States Continue to Debate Medicaid Expansion and Reform

Expansion or not, it is obvious that states must consider how to make their Medicaid programs more sustainable.

Ohio Governor John Kasich, like many state governors, has been mulling over the decision as to whether or not to expand Medicaid. He is particularly reluctant to pass an executive order that would expand the state’s Medicaid program, because the Ohio state legislators remain hesitant to support that choice. While Gov. Kasich sees the expansion as an opportunity to cover an additional 275,000 Ohio residents, state legislators are more concerned about the state budget and how the choice to expand the program could affect the finances of a state already dealing with the rising costs of Medicaid.

“I’m focused on the problem in Medicaid—the ever-increasing consumption of the state budget,” Ohio Senator Dave Burke said. “If we can accommodate other services, that’s a discussion.”

While Medicaid expansion remains a contested issue in the Buckeye State, its legislators have been able to at least move forward on a bipartisan effort that would reduce costs and improve efficiencies for the existing Medicaid program. “Medicaid reform has to happen whether we do Medicaid expansion or not,” said Ohio Senate President Keith Faber.

Ohio shouldn’t be the only state concerned about reigning in the costs of Medicaid. The Kaiser Family Foundation recently conducted a survey of Medicaid offices across the country, including the District of Columbia. The findings showed that Medicaid enrollment growth in 2014 is expected to average 8.8%; a 6.3% increase from the 2013 fiscal year. States choosing to expand Medicaid will see an estimated 11.8% growth in enrollment, but even those states not moving forward with expansion can expect to see a 5.3% growth. Growth rates can be attributed to the adjustments of the Federal Poverty Line under the ACA, as well as what is known as the “woodwork effect.” This phenomenon occurs when those who already eligible for Medicaid coverage, but were unaware, decide to enroll.

Medicaid expansion and beneficiary growth has many state legislators worried about their budgets, and their concerns are rational. The Kaiser study also found that all states will average a 10.3% spending growth in 2014, compared with 3.8% in 2013. In states expanding coverage, total spending is expected to increase on average by 13%, compared with 6.8% in non-expansion states. However, states that opt to expand the federal health program under the Affordable Care Act will have costs fully covered by the federal government for the first 3 years. By 2017, that federal coverage will drop to 90% of costs. This federal contribution is expected to slow the overall growth rate of spending in states that do choose to expand.

Expansion or not, it is obvious that states must consider how to make their Medicaid programs more sustainable.

Dr John Ayanian, director at the Institute for Healthcare Policy and Innovation, said that Michigan provides a Medicaid program that he considers as a “model for the nation.”

"This is one of few examples where Republicans and Democrats came up with the same approach (to combine) public and private goals to afford Medicaid expansion for the people in Michigan," Dr Ayanian said in a recent article. “With the current gridlock in Washington, DC, Michigan's approach represents a model for the nation.”

Dr Ayanian also presented at this past week’s V-Bid Summit at the University of Michigan, which focused on the numerous health reform initiatives being utilized to engage providers and consumers in improving the efficiency and quality of care in programs like Medicaid.

What makes Michigan’s program so unique? Dr Ayanian said it’s about being innovative and collaborative. "By linking Michigan's Medicaid expansion to market-oriented changes in this federal-state program, the governor and Legislature have created a pragmatic pathway for linking Republican and Democratic priorities for healthcare.”

Around the Web

Kasich Medicaid-Expansion Plan Puts Heat on GOP Legislators [The Columbus Dispatch]

Medicaid Expansion or Not, States Will See Higher Enrollment, Spending in 2014, Study Finds [Modern Heatlhcare]

Michigan's Medicaid Program Could Be Model for Nation, Says UM Health Researcher [Crain's Detroit Business]