nondisabled adult enrollee.

California and Florida spend far less at about $2,000 per enrollee, Illinois spends about $3,000, Texas spends about $3,750, and New York spends slightly more than Oklahoma.8 Figure 2 shows Medicaid enrollment counts by category. Children account for the majority of Medicaid recipients. The “other” category consists of family planning patients, breast and cervical cancer patients without insurance, foster care children and those enrolled in waiver programs. The blind/ disabled eligibles, although comprising just a small slice of the Medicaid population, account for a large portion of Oklahoma Medicaid spending, as shown in Figure 3.9

Figure 1. Medicaid Cost Per Non-Disabled Adult Enrollee $5,000 $4,000 $3,000 $2,000 $1,000 $0 CA

FL

Figure 2. Enrollment by Category, 2009

IL

NY

OK

TX

Figure 3. State Costs by Category, 2009

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Peering Into the Future

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ong-term Medicaid spending projections provide deeper insights into how PPACA would change Oklahoma’s Medicaid funding burden, assuming its provisions are fully implemented. We construct Medicaid spending projections with and without PPACA to estimate the new law’s effect on Oklahoma’s Medicaid spending. Under both projections, Medicaid eligibility, enrollments, benefit recipiency, and spending per recipient are estimated using historical trends from micro-data sources spanning the years 2000-08 (see Appendix for more detail).10 The historical trends are projected separately for detailed population sub-

groups—by gender, age, and FPL categories and separately for special eligibility groups. Detailed eligibility rules specific to Oklahoma are applied (with and without PPACA) to determine eligibility counts from household surveys that provide data samples representative of the Oklahoma population. Enrollment, beneficiary, and spending rate data are taken from state-wide administrative records.11 The projections are anchored on Oklahoma state population projections of the Census Bureau. Oklahoma Medicaid spending projections are also constructed under alternative assumptions about federal matching rates going forward.12

Projections Without PPACA

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reezing nominal Oklahoma Medicaid spending at the level projected for 2014 without PPACA (the “freeze baseline”) generates 10-year spending (during 2014-23) of $20.7 billion. The cumulative 10year spending during the same period without PPACA is expected to be considerably larger: $32.3 billion. This projected spending increase (without PPACA compared to the freeze baseline) would

arise partly from increased enrollments of 127,000 people—increasing the enrollment share to 27 percent of the state’s population by 2023. As Table 2 shows, the projected composition of enrollees without PPACA is estimated to remain similar to today’s with enrollments rising steadily over the years just as during the past decade.

Projections Under PPACA

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he federal government promises to pay 100 per cent of health care costs for newly eligible Medicaid enrollees during the first three years of PPACA’s Medicaid expansion (2014-16) and promises to cover more than 90 percent of their costs thereafter.13 But Oklahoma’s Medicaid spending will surge because the federal government will provide only the state’s regular match rate for those who were Medicaid eligible but not enrolled under pre-PPACA laws, also known as the “old eligibles.”

PPACA’s insurance mandate will induce most of these individuals to enroll into Medicaid. Table 1 shows projected enrollments from PPACA’s Medic-

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Table 1: New Enrollees With PPACA from Expansion and Mandate Year

2014

2020

2023

Newly Eligible

217,000

214,000

217,000

Old Eligible

104,000

118,000

142,000

aid expansion (newly eligible) and from its individual mandate (old eligible). Our projections show that implementation of PPACA will cost Oklahoma an additional $11.4 billion during 2014-23, bringing the 10-year spending up to $43.7 billion.

Figure 4 shows projected Medicaid costs for

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Oklahoma’s budget from freezing Medicaid spending at its projected 2014 level (red line), projected without PPACA (blue line), and projected with PPACA (black line). In July 2011, the ARRA match rate enhancement disappears and Oklahoma’s Medicaid costs shoot up. Under PPACA, spending spikes in 2014 when the law is first implemented and increases slightly again in 2017 when the federal government reduces its match rate for PPACA’s newly eligible enrollees.

Table 2 shows that under PPACA, Oklahoma’s Medicaid enrollment is estimated to increase to 1.4

million by the year 2023—or 36 percent of the Oklahoma population. This represents the projected addition of 340,000 in Oklahoma Medicaid caseloads by that year over and above the increase projected without PPACA. Table 2 also shows the dramatic change in composition of enrollees under PPACA. Most of the enrollment increases under PPACA are predicted to occur among nondisabled adults so that by 10 years after PPACA’s enactment, they will constitute more than a quarter of Medicaid caseloads—significantly more than they constitute today, as shown in Figure 2.

