Governor Kasich’s Failed Ohio Expansion

March 27, 2015 Posted by Patrick Marvin - No Comments

Governor John Kasich of Ohio, a likely presidential candidate, visited Maine yesterday to drum up support for a state-led initiative to call for a convention that aims to amend the Constitution to mandate a balanced federal budget.

As Maine legislators consider following Kasich’s lead by passing a balanced federal budget resolution, it is worth examining another aspect of Kasich’s legislative history that Maine should not try to emulate: expanding Medicaid.

In October 2013, Kasich defied his party and helped make Ohio the 25th state to expand Medicaid coverage, a move that has put nearly 500,000 more people on the government entitlement program.

Kasich certainly has some conservative reforms on his record in Ohio, and even asserts that he is more conservative than his fellow potential Presidential candidates, specifically Governor Scott Walker of Wisconsin. Even so, many observers have doubted his commitment to limited government due to his failure to cut spending, stand firm against organized labor, or truly reform his state’s tax system.

Any claims he had to conservative governance, however, ended when he accepted the growth of Medicaid in Ohio..

The two-term Governor was seemingly duped into accepting the underlying premise pushed by the left, believing the misleading and false arguments made by proponents of expansion. He couldn’t resist the urge to accept the billions of federal funds that the Obama administration used as an incentive to expand the program to include more people.

One of these dishonest arguments, which is still being made today, is that if a state doesn’t expand Medicaid and accept the federal the funds dangled in front of it by Obamacare, it is essentially allowing those funds to be sent to other states and put to other uses.

But that ridiculous claim couldn’t be further from the truth.

A recent report by the Congressional Research Service explains that:

“If a state hasn’t implemented the ACA Medicaid expansion, the state would not receive any federal Medicaid funding for the expansion. However, this doesn’t mean any additional federal Medicaid funding would be allocated to states that have implemented the expansion.

Quite simply, there is no set amount of Obamacare money, and no mythical stockpile of funds that is passed along to the next recipient if it is refused. When a state chooses not to expand Medicaid, the money it would have received is not spent by other states, and in fact is not spent at all.

Unfortunately, the absurdity involving Medicaid expansion does not end there.

Kasich also argued that his support for expanding Medicare was also ground in his humanitarian beliefs, and that those who would benefit from this policy were deserving and hardworking families.

However, according to the left-leaning Urban Institute, an estimated 89.7% of adults who would be eligible for expanded Medicaid in Ohio are childless and have no dependents.

Just for comparisons sake, that number is in 99.3% Maine.

Kasich also claimed that Medicaid is “not a program designed to encourage dependency,” and that expanding the program would empower citizens to achieve economic success.

Yet as many have pointed out, expanding Medicaid does not necessarily result in lower uninsured rates, but often encourages citizens to abandon their private health plans and pick up taxpayer funded options.

The National Economic Bureau of Research projects that if every state in the U.S. expands Medicaid, as many as 4.2 million Americans would switch from private health insurance to Medicaid.

The Foundation for Government Accountability has also acknowledged that when states expand Medicaid, the uninsured rate often does not decrease, meaning the new enrollees to program were previously insured on their own private plans.

But perhaps the worst part of Kasich’s expanded Medicaid deal, and the aspect that will have the greatest impact on his home state, is the price tag.

Kasich and other organizations based their predictions for the cost Medicaid expansion on the assumption that 275,000 Ohioans would join the program after the income eligibility level was increased to 138% of the federal poverty level.

However, that rough estimate is nearly half the actual number, and as a result, the cost for expanded Medicaid in Ohio has exceeded even the worst case predictions.

Ohio’s Medicaid expansion is estimated to result in $14 billion of new federal spending over the next seven years, and predictably, that money is expect to run out early, as the program is expected to be nearly $1 billion over budget by this June.

With Ohio on the hook for 10% of the expansion’s cost by 2020 (if the federal government keeps its promise) that will result in an annual cost of over $400 million for Ohio taxpayers. Hardly the characterization of proponents that expansion comes at virtually no cost for states. Even that projection depends on the reimbursement rate for the federal government staying where it is. If that reimbursement drops, the state cost would be even more crippling.

The fiscal outlook for Ohio is so bleak, Kasich even proposed in his latest budget to begin charging premiums for some of the highest earning Medicaid recipients, a move designed not only to increase state revenue, but to discourage use of the program.

And not only is Kasich’s budget strategy falling apart, but his promise that Medicaid expansion would provide a boost to Ohio’s economy is also proving to be a fairy tale. In 2014, the first full year of the Medicaid expansion, Ohio gained fewer jobs than it had in any of the previous three years, proving that his state is not “roaring ahead” as he claims.

Maine chose another pathway by not expanding Medicaid. Not doing so, in conjunction with realigning eligibility guidelines for the program, has allowed the state to actually reduce the number of people dependent on the government for insurance by nearly 70,000, reduced costs, stabilized the Department of Health and Human Services, and most importantly has given the state the flexibility needed to reprioritize precious dollars away from able bodied, childless adults and toward in home care, care for the elderly, and mental health.

In a Bangor Daily News column one year ago, DHHS Commissioner Mary Mayhew crystalized this point:

MaineCare today consumes 24 percent of all state funding — one out of every four tax dollars. Funding waitlists will cost the state more than $45 million annually, and the cost of expanding Medicaid to more than 100,000 able-bodied adults is, according to our analysis, more than $800 million over 10 years.

While Governor Kasich’s visit provided Mainers a new and welcome opportunity to consider balancing the federal budget, it is also a chance to remember the folly of doing what Ohio did, and expanding Medicaid.