Few states demonstrate the failure of Medicaid expansion better than Ohio. Gov. John Kasich’s (R) expansion of Medicaid is already beginning to hemorrhage expenses the state’s budget may not be able to withstand. In 2013, Kasich expanded Medicaid under the auspices of the Affordable Care Act, bypassing the wishes of the Ohio General Assembly, who struck expansion from the state budget and even passed a ban on Medicaid expansion. Opponents of Medicaid expansion note the program is stretching states’ already thin budgets and has a poor track record at providing cost-effective and efficient care for those in need.
When Kasich first pushed through expansion, he estimated the cost between 2014 and 2020 to be around $14 billion. According to the latest Ohio Department of Medicaid data, these predictions were nowhere close to reality. Watchdog.org reported in April Kasich’s Medicaid expansion costs an average of $391 million per month, or over $1.5 billion per quarter. If these trends continue, Ohio’s Medicaid expansion will cost $14.1 billion by August 2017 and $27.5 billion by June 2020. The total federal cost for Ohio’s expansion as of April 2014 amounts to around $7.1 billion.
Funding Medicaid expansion has always been one of the central problems with any model accepting federal dollars is funding. Medicaid is one of the fastest-growing liabilities in both state and federal budgets. Under the ACA, the federal government has promised to cover 100 percent of the costs of newly eligible enrollees until 2017, but the matching rate declines over time, so states will eventually have to find other ways to pay for the newly eligible population. Moreover, the 100 percent match applies only to newly eligible enrollees. Those who were eligible for Medicaid before expansion and are required to enroll under Obamacare’s individual mandate are subject only to the lower, regular matching rate. This means state costs for Medicaid are increasing even for those states not expanding their Medicaid programs. These costs only promise to increase; five percent of benefit costs will be paid by state taxpayers starting in 2017, this increases to 10 percent by 2020.
In a letter to The Columbus Dispatch, Greg Lawson of the Buckeye Institute for Public Policy Solutions argues Ohio’s Medicaid program cannot be fixed. “With 2013’s Medicaid expansion, more than 650,000 able-bodied Ohioans are now enrolled in a fiscally irresponsible welfare program that has no work requirements,” wrote Lawson. “Full federal funding for Medicaid is about to dry up, which means that Ohio’s share of the Medicaid bill will continue to rise – and the expansion has already cost more than a billion dollars more than the projected costs. Ohio’s current Medicaid program is simply unsustainable.”
Peter Ferrara, a senior fellow at The Heartland Institute, warns total future costs to state governments are estimated to exceed the funds provided by the federal government, with this shortfall reaching as high as 66 percent of state expenditures. States will inevitably find the situation impossible to maintain without spending cuts, incurring massive debt, or tax hikes.
Medicaid expansion, at its core, builds on a failing model. It’s a system where the federal government dictates multiple aspects of the insurance plan and the beneficial aspects of real market competition are lost. Once expansion occurs, it will be extremely difficult to roll back. Federal law blocks states from backing out of the expansion under a provision called “Maintenance of Effort,” which requires states to fund a program at the initially agreed-upon level, regardless of the amount of federal funding received. Ohio provides yet another cautionary tale for states that have not expanded Medicaid. Medicaid expansion is an expensive endeavor that research shows fails to provide better or more affordable health care.
The following documents examine Medicaid expansion in greater detail.
Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems.
Expanding Access to Healthcare in Ohio
https://heartland.org/policy-documents/expanding-access-healthcare-ohio
In this report, The Buckeye Institute examines three ways to increase access to affordable health care in Ohio, especially in low-income and underserved areas. “The Ohio Legislature could enact The Buckeye Institute’s recommended changes at no cost to taxpayers and at great benefit to Ohioans most in need of expanded healthcare access.”
Research & Commentary: States Should Innovate, Not Expand Medicaid
http://heartland.org/policy-documents/research-commentary-states-should-innovate-not-expand-medicaid
Matthew Glans of The Heartland Institute discusses how expanding Medicaid can have repercussions beyond state budgets and the health care industry and notes better options exist: “It is important to remember government spending creates little or no income or economic growth; it is merely the redistribution of tax dollars taken from the pockets of taxpayers.”
Medicaid Expansion: Myth versus Reality
https://heartland.org/policy-documents/medicaid-expansion-myth-versus-reality
This Buckeye Institute Policy Brief identifies and refutes some of the most common myths about Medicaid expansion in Ohio.
