As Medicaid continues to expand across the state’s budget, Ohio politicians are being forced to develop ideas on how to deal with this growth. Both Congressman Ted Strickland and Secretary of State Ken Blackwell have put forth ideas that would change the state’s Medicaid system. Unfortunately, Representative Strickland’s plans will only make the budget situation worse. On the other hand, Secretary Blackwell’s ideas are a good first step to move Medicaid in Ohio down the right path.
Medicaid is a joint state/federal medical program that covers care for many Ohioans in poverty or with serious disabilities. Currently around 1.6 million people receive service at a cost of $13 billion a year. It accounts for 40% of the state budget and it continues to grow every year.
As the Ohio Commission to Reform Medicaid put it in 2005, “Ohio’s Medicaid program is swamping the state budget, with expenditures increasing at twice the rate of the growth of state revenues. . . . The unsustainable rate of spending growth not only threatens the long-term viability of the program for the needy, but also threatens to crowd out funding for other essential state services including education, economic development, public safety, and transportation.”
Over the next decade, dealing with this worsening financial picture will be a top priority of state lawmakers. So what changes to the program are being discussed in this campaign?
Congressman Strickland plans a massive expansion of the program. Instead of taking steps to reduce spending, his plan will actually increase it. This idea will use Medicaid dollars to fund a health insurance exchange that will, at minimum, cost taxpayers $133 million in new spending. His health care plan also calls for enrolling everyone eligible for Medicaid in that program, which would mean up to $360 million in additional spending.
Spending more on Medicaid is not the way to fix the program. As the Commission to Reform Medicaid pointed out, the growth rate for Medicaid is already unsustainable. Increasing this growth rate will only increase the threat to both the viability of the program and funding for other state programs.
Secretary Blackwell, in contrast, seems to understand this. His Medicaid proposals were developed from ideas presented by the Commission to Reform Medicaid and would lead Ohio in the right direction for reform.
The most important part of his plan is his call to move towards a more consumer-directed care model for Medicaid delivery. The current system is more focused on service providers than consumers and as such it is wasteful and unresponsive to the needs of Medicaid recipients. Moving towards more consumer-directed care has the potential to better contain costs while also improving service for recipients.
Reshaping the program along these lines is a good first step. It is unclear, though, if it goes far enough. Some states – such as Florida or South Carolina – are undertaking major restructuring of their Medicaid programs in an effort to ensure that the program can continue to provide service without becoming fiscally unsustainable for the state. If the program continues to grow as it has in the past, Ohio policymakers would be wise to look to these states for reform models.
Medicaid provides many important services to people in poverty and people with disabilities. Its current rate of growth, however, threatens both these services as well as other programs in the state budget. It would be a mistake to accelerate this growth, as Representative Strickland is advocating. The plan outlined by Secretary Blackwell for reforming the program is a much more sensible way of ensuring this program remains viable while at the same time keeping the burden on taxpayers from becoming too heavy.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.