INDEPENDENT ANALYSIS

Ohio may see $1.4B gain by expanding Medicaid coverage

But after 2021, costs would exceed income

1/16/2013

BY JIM PROVANCE BLADE COLUMBUS BUREAU CHIEF

The HPIO report found that roughly 450,000 of the nearly 1.6 million uninsured Ohioans would find coverage under the law and Medicaid expansion.

COLUMBUS — As Ohio ponders whether to expand Medicaid, the state-federal insurance program of last resort under the federal health-care law, an independent think tank on Tuesday said its analysis showed the state would benefit financially — at least over its next four two-year budgets.

The report by the nonpartisan Health Policy Institute of Ohio found that the state’s increased costs from expanding Medicaid enrollment would total nearly $2.5 billion by 2022.

But between related savings in other programs and increased tax collections and revenues tied to the added federal health-care spending, the report found that the state would bring in $1.4 billion more than that amount during that period.

“For the next four biennia, the state budget would on balance come out clearly ahead,” said Stan Dorn, senior fellow at the Urban Institute Health Policy Center in Washington and co-author of the HPIO study.

“Once you reach the fiscal year 2021, at that point federal Medicaid dollars are paying for 90 percent of the costs of newly eligible adults,” he said.

When that happens, state costs would be expected to slightly exceed the income benefits.

The HPIO report found that roughly 450,000 of the nearly 1.6 million uninsured Ohioans would find coverage under the law and Medicaid expansion.

The Health Policy Institute has not taken a position on whether Ohio should expand income eligibility under the Medicaid program to 38 percent over the federal poverty level. That threshold amounts to annual income of $31,809 a year for a family of fouridAs passed in 2009, the Affordable Care Act, often called Obamacare, mandated that states expand their Medicaid eligibility to draw in more lower-income people as part of its national goal to greatly increase the portion of the population with health coverage.

But the state mandate was struck down by the U.S. Supreme Court last year even as it upheld the broader law’s constitutionality.

Under the law, the federal government would pay the full freight of the expansion for three years and then begin reducing it to 90 percent by 2021.

Despite this carrot, some states are expected not to participate.

Gov. John Kasich is expected to announce his intentions early next month when he proposes his second two-year budget.

“This analysis is not inconsistent with what we have heard from the wave of hospitals and other stakeholders that have been urging the state to expand Medicaid,” said Eric Poklar, spokesman for the Governor’s Office of Health Transformation.

“We will continue to review all of the data at our disposal and feedback from stakeholders, both for and against, and recommend in the budget a course of action that is best for Ohio," he said.

Even if the state does not expand Medicaid eligibility, it is still expected to face additional costs.

People who qualify for Medicaid but have never enrolled are expected to enter the program beginning next year to avoid new penalties for lacking insurance.

The state, which pays roughly 37 cents of every Medicaid dollar, would not be eligible for the higher federal reimbursement for people who already qualify, but who haven’t enrolled.

Report co-author Bill Hayes, director of health-care reform at Ohio State University’s Wexner Medical Center, said having the federal government pick up most or all of the tab for an expanded Medicaid program should save the state money by covering more people for which the state pays health-care costs.

Those include participants in the breast and cervical cancer program, as well as inmates who receive overnight, outpatient medical care outside prison walls. The report also suggests state revenues, job creation, and incomes would increase as a result of the additional healthcare spending.

Ohio has decided not to create its own health insurance exchange through which people and small businesses could compare, price, and purchase policies from competing private insurers. Instead, the federal government will run Ohio’s online exchange.

Contact Jim Provance at: jprovance@theblade.com, or 614-221-0496.

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