Politics & Policy

Washington Shoots Down Ohio’s Medicaid Reform

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The administration shows little willingness to negotiate.

Critics of Medicaid expansion were vindicated again last week when the Obama administration denied Ohio’s request to incorporate HSA (health savings account) features into the state Medicaid program. Opponents of Governor John Kasich’s 2013 expansion of Medicaid to childless, able-bodied, working-age Ohioans argue that hospital lobbyists, federal bureaucrats, and cowed state lawmakers will make future reform — much less repeal — nearly impossible. Now, officials in the federal Centers for Medicare and Medicaid Services have dealt welfare-reform advocates another setback, killing a proposal to require some of the adults in Ohio’s Medicaid program to pay meager monthly HSA contributions.

“CMS is concerned that these premiums would undermine access to coverage and the affordability of care,” Andrew Slavitt, the acting administrator of CMS, explained in a September 9 letter denying the state’s request for a Medicaid waiver to implement the Healthy Ohio Program (HOP), which the Ohio General Assembly approved in 2015. Under HOP, an enrollee’s contributions to Medicaid would max out at $8.25 a month or 2 percent of his income, whichever is less. The plan is modest, but it’s no wonder that CMS rejected it: The Obama administration’s goal is to maximize welfare enrollment, and Kasich gave the president everything he wanted by expanding Medicaid under Obamacare.

The HOP request included no work requirements, but the state estimated that HOP’s monthly premiums would cause more than 100,000 Ohioans to drop off the Medicaid rolls. More than 700,000 working-age Ohioans have signed up for Medicaid through Kasich’s Obamacare expansion, which includes no premiums, no time limits, and no requirement that enrollees find (or even seek) employment. Kasich expected that fewer than 450,000 would sign up by 2020.

Since Kasich took office in 2011, Ohio’s total Medicaid enrollment has increased by more than a third. Ohio Medicaid spending skyrocketed from $17 billion in 2011 to $25 billion in 2016. HOP would have barely put a dent in the expansion’s new costs, which are on track to double the $13 billion that Kasich projected for 2014–20. Federal taxpayers have been stuck with the nearly $10 billion tab already run up for Ohio’s Medicaid expansion, but Ohio taxpayers will have to fork over 5 percent of its $400 million monthly costs starting in January.

Even when Republican governors have asked to customize Medicaid as a precondition for expanding it, the Obama administration has shown little willingness to negotiate. Ohio’s HOP proposal is a watered-down version of conservative lawmakers’ attempts to emulate the Healthy Indiana Plan, an HSA program gutted by Governor Mike Pence in return for Obamacare money. Arkansas governor Asa Hutchinson agreed to continue his state’s Obamacare expansion in return for similarly feeble Medicaid waivers.

Unlike Pence and Hutchinson, who made a show of holding out for waivers before embracing Obamacare, Kasich framed Medicaid expansion as a fiscal and moral imperative. When Ohio’s legislature refused to expand Medicaid, Kasich did so unilaterally.

The question that Obamacare expansion raises is not whether all citizens should receive health care but whether it should be paid for through an ineffective, unsustainable federal welfare program.

Other governors should pay attention to what’s happening in Ohio, says Jonathan Ingram, vice president of research at the free-market Foundation for Government Accountability. “The federal government’s rejection of Ohio’s waiver request should serve as another warning to states that have rejected Medicaid expansion,” Ingram said. “As usual, Washington bureaucrats hold all the cards, and they’re interested in only one thing: expanding welfare to more able-bodied adults.”

“In the end, no amount of tinkering can make expanding Obamacare to more than 700,000 able-bodied adults a ‘conservative’ plan,” he added, noting Ohio’s $4 billion and counting in Medicaid-expansion cost overruns. “The state’s own actuaries estimate that the waiver would have increased per-person costs by nearly 10 percent. And that assumes that the projections will be on target, a suspect assumption given the fact that their earlier projections are now expected to be off by nearly $8 billion by the end of 2017.”

Like Obamacare’s various mandates, Medicaid expansion is less about health care than about providing “coverage” via insurance plans controlled by CMS; federal law has required hospitals to provide emergency care to the poor for decades, leaving states and private charities to fill in the gaps. The question that Obamacare expansion raises is not whether all citizens should receive health care but whether they should receive health care paid for through an ineffective, unsustainable federal welfare program.

Unless state lawmakers are willing to reject new federal funding — Medicaid expansion is 100 percent federally funded through the end of this year, and the feds promise to pay at least 90 percent forever — that welfare program’s costs and reach will continue spiraling out of control.

Every waiver request that Obama’s CMS rejects puts the lie to assurances of flexibility from Governor Kasich and other advocates of Medicaid expansion. As usual, lawmakers would be wise to pursue reforms that aren’t tethered to funding from an overbearing and deeply indebted federal government.

Jason Hart — Jason Hart is a health- and labor-policy analyst in central Ohio.

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