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Privatized Medicaid plan could cost Oklahoma economy more than $900 million, study shows

Privatized Medicaid plan could cost Oklahoma economy more than $900 million, study shows

Job losses projected at 5,500 under outsourcing plan

OKLAHOMA CITY, MAY 6, 2021- Oklahoma could expect a negative economic impact of $904 million if Medicaid is outsourced to insurance companies, according to a report examining the governor’s managed care plan. 

 

The economic impact report projects the state stands to lose nearly 5,500 jobs and almost $25 million in local, county and state tax revenue under the governor’s plan. Projections also show a direct loss of $480 million to the hospital industry statewide.

 

Using its economic modeling software, IMPLAN studied what the state might expect should the governor’s Medicaid privatization plan go forward. The study’s findings were even more catastrophic than expected.

 

Specific projected losses from the governor’s plan, as modeled by IMPLAN, include:

  • Loss of more than 2,600 direct hospital jobs

  • Loss of nearly 5,500 total jobs (each direct hospital job is related to a loss of an additional 1.1 jobs in other industries)

  • Loss of more than $343 million in wages

  • Loss of $92 million in tax revenue ($25 million in local, county and state taxes; $67 million in federal taxes)

 

The most impacted industries other than hospitals are real estate, employment services, housing, insurance and restaurants.

 

Under the governor’s plan, the Oklahoma Health Care Authority (OHCA) would surrender administration of the state’s $2.2 billion Medicaid program to four large insurance companies. Federal law allows these insurance companies to charge up to 15 percent in administrative expenses. By comparison, the current administrative rate using OHCA staff is less than 5 percent.

 

Under privatization, the OHCA’s actuarial advisor projects reductions of 40 percent in hospital inpatient and emergency room care, 20 percent in mental health care and 15 percent in durable medical equipment. In other words, the insurance companies would need to reject and/or reduce necessary health claims by those percentages to stay within budget and collect their profits.       

 

Legislators currently have two avenues to stop this outsourcing plan. One is Senate Bill 131, which overwhelmingly passed in the House of Representatives and now awaits Senate action. The other is through the annual appropriations process. Contracts with the insurance companies are voided if the Legislature chooses not to fund privatized Medicaid.    

 

IMPLAN is the leading economic modeling application and has been a standard tool for academic and professional economists for decades. The methods used to produce IMPLAN’s economic data set and economic impact estimates have been widely published both in professional publications as well as peer-reviewed academic journals. The study, commissioned by the Oklahoma Hospital Association, is available at https://bit.ly/3egtkQ8

 

To learn more about the Oklahoma coalition urging legislators to deny funding to this flawed privatization plan, go to www.healthcareholdup.com.