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Kasich's Use of Managed Care Tools Cited in Medicaid Savings

Mary K. Caffrey
More signed up under Medicaid expansion than expected, but use of technology and management tools have kept costs $2 billion below estimates.
Ohio Governor John Kasich’s decision to bypass Republicans in his legislature to expand Medicaid sets him apart from other contenders for the 2016 presidential nomination, but he makes no apologies for his decision.

Guided by a need to answer “to St. Peter” for how he treats the poor, he also said during the first televised debate August 6, 2015, that it makes fiscal sense to treat those with mental illness instead of housing them in jails and prisons. And this week, he got some fresh numbers to back up his arguments.

A report released Wednesday found that Ohio’s Medicaid program came in $2 billion below projections, spending $23.5 billion, or 7.6% less than estimates. That occurred even though the program has attracted more newcomers than expected from the pool of newly eligible applicants—those earning between 100% and 138% of the federal poverty level.

“This is a good example of where you (use) better management tools, you can better manage the program and control costs,” said Greg Moody, who is director of the Office of Health Transformation.

Kasich’s ability to bring Medicaid to more of his residents while keeping costs under control is something he openly touts as he runs for president, and it seems to be working for him in some of the early primary states. Since his appearance in the first debate in Cleveland, he has climbed in the polls in New Hampshire, which also recently expanded Medicaid through a CMS waiver.

His defense of his broadening of Medicaid as a more fiscally prudent way to deal with mental illness and drug addiction stood apart at the GOP gathering. He also talked about the need to give the working poor a chance to be treated outside of the emergency room, “where it costs more, where they're sicker and we end up paying.”

“We brought a program in here to make sure that people could get on their feet,” he said.

Indeed, the Cleveland Clinic announced that charity care costs had dropped 40% due to Medicaid expansion.

Use of technology has been a key to Ohio’s brand of Medicaid savings. It allows the state to quickly figure out who is eligible for benefits and to remove those from the rolls who no longer quality. That means as some 500,000 have signed up due to Medicaid expansion, 90,000 have left the program.

Ohio’s launch of Medicaid managed care had a bumpy start. As was the case in other states, transitioning to the use of contractors led to gaps in coverage. News accounts chronicled stories of longtime home health aides being forced to quit for other jobs after going weeks without a paycheck.

State officials say enrollment is 130,000 higher than anticipated, but use of Medicaid expansion has exceed expectations in many states. As for moving people off the rolls, Ohio officials attributed this to an improving economy that is allowing more people to get jobs and coverage at work.

A special legislative panel is closely watching the cost per beneficiary, and noted that that Medicaid spending rose 3% in the past fiscal year, down from 4.6% the prior year.

 
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