Photo by Eric Tastad used under a Creative Commons license.
Just prior to the start of the legislative session we ran a blog post titled “Avoiding devastating health care cuts will require hard choices.” Two-and-a-half months later, as legislative leaders begin to look in earnest at crafting a budget deal, the budget outlook for the Oklahoma Health Care Authority (OHCA) and the Department of Mental Health and Substance Abuse Services continues to look grim. Lawmakers have not yet done anything to stave off cuts that would create serious hardship for Oklahomans.
OHCA initially reported it needs an increase of $144.5 million in FY 2015 just to continue operating current Medicaid services. Of the total increase, $44.9 million was needed to replace lost funds due to a decline in the federal matching rate, $47.4 million was due to anticipated growth in enrollment and utilization, and $42.6 million was to replace one-time carryover in this year’s budget. Since OHCA is currently running a surplus, it expects to have a healthy carryover for next year and no longer needs to replace the one-time funding in its budget. It now seeks a $90 million funding increase to cover the loss of federal matching funds and 4 percent growth in costs due to enrollment and utilization.
As we’ve discussed previously, the range of options when Medicaid faces shortfalls is both narrow and unappealing, consisting mostly of limiting benefits or cutting provider rates. OHCA has compiled a list of measures it could take to address budget shortfalls in FY 2015. These include:
Eliminating all optional medical benefits, including adult dental services, podiatry, optometry, therapy, and audiology, and non-life sustaining medical supplies, such as wheelchairs and diabetic supplies ($10 million state savings);
Limiting coverage of various services, such as prescription drugs, doctor visits and hospital visits, increasing co-payments, and requiring prior authorization for various services ($39 million state savings);
Cutting reimbursement rates to providers serving Medicaid patients. Each 1 percent across-the-board provider rate cut would save the program $9.8 million, so the agency would be looking at cuts of about 9 percent to address a $90 million shortfall.
Any significant rate cut will affect the financial viability of some Medicaid providers and risk limiting access to medical care for at last some of the nearly 820,000 Oklahomans who rely on Medicaid. Some of the anticipated cost savings will be more apparent than real. If Medicaid recipients are subject to limits on prescription drug coverage or are no longer covered for diabetes supplies or dental services, they may end up forsaking preventive care and ultimately triggering higher care costs down the road. It’s also important to note that to address a $90 million shortfall in state funding, OHCA would need to implement a total of $373.7 million in total cuts because of the loss of federal matching funds.
So far this session, there has been little offered in the way of hope or solutions. The Governor’s budget provided no additional funds for Medicaid, instead hitting the agency with a 5 percent cut, which would add $47.7 million to the $90 million shortfall. Rep. Doug Cox authored a bill, HB 2384, that included a number of cost-containing measures, including a 3 percent provider rate cut, a reduction in monthly allowable prescriptions, prior authorization for various services, and annual caps on emergency room visits, some of which would have required federal approval to implement. The bill, which was estimated to have potential cost savings of $27.8 million, passed the House but was stripped of its original language in the Senate.
Meanwhile, the Department of Mental Health and Substance Abuse Services (DMHSAS) and Department of Human Services also need additional funds in FY 2015 to make up for declining federal matching support for the Medicaid programs they operate and other unavoidable cost increases. DMHSAS needs an additional $20.9 million while DHS needs an additional $8.3 million just to make up for lost federal match.
And we should remember that Oklahoma’s federal match is decreasing due to an increase in the state’s per capita income. The federal government is subsidizing us less because our state’s relative prosperity can provide the resources to take care of our own. That we are not taking care of our own isn’t because we can’t afford it; it’s because we are choosing not to.
If significant health care cuts are to be averted, the legislature will need to put revenue-generating options on the table. OK Policy recently laid out seven options, which include curbing tax breaks, tapping the Rainy Day Fund, and accepting federal funds to expand health care coverage under the Affordable Care Act, which would shift to the federal government costs now being paid for entirely or partly with state dollars. Although each of these options are viable, none is likely to receive serious considerations unless those who would be affected by health care cuts, and those who care about our fellow Oklahomans’ health, make their voices heard loudly and quickly in the weeks ahead.