As the November election draws closer, a major issue is emerging in the governor’s race: the future of SoonerCare.
SoonerCare is Oklahoma’s Medicaid program, and it provides no-cost health coverage to about1.3 million Oklahomans. Incumbent Gov. Kevin Stitt has spent his tenure advocating to partially privatize it — which would mean hiring private insurance companies to manage day-to-day operations.
His opponent, current State Superintendent of Public Instruction Joy Hofmeister, opposes the change. Voters will soon decide how Oklahoma manages itsbillion-dollar health program that serves more than one in four residents andabouttwo-thirds of the state’s children.
Right now, Oklahoma’s Medicaid agency pays providers like hospitals and doctors’ offices directly. A member goes to the doctor for a checkup, the Medicaid agency sends that doctor a check. Under managed care, SoonerCare members would choose an insurance company’s plan. The state would give an annual sum to the companies based on the number of SoonerCare members who enrolled in their plans. The insurance companies would then pay the medical bills using that annual sum.
The idea is that healthier people cost less to take care of, so the insurance companies would have an incentive to invest in preventative care. Stitt argues that would improve Oklahoma’s consistently devastating health outcomes. Most recently, America’s Health Rankings listed the state at 46th overall for health outcomes. The state has ranked among the bottom five nationally for years. That particular argument has been a focal point for the administration’s health policy — often cropping up in his State of the State address.
The insurance companies would also have more flexibility in how they can spend on health. State Medicaid agencies operate under stricter rules. Supporters often offer this example. A member with a heart condition has their air conditioner go out, and they can’t afford to replace it. The resulting heat poses a serious health risk. A managed care company has the flexibility to buy a new air conditioner with Medicaid funding. The state wouldn’t be allowed to.
Hofmeister has recently taken her opposition to that plan public. Among her concerns: the private insurance companies would be allowed to keep about 15% of their state funding for administration costs. The Administration estimates it will award $2 billion in contracts to the companies, so that administration cap would allow the companies to keep hundreds of million of dollars.
“The governor’s plan actually puts profit over care,” Hofmeister said.
Many of the plan’s opponents,including Republican members of the House of Representatives, have raised this concern. They note that under the current model, the state’s Medicaid agency spendsless than 4 percent of its billion-dollar budget on overhead.
Another concern: Oklahoma has attempted managed care before, and it didn’t go well.
“We tried this in the ’90s,” Hofmeister said.
Oklahoma implemented a managed care program for urban residents in the late 1990s, which failed and was canceled in 2003.
The program, known as SoonerCare Plus, ran into several issues. The private companies contracting with the state demanded rate increases — one demanding an 18% increase year over year during a budget shortfall. When the state didn’t grant the increase, it dropped out of the program, like several others had in preceding years. In 2002, Oklahoma Health Care Authority CEO Mike Forgary issueda letter to members, warning them that because of changes with their health insurance companies, they could soon see their care rationed or copays required. The state canceled the program a year later, when too few companies were available to enrollees.
The state’s medical industry has vocally opposed the plan, and even filed a successful lawsuit to block an earlier iteration of it last year.
The Stitt Administration had gone through the proposal process and awarded $2 billion in contracts to four major insurance companies. They approved and announced the contracts in January 2021, mere days before the legislature convened for the year. That meant lawmakers didn’t have the opportunity to consider legislation regarding the program before the contracts were signed.
Medical groups filed a lawsuit arguing that the contracts didn’t have the proper legislative approval. The Oklahoma Supreme Courtsided with them, ruling in June 2021 that the contracts were legally invalid because the Legislature hadn’t approved the plan before the contracts were awarded.
The ruling stated that those specific contracts were improper, but that the program could move forward if it obtained legislative approval.
In a strange turn of events, that approval happened even before the Supreme Court decision — and possibly by accident.
Lawmakers saidthey were under the impression that managed care was inevitable because the contracts were awarded before the session began, so they didn’t try to block the plan. They did pass Senate Bill 131, which aimed to put “guard rails” on the policy. For example, it sets requirements for how quickly providers have to be paid, how quickly the insurance companies have to approve an emergency prescription, and it sets a legal minimum for the number of providers who are in-network. By passing SB 131, which was intended to place limitations on managed care, they gave managed care the legislative approval it needed.
The Administration again solicited bids, and they are in the process of reviewing them now. Officials expected to announce the awards early next year, and they still have to attain federal approval. The goal is to fully implement managed care by next fall. If Stitt wins, that plan will continue. But if Hofmister wins, she would have an opportunity to interrupt that plan before it is brought to fruition.
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