As Ohio prepares for a new state budget comes news that the Kasich administration spent less than projected on Medicaid, holding down expenses by about $590 million in the first year of the biennium and by $219 million in the current year. The savings, a small fraction of the cost of the program, result, in part, from steps that have been taken, some new, some continuing, to create a more efficient health program for poor families, the elderly poor and disabled Ohioans.
At roughly $18 billion a year, Ohio Medicaid is the state’s single largest public program and poses a perennial challenge to governors seeking to apply brakes to spending. The program also is highly sensitive to the twists and turns of the economy, its enrollment rising and falling with the strength of the job market. For that reason, governors manage to restrain spending for a period only to see caseloads swell and spending surge again during economic downturns.
State data indicate that Medicaid spending grew at a relatively low rate during this past downturn, rising an average 8.6 percent a year from 2008 to 2011 compared to annual rates averaging about 12 percent from 2000 to 2004 and 23 percent from 1990 to 1994. Without question, the slowdown in Medicaid spending the past couple of years is welcome. Worth keeping in mind, too, for a governor quick to claim only-in-our-lifetime achievements, is that the national trend practically mirrors what has been happening in Ohio.
That said, a state economy not yet out of the woods presents many pressing priorities, few of them higher than the need to reduce the substantial number of low-income Ohioans without health insurance. The Affordable Care Act authorizes states to expand Medicaid coverage to the uninsured who earn up to 133 percent of the federal poverty level. The governor has said he is holding off on a decision about an expansion until the budget picture is clear and he is sufficiently confident Ohio can handle the “woodwork effect,” covering first those who are currently eligible but not enrolled. The evidence his team is touting about a spending slowdown suggests Ohio can accommodate an expansion, especially as the federal government will pick up at least 90 percent of the cost for those who will be newly eligible.