Fiscal Focus: Medicaid Expansion
Why the Public Should Invest When people have adequate health insurance coverage, they can receive preventative care, treat illness early on, and are more productive individuals in life and work. We should strive for all Ohioans to have health care that meets their needs and let them live to their full potential. Individuals without insurance utilize emergency rooms for primary care, where costs for care of the uninsured are then passed on to all Ohioans. A healthy society is happier and more productive, and a strong health care system can reduce costs for everyone.
The Current Reality The Affordable Care Act (ACA), signed by President Obama in 2010, triggered the most significant changes to the health care system in the United States in decades. One major provision of the ACA leads to a discussion in Ohio (and all 50 states) about Medicaid Expansion. But, here are the basics on Medicaid today—pre-ACA implementation.
Medicaid is a state program that provides health coverage to low income individuals. In Ohio, around 64% of the funding comes from the federal government and 36% comes from the state. If the Ohio legislature decides to scale back funding, it reduces the federal match as well.
In 2010, approximately 2.2 million Ohioans were insured through Medicaid. Between 2009 and 2011, Ohioans who were covered by private insurance dropped from 66% to 57%. In 2011, more than 1.5 million Ohioans were uninsured.
Medicaid conversations invite much debate and interest due to the size of the program. Medicaid alone represents 4% of the Ohio economy. About 30% of the state budget is dedicated to this one program. Almost 70% of Medicaid spending is directed towards the disabled and seniors. The remainder is spent on families with children who represent a larger number of individuals served but are less costly. Because of the changing economic realities and policy decisions that have benefited the wealthy, we continue to see the number of poor and uninsured Ohioans at an alarming rate.
Currently, Medicaid eligibility is based on where a person falls on the ‘federal poverty line’ (FPL) and one additional characteristic. Eligibility exists for disabled workers up to 250% of the FPL, children and pregnant women up to 200% of the FPL, parents up to 90% of the FPL, and the disabled up to 64% of the FPL. Childless adults without a disability are not currently eligible for Medicaid.
The 2014-15 Budget On January 15, 2013, the Health Policy Institute of Ohio released a non-partisan study of the impact of Medicaid expansion in Ohio. Medicaid expansion will be hotly debated based on the sheer amount of dollars tied to the program, moral and ethical calls to care for the sick, political ambitions and ideology, and philosophical differences about the proper size and role of government. The ACA allows states to expand Medicaid beginning in 2014 to cover the disabled, parents, and childless adults who fall beneath 138% of the FPL. In 2012, 138% of the poverty line for a family of 4 was $31,809.
The HPIO study estimates this expansion of Medicaid will encompass about 456,000 people. Between 2014-2017, the federal government will pay 100% of the expansion, and then they will slowly scale back until 2020 where the cost share will be 90/10 split between the federal government and Ohio. It is important to remember that other aspects of the ACA will take effect regardless of Medicaid Expansion in Ohio, such as the health insurance exchanges and the individual requirement.
In addition to providing more health care services to more people, Medicaid Expansion will be a financial gain for the state. There will be massive federal investment of $5 billion (over 10 years) in Ohio for healthcare. This will create jobs in the healthcare industry, increasing sales tax revenues and income tax revenues at the state and local levels.
Medicaid expansion will also generate savings in the state budget and free up resources for restoring and expanding services. Over 10 years, it is estimated the state will save $273 million on prison-related health expenses and $389 million on mental health services. There are other areas of savings as well such as cancer screenings.
In 2022, once the federal-state share has settled into its 90/10 cost sharing, Ohio will receive $610 million in new revenue and cost savings and have to spend $609 million for our 10% match. Unlike many policy debates, where there are a variety of options that can be chosen, Ohio policymakers have two options: Yes or No.
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