Small: Medicaid expansion (not) working as predicted

Medicaid expansion (not) working as predicted

By Jonathan Small

Proponents of adding able-bodied adults, including many working-age men, to Oklahoma’s Medicaid program promised it would solve virtually all the state’s health-care woes. Rural hospitals would suddenly be lavishly funded. State government would be flush with cash. Health outcomes would improve on a skyrocketing trajectory.

Obviously, none of those things has happened despite expansion having been in place for five years now.

Instead, officials with the Oklahoma Health Care Authority (OHCA), which administers Medicaid, have requested an additional state appropriation of nearly $500 million this year, due in part to surging costs related to the expansion population.

Rather than create a windfall of free-flowing federal cash as expansion supporters promised, Medicaid expansion is creating major budget challenges.

Supporters will argue expansion is still worth it, even if it produces no savings, because the able-bodied individuals added to the welfare program will now be healthier.

There’s just one problem with that theory: It isn’t true.

The hundreds of thousands of able-bodied individuals added to Medicaid are not getting dramatically healthier in any way that shows up in state health statistics, even though those individuals are using taxpayer-funded health benefits at a high rate.

The Commonwealth Fund’s “2025 Scorecard on State Health System Performance” report showed that in Oklahoma in 2018-2019, prior to Medicaid expansion, there were 117.7 deaths per 100,000 population before the age of 75 from health care-treatable causes. By the 2022-2023 period, the most recent for which the report had data, that figure had increased to 124.6, despite Medicaid expansion.

The death rate in Oklahoma was far higher than the rates in nearly all states that have not expanded Medicaid.

Oklahoma ranked 48th on health outcomes and healthy behaviors, according to the Commonwealth Fund, while some non-expansion states did significantly better, such as Florida (ranked 20th in health outcomes) and Texas (27th).

Admittedly, there is reason for skepticism regarding the OHCA’s claim that it needs $500 million. Some legislative leaders have argued, with cause, that the agency is using gimmicks to inflate that number.

But even if the agency needs $300 million, rather than $500 million, that expenditure will reduce opportunities elsewhere. Every dollar that goes to the Medicaid welfare program is one less dollar that can be directed to education, law enforcement, roads, or returned to working families through tax cuts.

So what should policymakers do? They should stick to this simple principle: Those who created this mess—the big-box urban hospitals who funded the campaign to expand Medicaid in the first place—should bear the cost, not working families. Any Medicaid shortfall should be handled by reducing provider fees for the largest hospitals, not by increasing the burden on taxpayers or diverting money from more important causes.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.