More Medicaid Problems in Ohio
In tight economic times, when expenses are rising and your paycheck may even be shrinking, most families decide to cut back on expensive items. It makes little sense to buy a pricey high-definition TV when your electricity bill has doubled and your job is reducing overtime, right? This kind of common sense thinking, however, is lost on Governor Ted Strickland. At a time when state agencies are trying to trim budgets and the state is facing large budget deficits, he is trying to expand one of the most expensive parts of the state budget - Medicaid.
The crux of the problem is at the heart of the debate over government health programs: the desire of politicians to use taxpayer money to provide more government health care runs up against the fact that this health care is expensive to provide. And, adding to politicians’ woes, it is difficult to accurately predict future spending.
While none of this is a secret, most politicians prefer to ignore it. But when the bill comes due, it poses difficulties. That is what happened at the end of 2007 in Ohio, when spending on Medicaid was higher than the amount budgeted. That $207 million in unanticipated spending is bad news for a state facing large deficits. And when you also consider the fact Medicaid spending goes up dramatically during recessions, it spells even more trouble for Ohio taxpayers.
In the face of this troubling fiscal news, it would make sense to look for ways to save money. To the governor's credit, he is taking some small steps to control spending in Medicaid. But at the same time he is complaining that Medicaid is not spending enough.
In late December the Bush Administration turned down Ohio's request to enroll children in families between 200% and 300% of the federal poverty level (FPL) -- around $62,000 for a family of four). This was a plan that was passed without much opposition by the General Assembly earlier this year but required federal approval since the federal government pays over 60% of the cost. Governor Strickland was outraged at the federal rejection of the proposal and vowed to continue pushing for the program's expansion.
With almost daily news about the looming Ohio budget deficit and efforts to trim state spending, this federal veto of Ohio's Medicaid plans should be seen as an opportune sign. The state’s policymakers abdicated their fiscal responsibility when they increased eligibility. Since then, the state has discovered that Medicaid is more expensive than they realized (and spending is likely to continue to go up). With the state not having the money for the program, the federal government's move saved the state from its own foolishness.
That is not how the governor sees it. He contends that children need the government to pay for their insurance. But almost 80% kids in families who make between 200% and 300% of the FPL have private insurance. Most of the remaining have another form of health coverage. There really is no need for the government to provide care. In fact, studies indicate that the more likely scenario is that most of the children signing up for the new Medicaid benefit would have left private insurance to move onto taxpayer-financed insurance. It is not the proper role of government to provide health care for people who would otherwise have private coverage.
Instead of the governor's contradictory approach (taking small steps to control costs while trying to expand eligibility), the state needs to look at fundamental Medicaid reform. The program does not serve either taxpayers - who foot the bill for an expensive program - or recipients - who receive substandard medical care. The system does not work for anyone and it needs to be changed.
States like Florida and South Carolina are exploring ways to reshape their Medicaid programs to control costs, provide some certainty in the state's budgeting process, and improve quality for Medicaid recipients. These efforts are showing promise and Ohio would do well to follow the lead of these states.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