‘Skin-in-the-game’ Medicaid Expansion did not Work in Oregon
http://idahofreedom.org/skin-in-the-game-medicaid-expansion-did-not-work-in-oregon/
Brandon Hershey of the Idaho Freedom Foundation examines Medicaid expansion in Oregon, the problems it has faced, and the lessons Idaho could learn from its experience: “Oregon’s attempt to fund Medicaid expansion via high premiums and copayments proved an unsuccessful endeavor. As Medicaid costs grow—dramatically should Idaho choose to expand—implementing cost sharing will not help the poor in Idaho. As alternatives and solutions are discussed, this is one idea that should be thrown away. Medicaid expansion—no matter what the packaging is—will do nothing but place a burden on Idaho’s most vulnerable.”
Medicaid: Waivers Are Temporary, Expansion Is Forever
https://heartland.org/policy-documents/medicaid-waivers-are-temporary-expansion-forever-0
Robert Alt and Nathaniel Stewart of the Buckeye Institute discusses the empty promise of Medicaid waivers. “This solution is illusory. Because Medicaid waivers are temporary, subject to the discretion of federal officials and vulnerable to potential judicial reversal, they are unlikely to permit much of the flexibility state policymakers seek.”
Beware of Funding Promises Made by Medicaid Expansion Proponents
http://idahofreedom.org/beware-of-funding-promises-made-by-medicaid-expansion-proponents/
Brandon Hershey of the Idaho Freedom Foundation questions the ability of the federal government to cover the costs of Medicaid expansion: “Expanding Medicaid in Idaho relies on federal funds and the promise that the federal government will pay 90 percent of the costs. Really? With a debt of more than $17 trillion? The federal government rarely follows through with funding promises to the states. Medicaid expansion will bring the state’s hospitals a pile of reimbursements, but at what cost to state’s taxpayers and future generations?”
Policy Tip Sheet: Medicaid Expansion
http://heartland.org/policy-documents/policy-tip-sheet-medicaid-expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that offer better care at a lower cost to taxpayers.
A Medicaid Cure: Florida’s Medicaid Reform Pilot
http://www.floridafga.org/2011/11/a-medicaid-cure-floridas-medicaid-reform-pilot/
The Foundation for Government Accountability explains the success of its Project Medicaid Cure: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”
The Private Option: Medicaid Expansion by Another Name
http://heartland.org/policy-documents/private-option-medicaid-expansion-another-name
Nicole Kaeding of Americans for Prosperity forecasts the effects of the decision to expand Medicaid in Arkansas.
Why States Should Not Expand Medicaid
https://heartland.org/publications-resources/publications/why-states-should-not-expand-medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to fit coverage expansion.
The Empty Promises of Arkansas’ Medicaid Private Option
http://heartland.org/policy-documents/empty-promises-arkansas-medicaid-private-option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Medicaid private option program. The authors offer direct quotes from media interviews, legislative floor speeches, and social media posts made by private option supporters, and they provide point-by-point free-market rebuttals.
How Medicaid Expansion (and the ‘Private Option’) Will Lock its Clients into Poverty
http://heartland.org/policy-documents/how-medicaid-expansion-and-private-option-will-lock-its-clients-poverty
Dan Greenberg of the Advance Arkansas Institute argues legislators need to consider the potential economic problems that come from expanding Medicaid, including slow economic growth and trapping taxpayers into low-wage jobs.
Research & Commentary: The Medicaid ‘Cure’
https://heartland.org/policy-documents/research-commentary-medicaid-cure
Kendall Antekeier examines the Medicaid Cure, a pilot program established in five large Florida counties by former Gov. Jeb Bush (R). The Medicaid Cure is a premium support model passed in 2006 in which gave 290,000 Medicaid recipients a range of premiums and plans from which to choose.
A Medicaid Cure: Florida’s Medicaid Reform Pilot
https://heartland.org/publications-resources/publications/a-medicaid-cure-floridas-medicaid-reform-pilot?source=policybot
The Foundation for Government Accountability analyzes the success of Florida’s Medicaid Cure program, stating, “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at https://heartland.org/topics/health-care/index.html, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.
If you have any questions about this issue or The Heartland Institute website, contact Heartland Institute Government Relations Manager Nathan Makla at [email protected] or 312/377-4000.
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