Figure 4. Oklahoma’s Medicaid Costs $8.0

Billions of Dollars

Without PPACA With PPACA $6.0 Baseline 2014

$4.0

$2.0

$0.0 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Table 2: Medicaid Enrollments With and Without PPACA by Category (thousands) 2014

Children Nondisabled Adult Aged

2020

2023

Without

With

Without

With

Without

With

476

497

492

521

500

531

86

362

86

366

88

372

65

65

82

82

92

92

Disabled/Blind

102

125

109

133

111

135

Other

171

172

215

215

238

239

Total

901

1,222

984

1,317

1,028

1,369

Enrollment Increase

321

333

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340

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Another way to view the effect of PPACA on the all of the states shown, with healthcare spending fiscal sustainability of state Medicaid programs is growth in the double digits. For Illinois and New by comparing projected growth in Medicaid expenYork, PPACA causes Medicaid expenditures to ditures with the state’s average historical economic grow faster than those states’ GSPs, making a pregrowth—taken as a proxy from how rapidly state viously sustainable program unsustainable. Thus, incomes could grow in the future. Figure 5 shows PPACA is projected to increase fiscal stress on the the historical growth in gross state product (GSP) budgets of all these states with the exception of for the five most populous states and Oklahoma. It California. also shows the projected Medicaid growth rates over the long-term— Figure 5. Medicaid Growth With and Without PPACA and Historical Growth in Gross State Products (percent) during 2010-30—with and without PPACA. The historical growth of Oklahoma’s, California’s, Florida’s and Texas’ economies was slower than the states’ Medicaid expenditures, respectively, even without PPACA. And PPACA worsens the situtation by accelerating Medicaid expenditure growth in all these states except for California.14 Oklahoma’s Medicaid spending growth is by far the most rapid of

Alternative Scenarios

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he federal government is already feeling the strain of growing deficits and debt compounded by looming shortfalls in federal entitlement programs. This pressure increases the likelihood of future cuts in federal spending, including reductions in federal financial support for state Medicaid programs. Here we look at the effect on the Oklahoma budget of two alternative ways to reduce federal payments after 2019 to support those made newly eligible for Medicaid under PPACA.15 Table 3 shows the total spending during 2014-23 of these two alternative scenarios in terms of the freeze baseline spending on Medicaid and the projections with and without PPACA. Under Alternative 1, the federal government begins to phase out excess financial support for new eligibles (beyond Oklahoma’s regular match rate) at a rate of one-

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Table 3: Oklahoma’s Medicaid Expenditures (billions of dollars) Under Alternative Federal Support for New Eligibles (2014-23) Freeze Baseline .............................................

Without PPACA .............................................

With PPACA ...................................................

Alternative 1 ..................................................

Alternative 2 ..................................................

20.70 32.29 43.72 44.29 46.20

percentage point per year beginning in 2020. The resulting increase in Medicaid spending under this alternative is quite small—just $570 million during 2014-23. Under Alternative 2, the federal government would fully eliminate extra support for new eligibles at a constant rate over ten years beginning in 2020. Medicaid spending would increase by an additional $2.5 billion during the 2014-23 period under this alternative.

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Recent Policy Proposals in Oklahoma

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klahoma recently authorized $15 million in additional federal stimulus funds for Medicaid through the end of the current fiscal year without making spending reductions. With ARRA ending, Oklahoma will have to expend considerable additional funds on Medicaid beginning July 1 and will be forced to choose between cutting Medicaid and cutting other programs. Oklahoma is also proposing a provider fee on hospitals, excluding non-state owned and speciality hospitals, of 2 to 4 percent of net patient revenue to be earmarked for Medicaid.16 However, this fee proposal does not increase the funds that hospitals receive for serving Medic-

aid patients, which is fixed given the number and costs of those patients. These funds would simply increase state revenues to be devoted to Medicaid, making the proposal a tax.

The first of these proposals temporarily masks Oklahoma’s real Medicaid problem—long-term spending growth. The approach would make next year’s fiscal shortfall appear even bigger than if Medicaid spending were reduced beginning in the current fiscal year. The second proposal is likely to increase cost shifting from Medicaid to non-Medicaid patients as hospitals charge the latter more to recover the additional 2 to 4 percent fee that they will pay.

Policy Options for Oklahoma

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he enactment of PPACA is raising concerns about runaway state Medicaid spending and is motivating many state policymakers to seek ways to contain Medicaid expenditures. Beyond the obvious need to continue efforts to eliminate waste, fraud, and abuse within Medicaid, state leaders have a limited range of possibilities to constrain program costs under the PPACA. First, Oklahoma could explore the possibility of opting out of Medicaid completely and could focus state revenues on providing health coverage exclusively to low-income and disabled groups. Most policymakers view this option as impractical because it involves the loss of significant federal matching funds.

