Health care has been a major focus in the gubernatorial campaign with both candidates offering bold new plans to address the issue of uninsured Ohioans. Unfortunately, Ted Strickland’s raises serious questions about its cost to Ohio taxpayers and whether or not it is even feasible.
Strickland’s plan, released to much fanfare last month, makes many grand promises but offers few details. From the outline of the plan released to the public, it appears the centerpiece of the program is to expand Medicaid to help fund health insurance for Ohio’s 1.3 million uninsured.
A major problem with this is that Medicaid only covers certain people – pregnant women in poverty, their children, people with disabilities, etc. It also does not cover people who are not in poverty. Since 440,000 of Ohio’s uninsured have incomes above 200% of the federal poverty level, if this Medicaid-financed plan were to meet Strickland’s goal and cover all the uninsured it would involve a massive expansion of Medicaid eligibility in the state.
Another problem is that Medicaid is not an insurance program and it does not pay for insurance. Medicaid is a fee-for-service program that reimburses doctors or other service providers when an eligible individual uses certain services. To try and reshape Medicaid to pay for health insurance would involve a radical restructuring of this program.
Strickland’s plan addresses this by saying that it would be a demonstration program that would be funded under a Medicaid waiver. This also has the benefit of making the federal government pay for 59% of the program, since that is their matching rate for Medicaid spending in Ohio.
There is a major problem with this, however. The only way Strickland’s plan can cover the uninsured is to radically expand eligibility in Medicaid. That means a large increase in cost. However, the type of waiver that funds demonstration programs of this type must be “budget neutral.” That is, it must not cost the federal government more than the current Medicaid program.
One thing Strickland’s proposal is not is “budget neutral,” either for the federal government or Ohio taxpayers. He even acknowledges that by saying that it would cost $550 million over the next two years. The only way it could qualify for a federal waiver is if the plan would save Medicaid $550 million in some other area. With the generous eligibility expansion proposed, it is difficult to see how this could be the case.
Furthermore, this expensive new proposal is only part of his platform for Medicaid. He also says he wants to ensure that everyone who is eligible for Medicaid receives coverage. According to his campaign, between 100,000 and 150,000 people are eligible but do not use Medicaid. Since the state spends, on average, $2400 per Medicaid recipient, that would mean between $240 million and $360 million a year in new state spending on Medicaid if the Strickland plan were adopted.
Even with these staggering numbers, Strickland seems unconcerned with the price tag. He claims that between federal funding and “current state resources,” there will be no need to raise taxes. Even if we accept that his health insurance plan qualified for federal matching funds and only costs $275 million a year (as described above, both are dubious propositions), that means that the state is still on the hook for $113 million a year in new spending. Add that to the coverage of those not currently eligible for Medicaid but not using it, this spells up to $473 million in new spending every year. And this is only part of Strickland’s health care plan!
There are two possibilities here: either Strickland’s health care plan is unrealistic and will involve massive new tax revenue, or the plan he released to the public has a lot of missing details. Both are troubling. Health care is a real concern for many voters and they need a realistic cost estimate for candidates’ plans. Blithely claiming that “current state resources” will cover this plan is ridiculous. Alternatively, if the unreleased details of the plan will connect these dots and make sense out of this plan, the public needs to see them.
As it stands today, though, the health care plan released by Ted Strickland is unworkable and will involve a massive new burden on taxpayers. He should be commended for offering bold new ideas, but these ideas need to be both realistic and fiscally sound. This plan is a false promise to both the uninsured and taxpayers.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.