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What Should Ohio Do With Savings from Medicaid Expansion?

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As Ohio prepares to expand Medicaid, there are some questions about who will benefit and whether the state’s taxpayers should get a tax cut as a result of the expansion. Ohio Public Radio’s Jo Ingles says the answers to those questions might be elusive right now.

Thursday, October 24, 2013 at 5:08 pm

State figures show about 366,000 Ohioans are set to benefit from Medicaid expansion. But the Director of the Office of Health Transformation says that doesn’t mean all of those people will be added to the Medicaid rolls.

Instead, Greg Moody explains, the Medicaid eligibility requirements will change under new federal rules.

“It used to be that there were a number of different tests to decide if you were eligible, and you could spend down income or not count certain assets," Moody said. "The federal law moves to a very simple test. Either your income is above the line or below the line. With those other tests, we have some Ohioans currently on the Medicaid program at much higher income eligibility levels. At those higher levels, they will be eligible for the health insurance exchange and no longer need Medicaid.”

Moody explains that means those Ohioans who are switched to the health insurance exchange will likely qualify for subsidies. And that, he says, will help make sure working people are not turning down raises or promotions because the slight increase in pay would mean they would lose their health care.

Moody says the state is set to see $400 million in savings because of the expansion. And that is leading to a debate over what should happen with that extra money that could now be in the budget.

Republican State Sen. Chris Widener wants to give it back to taxpayers in a four percent income tax cut during the next couple of years.

“Those are our hardworking families that are trying to make ends meet," Widener said. "And in my opinion, if we have an additional $400 million of (general revenue fund) in the next 18 months, we ought to forward their benefit from reducing their income tax.”

But Wendy Patton with the left leaning think tank, Policy Matters Ohio, says if the state saves money from Medicaid expansion, it should not go to tax cuts.

“Ohio has very large unmet needs," Patton said. "There’s deferred investment in many programs. We have had tremendous cutbacks in our aid to local government. As a result of the cuts that we saw in the prior budget period, we know there are communities throughout the state that still have not been able to rehire police protection. We know that there are street lights dimmed in many communities.”

The Buckeye Institute’s Greg Lawson says no one should be thinking about how to spend Medicaid savings at this point.

“One of our biggest concerns of this Medicaid expansion all along is that it is going to cost more than they anticipate," Lawson said. "And that as we pick up more of the burden, whether it’s just ten percent that we are due to pick up by 2020 as it currently stands under the Affordable Care Act, or whether it’s more than that because of modifications to the matching rate, it’s going to cost more. And that is going to eventually crowd out a lot of other stuff.”

There’s another factor to consider here. A lawsuit has been filed against the state over the way in which Medicaid was expanded through the Ohio controlling board. The attorney leading that charge, Maurice Thompson, says it would be a good idea for the state to wait to see what happens with his group’s challenge.

“We might get into a situation here where on January first, we are expanding and spending more than we actually have because this money is unlawfully appropriated," Lawson said.

Thompson has taken his lawsuit directly to the Ohio Supreme Court because he says this issue must be decided quickly in order to keep the state from entering into a federal government contract that might be difficult to break free from in the future.

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