A second option is to seek federal approval to convert the state Medicaid program into a block grant program, which would give the state more control over how program dollars are spent. Block grants hold the potential of restraining Medicaid growth because the state would know how much federal aid it would recieve from year-to-year, as opposed to the current “as needed” funding scheme that incentivizes expansion by the promise of unlimited federal funds. A block grant program

could be paired with a premium-support program, whereby the state would provide low-income and disabled individuals risk-adjusted credits or vouchers to purchase coverage from among competing private plans. Under this model, an individual would own the plan and could opt to continue paying for the coverage out of pocket if he or she were to lose eligibility.

Until a block grant and premium assistance program can be implemented, legislators can take the following actions to slow spending growth.

• Member Cost Sharing: With more than 800,000 Oklahomans receiving Medicaid benefits each year, a low monthly premium of $10 each month would return more than $80 million to the program annually. Another option is to charge low premiums on a sliding scale, whereby members with higher incomes would be charged a slightly higher premium than low-income members. The Deficit Reduction Act of 2005 (DRA) provided states flexibility to make reforms to their Medicaid programs, including the permission of states to charge premiums and require cost-sharing (co-pays and deductibles) to certain enrollees.

• Long-Term Care Reform: In addition, the DRA

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permits states to “rebalance” long-term care opportunities within their Medicaid programs away from institutional-based (nursing homes) care to community and home-based care. Because such a move creates a service people desire (home-based care versus nursing-home care), there will be a “woodwork” effect, whereby demand for the service greatly increases. Because of this increased demand, it is important for the state to make efforts to control eligibility in order to effectively rebalance longterm care services and restrain costs. In addition, the state should take measures to actively promote and/or incentivize enrollment within the Long-Term Care Partnership Program.

• Cut Optional Benefits: Most covered populations under Medicaid are “mandatory,” though states are allowed to cover “optional” populations beyond those. However, under PPACA’s “mainte-

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nance of effort” clause, states are unable to cut optional eligibility populations until 2014. While states are prohibited from finding savings by cutting eligibility, no such prohibition exists with regard to optional benefits. Like eligibility, most benefits covered by Medicaid are “mandatory” and cannot be cut without federal approval; however, many benefits are “optional,” and the state should determine whether cost savings could be achieved by eliminating some of those benefits.

Finally, the federal Department of Health and Human Services has suggested a long list of proposed changes, but it remains unclear whether these changes can collectively deliver the needed savings to make Medicaid affordable.17 Thus, policy options for state lawmakers remain limited, unless the constitutional court challenges joined by several states succeed in effectively repealing PPACA.

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Conclusion

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ith 36 percent of the population projected to be on Medicaid by 2023 under PPACA and with continued escalation in per-patient health costs, Oklahoma Medicaid expenditures are predicted to balloon by another $11.4 billion beyond the increase projected without PPACA. To avoid making deep cuts in other public services and to maintain the state’s economic competitiveness by avoiding tax increases, Oklahoma lawmakers will have to enact stronger policies to control the huge

Medicaid spending growth that the state will experience under PPACA. However, there appear to be few avenues to constrain Medicaid spending given the prohibitions under PPACA for reducing program eligibility rules. Although ongoing court challenges inject uncertainty about the eventual implementation of PPACA’s laws, state lawmakers need to proactively explore ways to contain surging Medicaid expenditures during coming decades.

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Appendix: Methodology for Projecting Medicaid Expenditures The Medicaid Statistical Information System (MSIS) State Datamart website provides administrative information on the number of Medicaid enrollees (N_MSIS) and beneficiaries (R_MSIS) by gender (g), age category (a)18 and eligibility group (e) for years 1999–08. It also provides information on total Medicaid benefits (B_MSIS) awarded to state residents.

First, the total population for the state in question is calculated by gender, age category, income range (f) 19 relative to the federal poverty level (FPL), and year (t), based on data from the Current Population Survey, CPS_STTPOPg,a,f,t, where the suffix, STT, stands for the state in question. Because the CPS undercounts state populations relative to Census Bureau counts for all states, the census population CEN_STTPOPg,a,t is also categorized according to gender, age category, and year cells’ and the latter population is used to rescale CPS population counts: For each demographic cell, the ratio of the two populations Ug,a,t=

CEN_STTPOPg,a,t ΣfCPS_STTPOPg,a,f,t

provides a measure of the cell-specific population overcounts or undercounts in the CPS relative to the census population. Next, populations of the state’s Medicaid benefit-eligible individuals (E_CPS) by demographic cells are calculated from the CPS. These cells are calculated separately for specific income ranges (f) relative to FPL values.

