Governor’s Last Budget Introduced, Heads to Ohio House

By: Tara Britton
Director of Public Policy and Advocacy | Edward D. and Dorothy E. Lynde Fellow
&
Loren Anthes
Public Policy Fellow, Medicaid Policy Center

February 1, 2017


Governor Kasich introduced his last two-year budget proposal this week. The governor’s proposals run the gamut from revivals of previous tax proposals to advancing strategies to increase value and quality in health and human services. Many of the details of the budget proposal are still unknown. Further analysis of these proposals is forthcoming, as we learn more about the budget in the coming weeks.

The budget heads to the legislature this week, namely the House Finance Committee, where hearings will begin, and continue in both the House and Senate, over the course of the next several months. This process will see the budget go through several iterations before it is finalized in the summer.

From the House Finance Committee, the budget will be divided up by topic area and heard in subcommittees. The health and human services sections of the budget will be thoroughly vetted in the House Finance Subcommittee on Health and Human Services. This subcommittee will hear testimony from agency directors and stakeholders about the potential impacts of the budget provisions. Representative Mark Romanchuk (R-House District 2) will serve as chair of this subcommittee and Representative Emilia Sykes (D- House District 34) will serve as ranking member. The subcommittee membership also includes Representative Sarah LaTourette (R- House District 76), Representative Michael J. O'Brien (D- House District 64), and Representative Robert Sprague (R- House District 83). 

The governor outlined a number of Medicaid-related proposals in the release of his budget on Monday, highlighting initiatives, which build on his efforts to de-institutionalize care, move to value-based payment, and innovate in the delivery of services. Notably, Governor Kasich seeks to maintain the Medicaid expansion but, similar to the “Healthy Ohio” proposal, will try to impose cost-sharing requirements on expansion enrollees through an 1115 demonstration waiver.

The budget also outlines a number of changes in the managed care space. First, with the elimination of the sales tax on Medicaid managed care plans, the Ohio Department of Medicaid sought, and received approval for, a replacement of the tax by broadening it to all insurance companies through a graduated franchise fee. These funds will help the state maintain the state revenue they leveraged through the previous mechanism, though local governments and transit authorities will lose their ability to “piggy back” on those taxes, impacting local revenue generation. The governor has stated he will be able to backfill revenue lost to local governments, but the details on the funding mechanism are not yet available. Additionally, the governor continues his Medicaid privatization efforts, carving more populations into the managed care benefit. Particularly, this will include the long-term care services and supports system, which, pursuant to federal regulations, must go through a thorough stakeholder engagement process.         

On a provider level, there are several proposals that will affect many aspects of the delivery system. First, hospitals will see a rate cut, except for those hospitals with a high volume of Medicaid – a newly created peer group of providers not previously seen in Ohio. Second, behavioral health redesign will continue, with new dollars being allocated to increase practitioner capacity on the local level. Lastly, there are efforts to expand inpatient treatment for behavioral health, increases in waivers and rates for the developmentally disabled, and new efforts focused on drawing down federal funds for social determinants of health regarding lead abatement and medically-related transportation in non-emergency situations funded by Medicaid. Interestingly, there is an expansion of pilot programs focused on youth engaged in multiple public systems and more will be done to report the performance of providers engaged in Ohio’s pay-for-value initiative built on episodic-based payments.

In addition to Medicaid-specific proposals, the budget will focus on strategies to reduce infant mortality, care and prevention of mental health and substance use disorders, and reducing the burden and incidence of chronic disease. Increasing the tobacco tax by 65 cents, which is proposed in the budget, plays a role in addressing each of these priority areas.

Continuing efforts to streamline health and human services, eligibility determination for Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP) will be transitioned to the Ohio Benefits system, as proposed in the budget. This brings additional income-tested programs onto the system. The Kasich Administration has been moving toward bringing these programs into Ohio Benefits throughout its tenure.

Additional information on the budget for the Department of Mental Health and Addiction Services was offered on a Webinar hosted by the agency on Tuesday. It continues to fund treatment and recovery through local ADAMH boards, and recovery housing, prevention services in communities, and programs that help people with mental health and/or substance use disorders involved with the criminal justice system, including diversion programs and community supports.

Community Solutions will continue to track the budget as it progresses through the legislative process and will provide updates via this blog and other resources.