An Update on the Extension of Medicaid
Loren Anthes, Fellow, Center for Medicaid Policy
May 18, 2016 

Ohio’s Medicaid extension has received a lot of scrutiny from the media, policymakers, and policy experts since its implementation in 2014. This scrutiny has only increased in the past few months during Governor Kasich’s Presidential run and as the Ohio Department of Medicaid (ODM) finalizes its statutorily required 1115 demonstration waiver, Healthy Ohio. While many have been extolling the value of the program, including the Governor, some have claimed that the costs associated with the extension are exorbitant, resulting in overspending in the Medicaid program. This post, then, tries to give a sense of where we are today by examining the performance of the extension geographically and in terms of enrollment and expenditures.

Where is Expansion Happening?
The animation below gives a month by month picture of where the extension has had the greatest effect in terms of county population gaining coverage:

 

Highlights:

  • Cuyahoga County saw the largest initial enrollment due to the automatic transfer of the MetroHealth Care Plus waiver enrollees
  • The decrease in enrollment in April 2015 is likely due to the redetermination policy change implemented by ODM
  • Over half of the highest enrollment happened in rural counties, mostly in Appalachia

 

 

 

 

 

How Many People are Enrolling and How Much Does Care Cost?
Given the fact that the extension did not go through a formal budget process until this biennial budget, we’ll take a look at enrollment and expenditures from the beginning of the budget cycle (July 2015) moving forward.

 

Highlights:

  • Enrollment has climbed to 677 thousand Ohioans, an 11 percent increase
  • The average cost per enrollee (per member per month or “PMPM”) has decreased 4 percent
  • The average PMPM is $586.22, 10 percent lower than the state average of $651.58
  • Medicaid now covers 1 in 4 Ohioans, the extension 1 in 20

As was presented by Joint Medicaid Oversight Committee (JMOC) staff in March, the trend of costs decreasing for the extension population is consistent with the Centers for Medicare and Medicaid Services Office of the Actuary’s report on the financial outlook for Medicaid.

Is Medicaid Overspending?
The simple answer is no. In the previous biennium, actual expenditures were higher than estimates in part because the budget did not account for the extension, so OBM estimates did not formally include that spending. This is especially true because, according to Ohio budget practice, estimates cannot be changed mid-biennium, so ODM did not account for any enrollment until September 2014. Even so, total costs for the population were covered by the federal government, so there was no impact on costs to the General Revenue Fund (GRF). With that said, it might be helpful to take a look at the extension spending in isolation and in the context of Medicaid spending, generally.

The following chart shows the actual spending for the extension versus estimates for this biennium (starting July 2015):



Highlights
:

  • Estimates have been increasingly coming into line with actual expenditures, reflecting a more predictable trend
  • To date, the extension’s estimates for the year have improved from 12.6 percent to 7.5 percent a 40 percent improvement in accuracy.
  • January 2016 marked the first month of extension underspending, something which was repeated in March and April.

 


The extension of Medicaid benefits has cost more than initially projected, but that is the result of two factors: 1) the mechanics of the state budget process did not allow for expenditures to be estimated mid-fiscal year and 2) the caseload projections were inaccurate, reflecting a greater need for coverage than what was expected. Additionally, it is important to note that Medicaid has been underspending by nearly $2 billion (9 percent below estimates) in the current biennium. This has prevented ODM from having to request Health and Human Services Fund monies to pay for the newly required state share and, as was explained during the JMOC update referenced earlier, in large part due to Managed Care rates being adjusted downward due to experience over previous estimates established by the State’s actuaries.

The Takeaway
Ohio’s budget mechanics and preliminary estimates influence the way Medicaid spending looks generally, but particularly for a newly covered population. Moreover, it should be noted that the extension not only affects urban counties like Cuyahoga but, in fact, is disproportionately affecting the coverage rates in rural counties where there is deeper poverty, particularly Appalachia. It is also reasonable to assume that if Healthy Ohio is implemented, the counties with the higher proportion of current enrollment would be the counties with higher disenrollment.