Take a male aged a in 2008. Non-disabled adults qualify for Medicaid coverage if they have a child and are eligible for cash assistance. Thus, the eligibility rate, e, for adults aged a of gender g with FPLrelative income f and in year t can be calculated as: eg,a,f,t=

Ug,a,t x E_CPSg,a,f,t Ug,a,t x CPS_STTPOPg,a,f,t

Here, the numerator refers to the total number of state residents found to be Medicaid eligible in the

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CPS after applying the eligibility rules and the population adjustment ratio, Ug,a,t (described above).

Next, the enrollment rate, n, is calculated as the number of Medicaid enrollees divided by the number of Medicaid eligibles: ng,a,t=

N_MSISg,a,t Ug,a,t x ΣfE_CPSg,a,f,t

Here, the numerator is the total number of male state residents aged a of gender g in year t who are enrolled in Medicaid based on data obtained from the MSIS. One limitation of the data from the MSIS is that they are not decomposed by FPL-relative income categories. Therefore, the average age-gender enrollment rate is applied to all three FPL categories. Next, the recipiency rate, r, is calculated as the number of Medicaid recipients (or beneficiaries) among Medicaid enrollees: rg,a,t=

R_MSISg,a,t N_MSISg,a,t

Again, data for the number of state residents who received Medicaid benefits are obtained from the MSIS. Finally, average Medicaid benefits per recipient, b, in the state in question are calculated from the MSIS as: bg,a,t=

B_MSISg,a,t R_MSISg,a,t

where the numerator refers to total Medicaid benefits for this group. The average age-gender ratios rg,a,t and bg,a,t are applied to those who are Medicaid eligible in each FPL-relative income category. Thus, total state Medicaid expenditures (M) in 2008 on males aged a, gender g, FPL category f, and year t, can be represented as: Mg,a,f,t = Ug,a,t x CPS_STTPOPg,a,f,t x eg,a,f,t x ng,a,f,t x rg,a,f,t x bg,a,f,t

This method of calculating the four rates can be applied to all age groups and both genders and aggregated to yield total (MSIS-based) Medicaid ex-

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penditures for the year in question.

Total Medicaid expenditures derived in this manner for the base year (2008) are benchmarked to total (expended) Medicaid expenditures in 2008 as reported in the state budget. This step takes account of Disproportionate Share Hospital and Upper Payment Limit expenditures that are not included in MSIS data. Thus, these additional expenditures are implicitly distributed across age, gender, and eligibility categories in the same proportion as the state’s Medicaid expenditures included in MSIS data.

The simplest way to project states’ Medicaid expenditures for future years is to represent total expenditures in earlier years by age and gender, Mg,a,f,t, where t=2001–08, as above, and to extrapolate each of the component elements over future years. The product of those terms in future years provides estimates of future Medicaid expenditures in the state for each particular gender, age, and FPL category. Summing over all categories provides the future year’s total Medicaid expenditures.

Calculating and independently projecting each of these component rates captures different policy or environmental factors, each with the potential to exhibit its own future trend. For example, while the Medicaid eligibility rate for a particular population sub-group is determined by federal and state policies about which types of individuals should qualify

for Medicaid benefits, enrollment rates for different population sub-groups may be determined by the availability and cost of alternative health insurance coverage, individuals’ perceptions about their health care needs, the quality and out-of-pocket expenditures of Medicaid’s health care provision, and public awareness about the availability of Medicaid coverage for people with similar demographic, economic, and health characteristics.

Furthermore, Medicaid recipiency rates could vary among different population sub-groups by age, gender, and other characteristics, depending on their frequencies of adverse health episodes and health service needs. Finally, average benefit rates would differ depending on the incidence of chronic conditions; whether recipients are elderly or disabled; the type, quality, and cost of health care treatments that are locally available; and so on. Basing projections on detailed historical information on the group-specific trends of all four components separately—by age, gender, whether disabled, income level (relative to the federal poverty level), whether medically needy, unemployed, single- or dual-headed family, child status, etc.— provides greater confidence that the rich variety of independent influences of policies, environmental conditions, and behavioral propensities on Medicaid expenditures has been adequately accounted for.

