What Will Health Care Reform Cost Ohio?
There has been a lot of focus on the cost of the Congressional health care bills to federal taxpayers. Considering that if enacted, legislation could cost $1.3 trillion (or more) over the next ten years (and much more after that), we should be focusing on that. Lost in the discussion, though, is the fact that the legislation being discussed would also force state taxpayers to pay higher taxes by expanding Medicaid. Before any bill is passed by Congress, Ohio deserves to know just how much the federal Medicaid mandate in this bill will burden them.
Medicaid is a joint state and federal health care program that provides coverage to poor and middle class children, poor pregnant women, and the aged and people with disabilities. The federal government pays about 60% of the cost while Ohio taxpayers pick up the other 40%. In Fiscal Year 2009, state taxpayers paid $3.1 billion for Medicaid services while the federal government paid $6.7 billion.
Currently, Ohio's Medicaid program has limited eligibility for adults. If you have children, you can make up to 90% of the federal poverty level (FPL) and get Medicaid. If you are pregnant, you can make up to 200% of FPL. Ohioans with disabilities also qualify for the program.
Under health care reform proposals in both the House and Senate, though, that would change. Every adult that makes up to 150% of FPL would be eligible for Medicaid. States would be forced to extend their programs and pay their share of the costs. Ohio policymakers, who recently completed a budget process where they faced a record revenue shortfall, should be quite concerned about how much this federal mandate would cost state taxpayers.
Governors in some states have ordered their budget offices to prepare an estimate of the new spending that would be required under this Medicaid mandate. Sensibly, they want to know exactly what kind of budget pressures their states will be facing if the health care proposals become law. This allows state policymakers to craft spending and tax decisions in such a way as to ensure this new mandate does not disrupt state finances.
There is no evidence that Governor Strickland has done anything of the sort. Given the state's recent budget problems, it would be prudent to figure out if these proposals will cause future budget problems. One of the main reasons the budget process was so contentious this year was exactly because state policymakers didn't engage in this sort of long-term thinking in the past. Evaluating the proposed federal Medicaid changes is a good way to begin atoning for this mistake.
Since the governor won't do it, I'll give it a shot. According to U.S. Census data, in 2007 Ohio had over 1.2 million adults living in families under 150% of FPL. Given the state's current economic woes, we can safely assume that number is larger today. Some are already on Medicaid. Some have other insurance. But many these 1.2 million would be enrolled in Medicaid under the plans being discussed in Congress.
The Kaiser Family Foundation estimates that in 2006, the average Medicaid payment on adults in the system was $2,930. Let's say that only 500,000 of those eligible sign up for the program. If spending were at the same level as 2006 (it's undoubtedly higher, but those are the last year for which numbers are available), it would mean Ohio taxpayers would be paying $586 million every year for their Medicaid. More people enrolled would, of course, increase this cost.
This number is only a rough estimate based on some very incomplete data. But it's the best we have since Governor Strickland has refused to do what other governors have done and requested his budget office take a look at potential Medicaid costs. Maybe he's afraid that having this information may make the health care legislation more unpopular. If so, that is a poor reason to deny the public this information. If we are to make a sound choice on this issue, we should know what it will cost us. Too bad the governor does not seem to feel the same way.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
