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Oklahoma is winning its Medicaid standoff with the feds — for now

Oklahoma Gov. Mary Fallin (right) and the Obama administration can't agree on the Medicaid expansion. (Photo by Pete Marovich/Bloomberg)

Oklahoma is one of about two dozen states that hasn't expanded Medicaid — and it's tangled in a unique standoff of sorts with the Obama administration.

Oklahoma and the federal agency overseeing Medicaid are still wrestling with the fate of a decade-old state program covering almost 20,000 low-income adults. For the second straight year, the feds and Oklahoma have worked out a deal to keep the program alive after it was supposed to close at the end of 2013.

The program, known as Insure Oklahoma, is partially funded by federal dollars. It covers adults earning up to 200 percent of the federal poverty level ($23,340 for an individual) and has some features, such as enrollment caps, that fail to meet Medicaid expansion requirements that took effect the beginning of this year. Because of this, the federal Centers for Medicare and Medicaid Services warned Oklahoma early last year that the state would have to shutter the program if it didn't align the program with the Medicaid expansion.

Oklahoma's situation was similar to one in Indiana, another red state with an existing public health insurance program that faced possible closure last year. The two states could have either refused to accept the Medicaid expansion and end their existing programs, meaning those enrollees would be dropped from coverage. Or they could have accepted Medicaid federal expansion funding and terms, adding about 150,000 newly eligible people to the public health insurance rolls.

Both states took a third option. Last September, Oklahoma and Indiana negotiated one-year extensions of their respective state programs. At the time, CMS said the extensions bought everyone more time to work out a way to expand Medicaid.

In May, Indiana Gov. Mike Pence offered a plan to extend coverage to the Medicaid expansion population through its existing state program. Pence's plan, which must undergo federal review, incorporates changes meant to align the state program with Affordable Care Act requirements. But it has drawn fire from critics on the right, who say the plan plan abandoned free-market principles and is essentially an embrace of Obamacare.

Oklahoma, however, isn't quite Indiana. The one-year extension announced by Gov. Mary Fallin on Monday keeps Insure Oklahoma on life support through the end of 2015. In her statement, the governor talked about buying more time to negotiate a permanent place for Insure Oklahoma — but nothing about expanding coverage.

David Blatt, executive director the Oklahoma Policy Institute, a group supportive of the Affordable Care Act, said state leaders continue to show an "unyielding opposition" to the Medicaid expansion. In the 10 months since CMS and Oklahoma worked out the first one-year extension, Blatt said advocates have "not heard or seen any indication that there has been real discussions to expand Insure Oklahoma."

CMS hasn't responded to a request for comment.

States don't have an official deadline for joining the Medicaid expansion. Still, this latest one-year Insure Oklahoma extension, Blatt thinks, may be the last, since Oklahoma has to renegotiate with CMS by the end of 2015 its authority to run the entire Medicaid program. "It just seems unlikely they're going to continue to allow Insure Oklahoma to kind of exist somewhat outside of the basic framework," he said.

Blatt said advocates are pleased that Insure Oklahoma enrollees can at least keep their coverage for another year, and they ultimately think an Oklahoma expansion — if it happens— would work look similar to that program. Any expansion plan, he said, would likely have to adopt the approaches taken in Iowa and Arkansas, which are using federal dollars to subsidize private coverage.

"At some point, before too long, we need to start moving the ball toward the expansion," he said.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.



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