Ohio Senate Medicaid Provisions Could Jeopardize Self-Reliance
By Emily Campbell
Associate Director, Williamson Family Fellow for Applied Research
June 23, 2017

Changes to the Medicaid program included in the Senate version of Ohio’s biennial budget would make it more difficult for some Ohio families to move toward self-sufficiency. By grandfathering individuals who are enrolled in Medicaid expansion at the end of the next fiscal year and closing all future enrollment in Group VIII (expansion), the Senate bill deepens the benefit cliff. This creates a disincentive for some workers to accept a raise or increased hours because even a small increase in pay would mean they could never qualify for Medicaid health coverage again, even if their financial circumstances change. This impact is especially great for low-income working adults without children.

Most harmful is the provision that essentially rolls back Medicaid expansion by closing Group VIII to new enrollees. The Senate version ends new enrollment in Group VIII after July 1, 2018, but allows Ohioans who are enrolled in Group VIII coverage on June 30, 2018 to maintain eligibility until they cease to meet eligibility requirements or federal reimbursement is reduced. When Medicaid reverts to pre-expansion income limits, parents would qualify only if they made less than 90 percent of the Federal Poverty Level (FPL), or $18,378 per year for a family of three. Non-disabled single adults would never again qualify, even if they had no income at all.

When Medicaid was expanded in Ohio, it smoothed the benefit cliff in Ohio, by providing health coverage for low-income working adults. As workers earn more, they qualify for less. Strict eligibility criteria create a situation where even $1 more in earnings can result in a family losing hundreds of dollars in public benefits. This creates an economic disincentive for some workers to accept better paying jobs or increase their hours. The Medicaid grandfathering provision, while not removing coverage right away, increases those disincentives, especially for childless adults.

The charts below illustrate the benefit cliff for a family of three (one parent, two children) and a single non-disabled adult in Scioto County. (Our model is based on county-level data, and Scioto was selected because its expenses are close to the median for Ohio counties.) The monthly “cushion” – or the amount the family would have left over after covering basic expenses – is presented. Our previous research explains the methodology in greater detail.  Public benefits are treated as reductions in monthly expenditures, so that, for example SNAP reduces food costs in our model. The higher the cushion amount, the more the family has left over to pay for any non-essentials. Negative numbers mean that the worker is not earning enough to make ends meet and will need to dip into savings, go into debt, or rely on the generosity of family and friends to get by.

 


As shown in the chart above, the elimination of Group VIII changes the benefit cliff for a single working parent with two children. Without Group VIII, this family loses the ability to make ends meet at 90 percent FPL ($18,378 per year) and does not regain it until they pass 130 percent FPL ($26,546). The cliff caused by the proposed Medicaid changes is both more abrupt and deeper. Because the impact of this provision on non-disabled single adults is even greater at lower incomes, there is even greater incentive for those individuals to remain dependent on Medicaid for their health coverage. If the worker loses Medicaid expansion coverage for any reason, they will be bumped down to the red dotted line, no matter their income, and their climb to self-sufficiency will be steeper. 


The climb out of poverty is rarely linear and the Senate provision punishes workers who have even a temporary bump in pay, or, even worse, a setback. This creates an unequal path to self-sufficiency – one for working Ohioans fortunate to be enrolled in Group VIII a year from now, and another for those who aren’t. This provision would penalize people who make too little to be in Group VIII on June 30, 2018, people who are part of Group VIII on June 30, 2018, but later make enough that they no longer qualify. For example:

  • Single adults at any income level who aren’t currently receiving Medicaid coverage,
  • Low-income working parents whose income is not yet above 90 percent FPL,
  • People who take a temporary increase in hours or pay which puts them above the expansion threshold of 138 FPL ($16,642 for a single adult or $28,180 for a family of 3),
  • A middle-income Ohioan who later loses their job,
  • Workers who get a raise that puts them above the income ceiling, but later lose their job or take a cut in pay or hours.

Our model shows that those in Group VIII would have a strong economic incentive to maintain their Medicaid coverage. For some families, it would therefore make economic sense to turn down a raise or decline to work more hours. The risks are greatest for those approaching self-sufficiency wages. Based on these realities, the Senate proposal could incentivize dependency and continued reliance on government aid.