Ohio Offers to Match Medicaid Participants’ HSA Contributions 10 to 1—or Disenroll Them
Medicaid recipients would pay no more than $99 per year into a state-funded HSA and roll unspent HSA funds into a "Bridge Account" to ease transition to commercial insurance.
All Ohio Medicaid recipients—except for pregnant women—will be required to contribute the lesser of 2 percent of their income or $8.25 monthly to a state-funded health savings account (HSA) to help pay for their health care costs, if the federal Center for Medicare and Medicaid Services (CMS) approves the proposed Healthy Ohio Program (HOP).
Under HOP, the state would spend $32.6 billion over five years on Medicaid, which is almost $1 billion less than the five-year cost of Medicaid in its current form, according to the plan’s budget neutrality worksheet. Although the state would spend more per Medicaid recipient under HOP, total Medicaid enrollment would decrease, resulting in savings, if the plan’s projections are accurate.
If HOP proceeds, the state will contribute $1,000 per year to the “non-core” portion of each Medicaid recipient’s HSA, termed a “Buckeye Account,” to cover each person’s deductible, according to the program’s Section 1115 demonstration waiver. The deductible would increase each year as the non-core portion of the HSA accrues.
Medicaid recipients, including people with incomes below the federal poverty level, would contribute up to $99 a year as the Buckeye Account’s “core portion.”
Participants with positive core portion balances would draw from them to cover copays HOP would newly establish: $75 for inpatient services, $4 for outpatient services and preferred prescription drugs, and $8 for non-preferred prescription drugs and nonemergency use of emergency rooms.
Additionally, participants could earn up to $320 per year, which would be added to their HSA’s core portion, by taking certain preventive health care measures. At the end of each year, participants could spend the balance of their unspent core portion on “qualifying and medically necessary healthcare goods and services” or roll it into next year’s account.
Participants who exit the program would roll their entire HSA into a “Bridge Account” to ease their transition to paying for commercial or employer-sponsored insurance, the waiver states.
Pay to Play
HOP includes no work requirements. Participants who fail to make their monthly contributions within 60 days of their due date would be disenrolled from HOP until they make up their back payments.
Gov. John Kasich (R) submitted the demonstration waiver proposing HOP to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, which oversees CMS, in June. State lawmakers approved funding to implement HOP in 2015, when they passed Ohio’s 2016–17 biennium budget.
State Rep. Robert Sprague (R-Findlay) says the share of costs Medicaid recipients would contribute under HOP would be far less than a private insurance plan would require.
“It’s important to note that our plan only requires very modest contributions from the individual and then generous contributions from the state for people’s health savings accounts,” Sprague said. “[This], quite frankly, is a good deal, because most people in the private insurance marketplace are going to pay a lot more than that, as a percentage of their income, for their health care insurance.”
Andrew Yogmour, a legislative aide to Sprague, says HOP incentivizes participants to exit Medicaid by letting them spend their entire HSA balance on their new commercial insurance plan.
“If an individual no longer qualifies for Medicaid, as long as certain benchmarks are met, the Buckeye Account balance can be moved into a Bridge Account,” Yogmour said. “The Bridge Account is meant to help individuals with their medical expenses during the transition off of Medicaid.”
Spurious Claims of Savings?
Jonathan Ingram, vice president of research at the Foundation for Government Accountability, says HOP would be a bad investment for taxpayers.
“The proposed Healthy Ohio waiver is unlikely to bring the savings its advocates have promised,” Ingram said. “In fact, the state’s own actuaries estimate that the Healthy Ohio plan will actually cost taxpayers more per person, not less.”
Ingram says HOP’s projected savings rely on a provision CMS is likely to reject: removing from Medicaid thousands of recipients who decline to make their $8.25 monthly contribution.
“The only expected ‘savings’ are based entirely on reducing Medicaid enrollment by more than 130,000 able-bodied adults each year for refusing to pay monthly contributions,” Ingram said. “But that enrollment reduction will almost certainly never actually occur. After all, the federal government has repeatedly rejected other states’ requests to disenroll able-bodied adults in this manner.”
If HOP fails to disenroll tens of thousands of individuals, the program will cost taxpayers more than Medicaid expansion has, Ingram says.
“If that promised enrollment reduction never occurs, taxpayers would be on the hook for an extra $4 billion for Healthy Ohio, over and above what taxpayers are already spending on Obamacare expansion in Ohio,” Ingram said.
Banking on Market Principles
Sprague says HOP will reduce Medicaid costs by relying on competition and making patients conscious of their own health care costs.
“A more market-based system is going to drive down the costs, not increase them,” Sprague said. “The bottom line is we’re trying to introduce more market discipline into the health care marketplace in the State of Ohio, and anytime you introduce market forces, there’s going to be change and there’s going to be competition. There’s also going to be a reduction of price.”
Sprague says he expects CMS to decide the program’s fate by December 2016. If approved, HOP will take effect in 2018.
David Grandouiller (firstname.lastname@example.org) writes from Cedarville, Ohio.
Healthy Ohio Program 1115 Demonstration Waiver, Ohio Medicaid Department, April 15, 2016: https://www.heartland.org/publications-resources/publications/healthy-ohio-program-1115-demonstration-waiver-draft-4152016
Ben Johnson, “Medicaid Reform Could Save Ohio $1 Billion,” Health Care News, The Heartland Institute, June 2016: https://www.heartland.org/news-opinion/news/medicaid-reform-could-save-ohio-1-billion
Michael Hamilton, “Ohio Medicaid Cost-Sharing Proposal Denounced as ‘Window Dressing,’” Health Care News, The Heartland Institute, June 2016: https://www.heartland.org/news-opinion/news/ohio-medicaid-cost-sharing-proposal-denounced-as-window-dressing
Image via Thinkstock