As we wait on duct-taped markers outside Wal-Mart, text our furloughed neighbors, and look up the number of beds in the ICU at the nearest hospital, we expect policymakers to take the same balanced approach to COVID-19—remaining calm and rational, focusing energy on the truly needy, and ultimately, preparing for the worst.
In both our homes and in the halls of power, uncertainty leads to insolvency, and we should expect some belt tightening.
Moody’s Analytics has assessed the budgetary impact of the COVID-19 outbreak on every state. The firm projects Oklahoma to experience a tax revenue shortfall this year of between 22 and 28 percent—or up to $2 billion.
Even as a quarter of the state’s budget is vanishing into thin air, some still pitch expanding Medicaid to able-bodied adults as a creative solution. It’s only “creative” in the same way that pouring gasoline on a raging fire to try to douse it is “creative.” In state after state, governments expand Medicaid to able-bodied adults only to find there is no easy way out. The projections turn out wrong. The promises are empty. Some have signed up more than twice as many able-bodied adults as expected. This has put tremendous strain on state budgets and crowded out other spending like funding for nursing homes, care for those with disabilities, and improvements to public safety and infrastructure.
Look at New York—just before the pandemic hit them hard, they had a $4 billion Medicaid shortfall because of expansion. Now their budget is totally bust. Other states are seeing this sad truth play out at as well.
Until now, Oklahoma has wisely avoided this path, leaving the state better positioned to fight the COVID-19 pandemic. States that haven’t expanded under ObamaCare have 35 percent more hospital facilities per capita than expansion states and, since 2013, have increased the number of hospital beds per capita, compared to a decline of more than six percent in expansion states.
What drives this critical disparity?
States that push more and more people into Medicaid—with its significantly lower, mandated reimbursement rates for providers—leave their hospitals with fewer and fewer patients paying through private insurance. In expansion states, that’s exactly what hospitals are getting right now. With hospitals under tremendous financial strain, this is the last thing they need right now.
It is time for policymakers to prevent a deepening of the crisis by recognizing these realities and adapting priorities.
Unfortunately, Oklahoma’s legislature is taking up two bills aimed at expanding Medicaid. SB 1046 will take $130 million a year from hospitals, via a tax, to pay for the state costs of expansion. It won’t be enough money, so SB 1935 will take money directly from the “budget stabilization fund” to an “amount necessary” to fund the inevitable boom in the Medicaid-eligible population. This won’t do anything to help the state care for COVID-19 patients, but it will hurt the hospitals when we need them most.
Shoving Medicaid expansion into the shrinking budget is not the solution—it’s another problem in the middle of a public health and economic crisis. It already deserved deep skepticism from taxpayers before the outbreak. Now, it’s downright dangerous.
To make matters worse, the federal government just passed a law that bans states from removing anyone from Medicaid once they are on the program, even if they become ineligible.
And it isn’t just dollars and cents in the Capitol building. Medicaid expansion will trap more able-bodied adults in every corner of the state in long term welfare dependency. This will make it even harder for employers to get people back into jobs, hurting Oklahoma’s economic recovery before it even gets started.
When you’re standing next to a raging fire, grab a bucket of water, not gasoline.