Gov. John Kasich’s new the biennium budget proposal would expand Medicaid to hundreds of thousands of newly eligible Ohioans, but the program is also likely to attract nearly as many residents who are already eligible for Medicaid but not enrolled in the program, spiking Ohio’s Medicaid costs by more than a half-billion dollars over the next two years.
The governor’s budget estimates more than 230,000 residents, who are eligible but not enrolled in Medicaid, will sign up for the state-federal health care program for the poor at a cost of about $521 million for fiscal years 2014 and 2015.
And the numbers could be even higher, depending on the take-up rate by the so-called “woodwork” population, as in the number of uninsured coming out of the woodwork.
“We are not assuming that everybody who is eligible but not enrolled is going to come in,” said Eric Poklar, a spokesman for the Kasich administration. “Those in the budget are the people we expect are going to be coming in. That is not the full universe of people who are eligible but not enrolled.”
The Patient Protection and Affordable Care Act mandates health insurance for everyone beginning next year, which, experts say, is likely to encourage a large share of those currently not enrolled to sign up for Medicaid.
They would join the program in the first two years on top of an estimated 365,000 Ohioans — including about 30,000 in Montgomery County — who would be newly eligible for Medicaid coverage under the proposed expansion to everyone at 138 percent of the federal poverty rate, or about $15,400 for an individual.
The federal government has pledged to cover the complete cost of newly eligible enrollees through the first three years of the expansion, gradually tapering its share to 90 percent by 2020. That’s expected to generate and influx of $2.4 billion in federal funds to Ohio over the next two years.
But federal dollars would cover just over 60 percent of the cost of care for those who are already qualified, leaving the state on the hook for the balance.
Still, Poklar was quick to point out that the state would be responsible for covering the woodwork population with or without a Medicaid expansion.
“Expansion and woodwork are two different issues,” Poklar said. “We knew all along that we needed to cover the woodwork effect and do it in such a way that it wouldn’t blow a hole in our budget, and we feel like we did that. Then we needed to make a decision on whether to do the expansion, and we have done that.’’
Kasich is the sixth Republican governor to sign on to a Medicaid expansion, joining the governors of Michigan, Arizona, Nevada, New Mexico and North Dakota.
Overall, 24 states have agreed to expand Medicaid, which currently covers about 2.3 million people in Ohio at a cost of about $19 billion annually.
While the woodwork effect will boost enrollment and costs exponentially, in the long-run, the savings from not having to provide care for the uninsured and leveraging federal funds made available through the ACA should offset state spending, said John Bowblis, a Miami University economics professor who specializes in health care.
“By doing the expansion and covering people we were already suppose to cover, there are going to be significant cost savings all around, and the federal government will kick in a lot of money to pay for that care,” Bowblis said. “The short-run costs are probably going to be higher than the benefits. But you have to remember with health care, you get the benefits down the road; if you get proper preventive care today through Medicaid, it saves you from the cost of having a heart attack and going to the emergency room later.”
The state expects to net $235 million over the next two years because of a boost in tax revenue, plus additional savings from proposed Medicaid eligibility changes and savings on medical care for prisoners, according to the budget proposal.
The Ohio Health Policy Institute recently reported expanding Medicaid could generate more than $5 billion in federal spending by 2022, while only costing Ohio $609 million.
Bryan Bucklew, president and chief executive of the Greater Dayton Area Hospital Association, said the benefits of expanding Medicaid would reach well beyond a line item in the state budget.
He said the cost of treating patients who are not covered and but would be covered under Medicaid would be much less than the cost of providing care to the approximately 1.5 million uninsured Ohioans who now use the emergency rooms for primary care, driving up insurance rates for even those with private health care coverage.
“Right now, those uninsured costs are cost-shifted to those who do have insurance,” Bucklew said. “So, we’re kind of paying twice. We’re paying the taxes to fund Medicaid, and then we’re also paying an additional hidden tax in our insurance rates to cover the uninsured.
“The goal here is to not only cover people but also give them access to a regular doctor so they won’t have to utilize the emergency room,’’ he said
Still, all of the suggested benefits of expanding Medicaid are contingent upon the government living up to its promises.
To address that concern, Kasich’s plan calls for an “opt-out” provision that would automatically shut down Ohio’s program for newly eligible residents if the federal government doesn’t pick up its share of expanded coverage.