Kasich and Obamacare: Follow the money, or the politics

7/15/2012

Gov. John Kasich portrays himself as the zealous guardian of Ohioans' tax dollars. But his efforts to thwart the national health-care reform law suggest that his watchdog role includes watching a lot of these dollars escape to other states.

The U.S. Supreme Court has upheld the Affordable Care Act (aka Obamacare), including its mandate that most Americans buy health insurance. Yet the governor is balking at carrying out two of the law's key features. That intransigence could cost -- not save -- Ohio taxpayers billions, since Washington is paying states to make these changes.

One of the provisions would extend health coverage to millions of uninsured Americans, by expanding the federal-state Medicaid program for poor and disabled people. The Supreme Court ruled that Washington can't force states to add to their rolls by threatening to withhold its funding of their Medicaid programs. Seven states, all with Republican governors like Mr. Kasich, already have rejected expansions of their programs.

The other provision disdained by Governor Kasich calls on states to create health insurance exchanges by 2014. These are markets that will enable employers and poor and middle-income consumers, with the help of federal tax credits, to buy affordable insurance from private providers that compete for their business.

Despite the promises of ample federal aid, Mr. Kasich says he's not inclined to comply with either provision. So Ohio's share of Washington's tax-supported largess could go elsewhere -- in effect, forcing Ohio taxpayers to subsidize states that go along.

The governor estimates that the Medicaid growth Ohio must undertake because of Obamacare will cost the state about $940 million in fiscal 2014 and 2015. That figure represents the cost of enrolling an estimated 900,000 Ohioans who qualify for Medicaid but have not signed up (Ohio's Medicaid program includes nearly 2.2 million people).

These laggards presumably will enroll in Medicaid now, to avoid paying the tax they would face if they did not comply with the individual mandate. Mr. Kasich's cost projection sounds like a huge sum, until you consider that it amounts to less than 2 percent of the state's current two-year, $55.8 billion general-fund budget.

The voluntary expansion is designed to extend health insurance to households that are not now eligible for Medicaid, with annual incomes of as much as 138 percent of the poverty level -- nearly $32,000 for a family of four. A new study by the Urban Institute, a nonpartisan policy research group in Washington, estimates the additional optional cost to Ohio of expanding its Medicaid program at $830 million through 2019.

That's not a break-the-bank sum, especially since the federal government will pay the full cost of states' Medicaid expansion through 2017. After that, Washington still will pick up at least 90 percent of the tab.

That's too good a deal for Ohio to pass up. Mr. Kasich can leave that money on the table, but it won't stay there long.

"For $830 million, Ohio gets back $17 billion" in matching federal aid, says John Holahan, director of the Urban Institute's Health Policy Research Center. "If you don't do it, people in Ohio will be paying federal taxes that get sent to other states. It doesn't make sense."

The Urban Institute study says 57 percent of the nearly 1.4 million Ohioans who lack health insurance -- more than 789,000 people -- would be covered by the voluntary Medicaid expansion. Getting them insured would save Ohio a lot of money for expensive, uncompensated treatment that hospitals and doctors provide patients who aren't covered now.

Actually, those costs aren't uncompensated; they're largely shifted to people who have health insurance. Mr. Holahan predicts that both providers and employers in Ohio will lobby Governor Kasich to change his mind.

By contrast, if Ohio refuses the Medicaid expansion, many people and families below the poverty line would not qualify for subsidies to buy insurance on the private exchange either. That would be the worst of both worlds.

Mr. Kasich expresses dismay that creating a health exchange could cost Ohio $43 million to set up. But his administration's refusal to establish an exchange doesn't mean that Ohio won't have one -- it simply means the feds will impose one on the state. Mr. Holahan says a state-run exchange would give Ohio flexibility and control it wouldn't have under a plan from Washington.

Massachusetts already has its own exchange. President Obama's Republican challenger, Mitt Romney -- who created the model for Obamacare when he was that state's governor -- wishes you would forget that.

The Republican governor of Michigan, Rick Snyder, and its GOP-majority Senate say they want to create an exchange tailored to the specific needs of that state's residents, in lieu of what they call "a one-size-fits-all bureaucratic scheme."

The liberal advocacy group Innovation Ohio notes that the five states that border Ohio -- three of which have Republican governors -- have collected more than $130 million in federal aid to create and run their exchanges. Ohio has gotten $1 million, which former Gov. Ted Strickland applied for.

The Kasich administration has worked well to improve Ohio's Medicaid program while containing its costs. The governor has assailed the federal government's performance on other issues. So his resistance to the state Medicaid expansion and health exchange likely reflects, more than anything else, Republicans' determination to kill Obamacare however they can, without offering an alternative.

"It's totally ideological -- it makes no economic sense," Mr. Holahan told me. "There'll be a lot of posturing until the election, but if Obama wins, a lot of states will follow the dollars."

Or these issues could become moot, if voters hire Mr. Romney and a Republican Congress this November and they finally carry out their threat to repeal the Affordable Care Act. Governor Kasich clearly is prepared to take that partisan gamble. But many Ohio taxpayers and consumers would prefer that he instead help them benefit from the law's protections and preventive medicine.

Which again raises the question: When Ohioans narrowly elected Mr. Kasich two years ago, is this the kind of thing they thought they were signing up for?

David Kushma is editor of The Blade.

Contact him at: dkushma@theblade.com