Guest Column

Broaden Ohio’s health-spending debate

9/29/2013

As the Ohio General Assembly considers expanding the state’s Medicaid program of low-income health insurance, lawmakers should explore other creative options that would ensure the program’s sustainability and increase access to health coverage for Ohioans.

Whether such coverage is publicly or privately funded, every Ohioan should have the chance to be healthy. Health insurance is also a critical rung on the ladder of economic opportunity.

Some lawmakers in Columbus are looking at changes that would curb Medicaid spending growth. Ohio is not alone in this pursuit: Achieving spending targets while improving the quality of care is the focus of several other states’ Medicaid activities.

A bipartisan legislative panel recently asked the Health Policy Institute of Ohio to analyze the feasibility of limiting Medicaid spending. The panel wanted us to explore the economic impact of expansion, if per-person spending growth in the program were held to a rate similar to that of the health-care system in general. The panel also sought suggested policy changes that could reduce spending growth.

New York ties spending growth in its Medicaid program to a 10-year average of the medical component of the Consumer Price Index. This is different from what Ohio lawmakers are considering, in that it is a global rather than per-person cap on cost growth. But it shows that in the absence of a recession, Medicaid growth rates can be reduced.

The State of Oregon has struck a deal with the federal government: In exchange for cutting by 2 percentage points its annual rate of per-person Medicaid spending growth, the state will get about $1.9 billion in federal support over five years.

Oregon must achieve these savings without withholding needed health care, degrading the quality of care, or cutting payment rates to providers. The state faces large penalties if it does not achieve the required savings.

A new law in Massachusetts goes beyond just capping Medicaid spending growth. The law also sets spending targets for the state’s entire health system, and establishes an independent body to propose policy changes if these targets are not met. Massachusetts has set bold goals for tying provider payments to value, as a part of a comprehensive package designed to reduce cost growth and improve quality of care.

Massachusetts, New York, and Oregon are expanding their Medicaid programs. Many other states, including Michigan, also have opted to expand Medicaid. Ohio Gov. John Kasich seeks Medicaid expansion in this state.

The Health Policy Institute of Ohio takes no position on expanding Medicaid. However, we believe that the issue of expansion deserves in-depth analysis.

This year, our institute, Ohio State University, and others analyzed Medicaid expansion. Our study found that expanding Ohio’s Medicaid program not only would provide health coverage to hundreds of thousands of Ohioans, but would have a positive fiscal impact on state and county governments.

The expansion option triggers additional federal funding for this coverage. We estimate that Ohio would save $1.8 billion to $1.9 billion during the nine-year period of our analysis.

We also found that expanding Medicaid while capping per-person spending growth rates would end up being less costly by 2019 (at 3.5 percent annual growth) than if the program were not expanded and cost growth continued to follow the historic trend (currently 7.2 percent; this figure includes program growth that occurred because of the recession).

The Governor’s Office of Health Transformation and the state Medicaid program, along with the legislature, have taken steps that show promise for reducing health-care costs and improving quality. These steps include broader use of care management, especially for people with complex health conditions, and tying some payments to positive results, such as reductions in avoidable hospital readmissions.

Whether or not Ohio expands its Medicaid program, the state should continue to look for other ways to cut costs and broaden access without compromising the quality of care.

Amy Rohling McGee is president of the Health Policy Institute of Ohio, an independent, nonpartisan organization based in Columbus.