Shared from the 2/10/2021 The Oklahoman eEdition


Managed Medicaid: Bad for rural hospitals ... bad for Oklahoma


Privatizing Oklahoma’s Medicaid program may prove to be too much for the long-term survival of rural health care. The governor has touted this change as necessary for the state’s financial strength, but it will result in irreversible damage to our state and Oklahomans who need health care.

The core arguments behind this change have been cost savings and improved health outcomes. Both points are incorrect and based on unrealistic assumptions.

The managed care plan proposes to ration care to Medicaid patients by reducing inpatient and outpatient services by 40% and behavioral health services by 20% in the first year. That means less care for Medicaid patients and more profit for insurance companies. The assumption that cost savings can be captured through administrative efficiency is false. The Oklahoma Health Care Authority (OHCA) has a commendable track record of keeping administration costs low. OHCA currently uses less than 4% of Medicaid funds for administration, while the new proposal allows insurance companies to use up to 15% of funding for administration. That’s a $230 million increase over what’s currently being spent to administer the Medicaid program.

This increased overhead will result in fewer services for patients and less funding for Oklahoma hospitals, physicians and pharmacies while delivering increased profits for insurance companies. If insurers fail to turn a profit, the state will provide a “risk corridor” that guarantees the state will share in any financial losses or gains.

OHCA Chair Stanley F. Hupfeld penned op-eds for state newspapers saying, “There are a plethora of protections and safeguards built into the request for proposal language that ensure the state’s providers will not be disadvantaged.” This simply cannot be true with a 40% reduction in services and increased administration costs. In fact, other states (Texas, Florida, Kentucky) have used a similar approach to manage their Medicaid programs with disastrous results.

Hospitals are typically the largest employers in most rural communities. Managed care threatens to squeeze this segment of the health care industry out of business, which could lead to mass unemployment and migration of these professionals to other states, taking with them any state income, sales and property taxes. Simply put, ruining rural economies in the state is no way to achieve “Top 10” status.

Oklahoma’s Medicaid program isn’t broken and doesn’t need to be fixed. It represents a safety net for health care services to roughly a million of the state’s most vulnerable citizens. Adding a “for-profit” middleman to the mix dilutes the value of Oklahoma’s Medicaid program even further and should be avoided. On behalf of rural hospitals and physicians in Oklahoma, we respectfully ask the Legislature to not approve funding for managed Medicaid.

Steve Hartgraves is president/CEO of Jackson County Memorial Hospital.

See this article in the e-Edition Here