Ohio’s Kasich Embraces Obamacare Medicaid Expansion

Published February 18, 2013

Ohio Gov. John Kasich detailed in a budget proposal his plans for expanding Medicaid eligibility as called for under President Obama’s health care law.

Kasich, a Republican, faced pressure from liberal groups devoted to increasing the entitlement program, as well as from health care providers backed into a corner by Obama’s law. His rationale for expanding Medicaid eligibility is spelled out in a 29-page summary of his biennial budget proposal released February 4.

Although his administration suggested expansion was unlikely when the U.S. Supreme Court’s 2012 decision gave states the freedom to opt out, in a January 16 interview with The Columbus Dispatch a spokesman for the governor set the stage for expansion by mentioning a “wave of hospitals and other stakeholders that have been urging the state to expand Medicaid.”

In its budget proposal, the Kasich administration proposes creating a new cabinet-level Department of Medicaid and stressed the need for Ohio to get its “fair share” of federal funds, explaining, “it avoids leaving Ohioans’ federal tax dollars on the table and keeps the federal government from simply giving them away to other states.”

“Importantly, Ohio will roll back this extension if the federal government changes the rules” to lower the federal taxpayer share of Medicaid spending, the governor’s budget summary claims.

Ohio Treasurer Criticizes Decision

Not all Republican state officials agree. Ohio Treasurer Josh Mandel voiced his opposition to expanding Medicaid in a February 11 letter to leaders of the Ohio General Assembly, urging House Speaker William Batchelder and Senate President Keith Faber “to prudently consider the long-term financial implications of voluntarily implementing the Medicaid expansion in Ohio and to reject this expansion during the budget process.”

“Though the federal government is promising to pay for most of the expansion in the near term, it is currently borrowing approximately 40 cents of every dollar it spends,” Mandel wrote to the Republican leaders of the state legislature. “I am concerned that expanding Medicaid in Ohio will overwhelm an already broken system and place an unbearable burden on generations of Ohioans.”

Mandel also criticized the governor’s suggestion that the expansion could be rolled back if Washington cuts funding below the promised levels.

“While the proposed ‘opt-out’ trigger is a well-intentioned safeguard to retract Medicaid’s expansion if the federal government reduces its funding share, I am concerned whether such a safeguard would be honored in the future, because history has shown that once a government benefit is given it is rarely taken away,” Mandel wrote.

“There is no free money,” he added. “While expanding Medicaid may direct more federal dollars to Ohio in the next few years, in the long term Ohioans will have to repay the debt that is funding federal government spending.”

Promoted by Left, Opposed by Right

Kasich’s announcement was coordinated with the Universal Health Care Action Network of Ohio, a socialized-medicine lobbying group devoted to full implementation of Obama’s law. The move was favored by progressive think tank Innovation Ohio, liberal think tank Policy Matters Ohio, the Cleveland Plain Dealer, and the left-leaning Urban Institute. The decision was criticized by a policy report from the Buckeye Institute for Public Policy Solutions, a free market think tank in Columbus.

Buckeye Institute president Robert Alt and policy analyst Greg Lawson listed six major reasons Ohio should not expand Medicaid eligibility, pointing out future reductions in federal Medicaid funding could increase the direct financial burden on Ohio’s taxpayers.

“Under the ACA, the federal government is offering increased federal funding for states that participate in Medicaid expansion. These funding levels are unsustainable, and may be changed at any time. The Obama administration already recommended an adjustment that would cost Ohio an additional $2 billion. Even slight changes to federal spending rates will have devastating long-term effects for Ohio,” Alt and Lawson wrote.

The calculations also leave out the increased administrative costs the state will face.

“The enhanced federal matching funds provided under the ACA explicitly do NOT cover administration of the expanded program. The Obama Administration estimates that the states will need to pay an additional $12 billion in administrative costs for expansion,” Alt and Lawson wrote. They estimate that “Ohio will incur at least another $137 million in administrative costs between 2014 and 2022 if it chooses to expand Medicaid.”

Conflicting Comments from Kasich

Advocating the Ohio General Assembly expand Medicaid eligibility stands in sharp contrast to Kasich’s previous complaints about Washington’s unsustainable spending.

During an August 2012 interview on the Coffee and Markets podcast, Kasich said he was undecided on Medicaid expansion, stating, “I’ve instructed my staff to begin to talk to Democrat and Republican staff members for governors to see if there’s a way that we can carve something out here.”

In a March 22, 2010 campaign blog post the day before Obama signed the health care bill into law, Kasich predicted the Medicaid expansion would shift heavy costs to the states.

“The new taxes will hurt long-term economic growth and, if history is a guide, won’t be enough to pay for all the new spending,” Kasich wrote at the time. “In the end, the federal government will just rack up higher deficits and go deeper in debt, leaving future generations to pick up the tab.… Instead of letting states develop innovative solutions to their respective challenges, new federal mandates will require more Medicaid spending and stick states with large and unsustainable costs.”

Kasich must now convince the state legislature to join his embrace of the expansion, despite his prior warnings.


Internet Resources

Ohio.gov: “The State of Ohio Executive Budget, Fiscal Years 2014-2015”


Buckeye Institute: “Expanding Medicaid”