Study: Ohio could save on Medicaid expansion

In testimony to the Senate Medicaid Finance Committee, researchers from the Health Policy Institute of Ohio and Ohio State University offered up different scenarios, including what would happen if the federal government backs out on its pledge to cover at least 90 percent of the costs of an expansion of Medicaid, the state and federally funded health care coverage plan for poor and disabled Ohioans.

The Health Policy Institute of Ohio is a nonpartisan health organization.

Even if the federal government were to back out in 2017 after Ohio expands Medicaid eligibility, the state would save $1.5 billion in 2025 compared to if no changes were made at all — as long Ohio can hold down the program’s annual cost increases at 4 percent, the researchers said.

Subcommittee chairman Ohio Sen. Dave Burke, R-Marysville, said the study gives Republican senators some credible facts to chew on while they consider whether to expand Medicaid.

“Certainly our number one goal is to bend the cost curve (reduce the growing expenses of Medicaid), and by HPIO’s standards, that appears to be a feasible discussion,” Burke said. “But again, how we get there from a policy standpoint is where the cantankerous issues come up.”

Republican Ohio Gov. John Kasich since January has pushed for a Medicaid expansion, a key component of the federal health care law, but conservative Republicans in the the state legislature have resisted. They have cited concerns over accepting federal money to expand an expensive social program and doubts that Washington will follow through on its end of the deal.

Tea party groups have warned they will recruit conservative primary opponents to run against Republican lawmakers that support Medicaid expansion. Meanwhile, a pro-expansion coalition that includes hospitals, business and labor groups are preparing to take the issue to the 2014 ballot if lawmakers don’t act.

As the debate has continued, Republicans have shifted their rhetoric toward reforming the program to reduce its costs, including trying to make changes to encourage people on Medicaid get better jobs so they can afford to buy private insurance and improve the program’s effectiveness.

Without any changes, Medicaid will eventually cost Ohio $17.3 billion in 2025, assuming the program’s cost continues to grow at 7.2 percent a year, according to the Health Policy Institute of Ohio/Ohio State University study released Tuesday.

But if lawmakers expand Medicaid while capping the program’s cost growth at 4 percent a year, Medicaid will cost the state $14.1 billion in 2025, assuming the federal government makes good on its guarantee to cover 100 percent of the costs of expansion through 2016 and then gradually decrease payments to 90 percent by 2020.

If Washington backs out in 2017, reverting to paying for 60 percent of Medicaid like it does now, Ohio would still pay $15.8 billion in 2025, or $1.5 billion less than if no changes were made at all, according to the study.

Sen. Capri Cafaro, D-Hubbard, said the study should help satisfy lawmakers’ fears that Washington will leave the state holding the bag on Medicaid expansion. Cafaro introduced a bill last week that would expand Medicaid and aim to cap annual cost increases for the program at 3.5 percent.

“I think the big concerns here have been what will happen if the federal government walks away, and will we be able to cover more lives with less money? I want folks to understand that the numbers do add up, and it’s possible to serve more people in an effective manner and improve outcomes while reducing costs,” she said.

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