John Kasich has yet to say whether Ohio will expand Medicaid, as the Affordable Care Act proposes, or whether he will take the option offered by the Supreme Court’s ruling in June permitting states to skip an expansion. Fair enough, the governor says he needs to be cautious and to weigh the options and potential impact on the state budget. Still, an early decision on Medicaid expansion is a crucial factor in how reforms in the health-care system will play out in the state, the developments affecting the health of more than a half-million low-income Ohioans and the financial stability of the state’s health-care providers.
The reform law calls for states to enroll in Medicaid adults younger than 65 years with annual income up to 133 percent of the federal poverty level. Currently, the federal government covers in states an average 57 percent of the cost for Medicaid. The federal match for the newly eligible will begin at 100 percent in 2014 and scale down to 90 percent in 2020 and thereafter. An important snag? The federal share of the cost for those who now are eligible but are not enrolled in the program will remain at the much lower current match.
A concern in the governor’s office is that Ohio will have trouble enough finding the $369 million needed to cover the 319,000 who are currently eligible but not enrolled, let alone the expense in expanding coverage. In 2009-10, an estimated 520,000 Ohioans ages 19 to 64 with income below 100 percent of the poverty level were uninsured, the population the reform law seeks to cover.
While state officials drag their feet, it bears pointing to analyses by such respectable groups as the Congressional Budget Office, the Lewin Group and the Urban Institute that show states have more to gain from Medicaid expansion than the critics allow. For instance, the Lewin Group estimates that even including the cost of covering the currently eligible, states will spend a mere 1.1 percent more between 2014 and 2019 than they would without health reform. An Urban Institute assessment puts the increase at 1.4 percent.
Other analysts have found that critics vastly overstate the projected costs of expansion, not taking into full account savings that would offset the expenditures. The Lewin Group estimates state and local governments would realize $101 billion in savings in reduced uncompensated care for the uninsured. An expanded Medicaid would cover more low-income residents with mental illnesses and special needs, drawing down more federal funds. Other sources of savings include less state spending on eligible adults who qualify for federal subsidies in the health exchange.
In short, the governor has an opportunity to improve health and productivity for a large number of Ohioans for a modest increase in cost.