Oklahoma Refuses to Implement Obamacare Exchange, Delays Medicaid Decision

Published January 2, 2013

Oklahoma Republican Gov. Mary Fallin announced the Sooner State will not create a state-based health insurance exchange under President Obama’s health care law, while reserving final determination of Medicaid eligibility for people referred from a likely federal exchange.

Exercising an “opt-out” allowed in last summer’s U.S. Supreme Court decision, Fallin told reporters at a press conference the state will not expand Medicaid coverage according to President Obama’s guidelines, while restating support for a pending state lawsuit against the federal law. Under Obama’s law, states were originally required to inform federal officials in November whether they would create a state-based exchange. If not, a federally managed exchange is created under the controversial law.

Although the deadline was extended to mid-December, Fallin decided to announce she won’t go along in a letter to Health and Human Services Secretary Kathleen Sebelius. Fallin’s letter stated “it would be irresponsible of me to commit our state to the development of an insurance exchange based on the information provided” by the U.S. government. “Our state will not establish a transitional reinsurance program as outlined in PPACA.” She stated she believes “viable market-based solutions” can facilitate “greater access to health insurance coverage in Oklahoma.”

Fallin said she and Republican legislative leaders want to “increase quality and access to health care, contain costs, and do so without placing an undue burden on taxpayers.” She stated a choice between a state exchange and a federal-run program “has been forced … by the Obama Administration in spite of the fact that voters have overwhelmingly expressed their opposition to the federal health-care law through their support of State Question 756, a constitutional amendment prohibiting the implementation of key components of PPACA.”

Fallin also pointed to a lawsuit in which Oklahoma Attorney General Scott Pruitt contends IRS rules taxing businesses conflict with the ACA’s provisions and violate the federal Administrative Procedures Act. That case is pending in federal district court.

Medicaid Expansion Tax Hike

Republican leaders of the state legislature quickly backed Fallin’s decision, along with the head of the Oklahoma Council of Public Affairs, the state’s leading free-market think tank.

Michael Carnuccio, president of OCPA, said Fallin handled the controversy “wisely.” He said rejection “of fleeting federal dollars to expand Medicaid … improves the odds that the state government will have the means to adequately fund important core services—including transportation infrastructure, education, and public safety—for years to come.”

Carnuccio’s group projects Medicaid expansion would cost taxpayers a total of $6.5 billion by 2023—nearly equal to the current state-appropriated budget.

Fallin said Medicaid expansion is “unaffordable, costing the state of Oklahoma up to $475 million between now and 2020, with escalating annual expenses in subsequent years.”

Relying on the federal dollars would increase dependence on a cash stream “that may or may not be available in the future given the dire fiscal problems facing the federal government,” Fallin said. “On a state level, massive new costs associated with Medicaid expansion would require cuts to important government priorities such as education and public safety.”

Fallin said Sooner State lawmakers will instead consider changes to “Insure Oklahoma,” a state-run Medicaid-funded program that assists the working poor with access to private insurance.

Medicaid Already Unsustainable

State Rep. T. W. Shannon of Lawton, the House Speaker-elect, said Medicaid “is already unsustainable and needs to be reformed at the state level with solutions that reflect our unique challenges.” He continued, “It is important to understand that even if we were to create an exchange, the rules are written in Washington, DC and the exchanges are going to be controlled by the federal government.”

The Republican leader said expansion of Medicaid would “create a massive new bureaucracy and would enable new federal taxes on our employers.”

Senate President Pro Tem Brian Bingman of Sapulpa said Oklahomans “simply do not want anything to do with Obamacare.” A state-run exchange “compliant with the federal law” would “be ‘state-run’ in name only,” he said He also promised support for Medicaid reforms “to deliver affordable coverage to every Oklahoman regardless of individual circumstances.”

Patrick B. McGuigan ([email protected]) writes for Oklahoma Watchdog.