OCPA column: SB605 is bad policy, no matter where you try it

Senate Bill 605 is bad policy, no matter where you try it

By Kaitlyn Finley, policy research fellow at the Oklahoma Council of Public Affairs.

Although Oklahomans have wisely rejected repeated attempts to expand Medicaid under Obamacare, new proposals keeping popping up in their place like the many-headed Hydra.

The latest expansion proposal at the Oklahoma Capitol, Senate Bill 605, claims to be a “conservative” alternative to traditional Medicaid expansion. But SB 605 is just Obamacare Medicaid expansion by another name.

SB 605 would expand medical welfare benefits to a potential 628,000 able-bodied, working-age adults in Oklahoma. The program would be designed under the authority of a federal waiver. These new welfare beneficiaries would receive Medicaid benefits through commercial plans administered by another state-run program, Insure Oklahoma. If implemented, the federal government would pick up 90 percent of costs accrued from new expansion enrollees while Oklahoma state taxpayers would pay for the remaining 10 percent of costs. Based on the number of eligible enrollees and average per-person costs, Oklahoma state taxpayers could be on the hook for $374 million annually if they implemented SB 605.

Despite real-world fiscal nightmares in other states, some expansion proponents still claim that expanding Medicaid through a waiver and utilizing private commercial health plans will be a cheaper way to expand Medicaid. These are unfounded claims. Look no further than Arkansas, Iowa, and New Hampshire. These states implemented a plan similar to the one proposed in SB 605 and it left them in a financial mess.

Arkansas’ “private option” expansion plan has accrued more than $1.4 billion in cost overruns in the past three years. Iowa and New Hampshire decided to scrap their alternative expansion plans altogether in 2015 and 2018, respectively. To make matters worse, these states’ “conservative” expansion plans turned out to be even more expensive than if they had just adopted traditional Medicaid expansion in the first place.

Oklahoma lawmakers should be wary of any “conservative” option, like SB 605, to expand Medicaid through a federal waiver. Putting aside the price tag, any supposedly conservative features may be rescinded by the next liberal president, leaving Oklahoma paying the tab for all the costs from a new entitlement class of hundreds of thousands of able-bodied, working-age adults.

Oklahoma has already seen this happen when the Obama administration threatened to gut Insure Oklahoma and push individuals onto the expensive Obamacare exchange. The Obama administration did not want to approve an extension for Insure Oklahoma because the program has enrollment caps in place and generally requires beneficiaries to be working in order to receive partially subsidized health insurance. Oklahoma’s recent history with the Obama administration shows how foolish it would be to rely on temporary waivers, where authority lies solely with the federal government, particularly for proposals that have shown to be an inefficient use of taxpayer dollars.

With all the financial nightmares and program chaos surrounding waivers for Medicaid expansion and the rapid rise in Medicaid enrollment in general, states like Oklahoma should be wary of any expansion proposal. This is especially true when the whole plan relies on a temporary waiver and on promises of reimbursements from a benefactor that is already $22 trillion dollars in debt.


Kaitlyn Finley serves as a policy research fellow focusing on health care and welfare policy for the Oklahoma Council of Public Affairs.