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Notes and Sources 1

Jagadeesh Gokhale, Ph.D., is a senior fellow and Angela C. Erickson is a research assistant at the Cato Institute, Washington, D.C. Jason Sutton, J.D., is Policy Impact Director at the Oklahoma Council of Public Affairs, Oklahoma City, Oklahoma. This paper borrows heavily from Jagadeesh Gokhale, “The New Health Care Law’s Effect on State Medicaid Spending: A Study of the Five Most Populous States.” Cato Institute White Paper no. 31, April 6, 2011. (http://www.cato.org/ pub_display.php?pub_id=12967) 2

Based on the authors’ calculations using Medicaid Statistical Information System (MSIS) (http:// msis.cms.hhs.gov/), Census Bureau population counts (http://www.census.gov/population/www/projections/ projectionsagesex.html) and National Association of State Budget Officers (NASBO) general revenue expenditure reports (http://www.nasbo.org/Publications/ StateExpenditureReport/StateExpenditureReportArchives/ tabid/107/Default.aspx).

growth rate was faster during the 2000-05 period than during the years after the policy change. Adjusting projections to account for this policy change has a negligibly small effect on projected growth in state Medicaid spending.

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Data from the Census Bureau’s Current Population Survey and the MSIS are used.

12

The methods are described in Jagadeesh Gokhale, “The New Health Care Law’s Effect on State Medicaid Spending: A Study of the Five Most Populous States.“ Cato Institute White Paper no. 31, April 6, 2011 (http:// www.cato.org/pub_display.php?pub_id=12967) and in Jagadeesh Gokhale, “Final Notice: Medicaid Crisis: A Forecast of Texas’ Medicaid Expenditures Growth.” Texas Public Policy Foundation report. December 2010 (http:// www.texaspolicy.com/pdf/2010-12-RR12FinalNoticeMedicaidCrisisForecastofTexasMedicaidExpendituresGrowth-CHCP.pdf).

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3

Elizabeth McNichol, Phil Oliff, and Nicholas Johnson, “States Continue to Feel Recession’s Impact.” Center on Budget and Policy Priorities report. March 9, 2011. (http:// www.cbpp.org/cms/?fa=view&id=711.)

4

Federal matching percentages are published in the Federal Register, 74, no. 227 (November 27, 2009), available at http://aspe.hhs.gov/health/fmap11.htm.

For Oklahoma the federal government will cover 95 percent of new eligibles according to Section 1905 sub. (b) of the Social Security Act. 14

Cost savings from Disproportionate Share Hospital (DSH) payments to hospitals for the uninsured are estimated to outweigh the PPACA-induced spending increases in California due to the number of uninsured people who will become insured but are not eligible for Medicaid.

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Each state has its own TANF program with different eligibility standards, deductions, and income levels. Each state determines whether to have an asset test to determine Medicaid eligibility. Oklahoma’s eligibility rules do not include an asset test. Special eligibility categories in Oklahoma do not include a “medically needy“ group.

Under the Social Security Act, states can elect whether to define a special “medically needy “ category. Thus, costs and enrollments vary widely across states for this category of beneficiaries.

15

PPACA specifies the additional matching rate for new eligibles for “2019 and succeeding years.“ See Social Security Act, Section 1905 [42 United States Code 1396d]. Here we explore alternatives wherein the matching rate applicable in 2019 will be gradually reduced beginning in 2020.

16

See Oklahoma House Bill 1381: http://e-lobbyist.com/ gaits/drafts/258383.

17

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133 percent of the poverty level is $14,484 for an individual and $29,726 for a family of four. See http:// www.coverageforall.org/pdf/FHCE_FedPovertyLevel.pdf.

Kathleen Sebelius, “Sebelius outlines state flexibility and federal support available for Medicaid - Full Letter.“ February 3, 2011U.S. Department of Health and Human Services news release. (http://www.hhs.gov/news/press/2011pres/01/ 20110203c.html).

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18

Based on the authors’ calculations using the MSIS, NASBO general revenue numbers, federal FMAP levels, and Bureau of Labor Statistics’ state employment numbers (http://www.bls.gov/sae/).8 Based on the authors’ calculations using the MSIS. 9

Authors’ calculations are based on data from the MSIS.

10

Oklahoma increased provider reimbursements in 2006.

This increased Medicaid spending by less than $20 million, or 2 percent of the state’s Medicaid spending. See Oklahoma Health Care Authority State Fiscal Year 2006 Annual Report, http://www.okhca.org/reports/pdflib/ AR_2006.pdf. Oklahoma’s historical average Medicaid

12

The age categories correspond to those of the Medicaid State Information System’s age ranges: 0, 1–5, 6–12, 13–14, 15–18, 19–20, 21–44, 45–64, 65–74, 75–84, and 85+.

19 The income ranges are defined according to the applicable cutoffs before and under the new health care law.

Those cutoffs are generally different for population groups served by various Medicaid programs.

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