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Medicaid expansion vital


D.W. Tiffee August 1st, 2012

David Blatt (Commentary, “Oklahoma and Medicaid Expansion,” July 18, Oklahoma Gazette) makes some important points about the benefits of expanding Medicaid under Obamacare, but neglects to mention the astonishing profit of the plan to the state and taxpayers.

According to Mike Fogarty, CEO of the Oklahoma Health Care Authority, the uncompensated cost of treating the uninsured in Oklahoma exceeds $1 billion annually, most of it paid for by shifting the cost to insured families, while bad debt and charity care costs hospitals $365 million a year.

Fogarty estimates that the $1 billion in uncompensated costs would be cut in half through expansion of Medicaid. He has reportedly said that the average yearly state investment of $63 million to provide the mandated coverage will likely see a return on investment of 8 to 1. Because the feds will pay at least 90 percent of the cost, the state cost per person is just $32 per month in 2020.

These estimates are in agreement with those of the Kaiser Foundation, the Lewin Group and the Urban Institute, all of which estimate that states will have a net savings of tens of billions of dollars each year.

Conservatives can’t do the math, so they resort to bizarre fear mongering. U.S. Sen. Tom Coburn says the $63 million a year in increased cost “will force the governor and Legislature to raise taxes, raise college tuitions, decrease the quality of education, or all three.”

Dr. Tom needs to get a clue. The conservative Oklahoma Council of Public Affairs has documented how the state raised more than $200 million in funds for Medicaid in 2011: The Supplemental Hospital Offset Payment Program assessed a 2 percent “provider fee” on certain hospitals that serve Medicaid patients. The revenue from the “fee” was then “used to match federal funds to increase reimbursements to hospitals that treat Medicaid patients. Estimates suggest the fee would generate approximately $118 million in fee revenue and $208.3 million in federal funds.”

Translation: The state can raise hospital fees to pay for expanded coverage ($63 million a year), but the feds now contribute at least $9 for every state dollar; the hospitals recover the fee (and a boatload more) through expanded Medicaid spending, and the state saves $500 million a year in uncompensated costs with no tax increase whatsoever.

Where’s the beef?

—D.W. Tiffee, Norman

 
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