WHEN federal matching funds were reduced for Oklahoma’s Medicaid system in recent years, state officials handled that change by reducing payments to health care providers. This year, federal matching funds are expected to increase. Providers argue reasonably that a portion of that money should be used to now increase payments to doctors, hospitals and other professionals.
Medicaid, the government-funded program that pays for health care for lower-income citizens, involves state and federal funds. Under a formula used by the federal government, more prosperous states receive a smaller federal match while poorer states have a larger share of Medicaid expenses covered by the federal government.
Around the year 2000, roughly 71 cents out of every Medicaid dollar spent in Oklahoma came from the federal government. Today, the figure is around 58 cents on the dollar.
The match is adjusted each year based on a threeyear rolling average of each state’s economic growth. In Oklahoma, that formula resulted in federal matching funds being cut as the state entered an oil bust recession because the multi-year average reflected the oil boom activity preceding the downturn. So federal Medicaid funds were cut at the same time state revenue fell. The way Medicaid is structured, the primary way states can adjust spending is to cut payments to doctors and other providers, and this is what occurred.
Later this year, the federal match is expected to increase so roughly 62 cents out of every Medicaid dollar spent in Oklahoma will come from the federal government. If state spending on Medicaid is simply maintained at last year’s level, the new federal matching rate will translate into an increase of $37 million for state nursing homes, $94 million for hospitals and $50 million for entities that care for people with developmental disabilities.
The extra federal money, providers argue, should be mostly used to raise provider payments to the levels seen before the downturn. If rates aren’t increased, they say, many providers may go out of business. In the past six months, four nursing homes have closed in Oklahoma, and more are expected to do the same if rates don’t increase. Providers caring for the developmentally disabled have an 82 percent turnover in direct care staff because pay averages $8.58 per hour — less than working behind a fast-food counter — and that low pay is caused in part by low Medicaid payments. The median operating margin of rural Oklahoma hospitals is now negative-5.9 percent.
Some of those statistics could be improved if Oklahoma government maintains its current level of state funding for Medicaid and uses the additional federal dollars to boost provider rates. Yet health care officials, who recently met with The Oklahoman editorial board, say lawmakers may instead cut state Medicaid funding, thinking the increased federal match will make up for the loss of state dollars. That’s not the way to go.
Lawmakers this year have passed more than $610 million in tax increases and other revenue measures, much of it to benefit education. As things stand, it appears those gains are being generated not only by passing tax increases, but by diverting funding from the treatment of some of Oklahoma’s neediest citizens.