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And the Real Leader Award Goes to.... Governor Fallin, for Rejecting Medicaid Expansion

State Budget Solutions | by Kristie De Pena | February 19, 2013

Ok Gov Mary FallinOklahoma Governor Mary Fallin announced that Oklahoma would become the latest state to reject two key elements of the healthcare plan. Oklahoma will not participate in the state expansion of Medicaid and will not create a health insurance exchange, leaving the task to the federal government. Why? Governor Fallin succinctly stated, "Such an expansion would be unaffordable."

For Governor Fallin's dedication to fiscal solvency in Oklahoma, we award her SBS' "Real Leader Award." Governor Fallin acted in the best interests of Oklahomans, choosing the path of long-term stability, as opposed to short-term popularity. She defends state sovereignty and respects the choices made by her constituents. Her efforts provide an excellent example of principled decision-making and upstanding communication.

"No" to Medicaid Expansion

The Supreme Court's ruling on the Patient Protection Affordable Care Act (PPACA) allowed the states to opt out of the law's provision requiring the expansion of Medicaid.

Under the original legislation, the federal government would require states to expand Medicaid to cover those making 133 percent of the poverty level. States that refused to participate in the expansion would lose federal funding for Medicaid entirely. Now, the federal government cannot condition federal dollars on the participation of each state in the Medicaid expansion plan. Either way, the federal government will cover the costs of the expansion only through 2014, after which the states must pay an additional 10 percent by 2020.

As of February 12, 2013, twelve states in the nation will not participate in the Medicaid expansion; five states are leaning towards not participating. Oppositely, twenty-one states and the District of Columbia will participate in the Medicaid expansion; four additional states are leaning in that direction. Eight states are still undecided. See the chart below:

Not Participating

Leaning Towards Not Participating

Participating

Leaning Towards Participating

Undecided

Alabama

Iowa

Arkansas

Kentucky

Alaska

Georgia

Nebraska

Arizona

New Hampshire

Florida

Idaho

New Jersey

California

New York

Indiana

Louisiana

Virginia

Colorado

Oregon

Kansas

Maine

Wyoming

Connecticut

 

Tennessee

Mississippi

 

Delaware

 

Utah

North Carolina

 

District of Columbia

 

West Virginia

South Carolina

 

Hawaii

 

Wisconsin

South Dakota

 

Illinois

 

 

Oklahoma

 

Maryland

 

 

Pennsylvania

 

Massachusetts

 

 

Texas

 

Michigan

 

 

 

 

Minnesota

 

 

 

 

Montana

 

 

 

 

Nevada

 

 

 

 

New Mexico

 

 

 

 

North Dakota

 

 

 

 

Ohio

 

 

 

 

Vermont

 

 

 

 

Washington

 

 

Republican governors lead each of the twelve states refusing to participate in Medicaid expansion. Of the twenty-one states participating in the expansion, just six have Republican governors, and the only Independent is Rhode Island Governor Lincoln Chaffee.

Why the refusal?

There are two primary justifications for the refusal by Governors to enroll their state. The first is fiscal: state budgets are stretched extraordinarily thin, even now. The aggregate state debt nationwide tops $4 trillion. Cities and municipalities are filing for bankruptcy. Simply put, the states cannot afford the additional financial burden on their Medicaid responsibilities.

The second reason for refusal is to take a stance on the widely accepted recognition that the Medicaid system is fraught with waste, fraud, and inefficiency. Many lawmakers believe that continuing to fund the status quo is not a solution, but rather a delay to creating a solution.

Governor Fallin stated that expanding Medicaid would cost the state "up to $425 million between now and the year 2020, while escalating the annual expenses in subsequent years." Fallin said that covering those costs with the state budget would require cuts to education and public safety, or require raising taxes.

"No" to Health Care Exchanges

PPACA required HHS Secretary Kathleen Sebelius to determine "on or before January 1, 2013" whether each state was prepared to run its own health exchange independently. A health insurance exchange (HIX) is a set of state-regulated healthcare plans whereby individuals can purchase health insurance eligible for federal subsidies. The exchanges are not themselves providers, but better regulate the insurance companies that are able to participate in the exchanges, and receive federal subsidies for certain services.

If a state is unwilling or unable to establish an exchange, HHS assumes primary responsibility for operating a federally based exchange in the state. On March 27, 2012, HHS published its final rule on the establishment of exchanged and qualified health plans, and exchange functions in the individual market. The final rule implements exchanges consistent PPACA by providing for competitive marketplaces for individuals and small employers to directly compare available private insurance options with those options provided by the federal government.

Governor Fallin's explained that Oklahoma would not establish an exchange because "[a]ny exchange that is PPACA compliant will necessarily be ‘state-run' in name only and would require Oklahoma resources, staff and tax dollars to implement. It does not benefit Oklahoma taxpayers to actively support and fund a new government program that will ultimately be under the control of the federal government, that is opposed by a clear majority of Oklahomans, and that will further the implementation of a law that threatens to erode both the quality of American health care and the fiscal stability of the nation."

In addition to her rejection of the Medicaid expansion and an Oklahoma HIX, Gov. Fallin also committed to supporting Oklahoma Attorney General Scott Pruitt's lawsuit against the health care law, claiming that the federal government does not have the authority to provide tax credits to poor and middle-class individuals through exchanges that the governments runs, as opposed to the states. On May 18, 2011, Governor Fallin signed into law the Health Care Compact, allowing for Oklahoma and other participating states to create their own health care policies by joining an interstate compact that supersedes prior federal law.

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