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Medicaid Reform Could Save Ohio $1 Billion

May 4, 2016
By Ben Johnson

A proposed reform to Ohio’s Medicaid program could save the state $1 billion by requiring enrollees to contribute a few dollars a month to health savings accounts (HSAs) and to make copayments for some medical services.

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A proposed reform to Ohio’s Medicaid program could save the state $1 billion by requiring enrollees to contribute a few dollars a month to health savings accounts (HSAs) and to make copayments for some medical services.

Under the proposed Healthy Ohio Program (HOP), Medicaid recipients would make mandatory monthly contributions of 2 percent of their income—or $99 a year, whichever is less—to a “Buckeye Account,” which is modeled after an HSA, according to a draft of the Healthy Ohio Program 1115 Demonstration Waiver posted online by the Ohio Department of Medicaid on April 15.

HOP would require the state to contribute $1,000 a year to each HSA to help recipients cover the new copays: $75 for inpatient services, $4 for outpatient services and preferred prescription drugs, and $8 for non-preferred prescription drugs and non-emergency use of the emergency room.

Preventive Incentive

With the exception of pregnant women, recipients who miss two months’ worth of payments to their HSAs would have their benefits suspended until they make back-payments.

Recipients could earn money for adopting healthy behaviors, such as giving up smoking or lowering their blood pressure. Those who take advantage of a recommended number of preventive care services could be eligible to roll unspent HSA contributions at the end of the year into next year’s account, reducing their required contributions for the next benefit period.

A similar system in Indiana led to significantly higher use of preventive services and diminished reliance upon emergency rooms as a main source of care, according to a report issued by the Indiana Family and Social Services Administration in April 2013.

‘Path Toward Self-Reliance’

State officials project about 15 percent of Medicaid enrollees would lose coverage through failure or refusal to shoulder some of their health care costs, making Ohio the first state in the nation to remove people at or below 100 percent of the federal poverty level from Medicaid for failing to pay premiums, The Columbus Dispatch reported on April 7.

Josh Brown, a health policy analyst and attorney who represents clients before the Ohio General Assembly, said those most likely to exit the program would be those most likely to become self-sufficient.

“Able-bodied adults really should be out working toward getting their own health insurance,” Brown said. “The idea is that a minimal premium of a few bucks would put them on the path toward self-reliance.”

Brown says the proposal would help remedy Medicaid’s perverse incentives.

“Even if you don’t ultimately support them, most would agree that these ideas have merit,” Brown said. “Many observers see the current incentive structure in the Medicaid system as a big problem. This is certainly one plan that could begin to satisfy those concerns.”

Too Little, Too Late

Concerns over Medicaid’s unintended consequences have grown since Gov. John Kasich (R) unilaterally expanded Medicaid in 2013, which has cost Ohio $7.5 billion to date, Ohio Watchdog reported on April 19.

Jason Hart, a health and labor reporter and policy analyst for Ohio Watchdog, says HOP could be a step forward for Ohio but would not undo the damage Medicaid expansion has done.

“[The program] would be an improvement on Gov. Kasich’s Medicaid expansion, but Kasich’s Medicaid expansion is one of the worst policies implemented in Ohio in decades,” Hart said. “The Healthy Ohio Program’s proposed cost-sharing measures could be a step in the right direction, but a maximum monthly contribution of $8.25 is a very small step, especially given that Kasich has made 670,000 more Ohioans reliant on Medicaid since January 2014.”

Quitting Ohio’s Dependency Drug 

Brown says the program’s modest incentives could prevent Medicaid from becoming “an unnecessary drug of dependency.”

“This [dependency] is particularly unfair to the people who really need Medicaid,” Brown said. “This plan seeks to inject the most minimal pressure on enrollees seeking the taxpayer alternative to their own health insurance. By doing so, these people may take a step toward fulfilling their God-given potential by becoming independent and less government-dependent.”

If the federal Centers for Medicare and Medicaid Services approves the proposed changes, HOP will go into effect for five years, starting January 1, 2018.

Ben Johnson (therightswriter@gmail.com) writes from Stockport, Ohio.

Internet Info:

Healthy Ohio Program 1115 Demonstration Waiver, Ohio Medicaid Department, April 15, 2016: https://www.heartland.org/policy-documents/gov-kasichs-medicaid-expansion-costing-ohioans-billions-dollars

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