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Medicaid expansion covers about 770,000 Ohioans. But it was not so long ago that nearly 800,000 had no access to health coverage. Medicaid expansion provides health coverage to adults up to age 64 with incomes between 0 and 138 percent of the federal poverty level. Before the Patient Protection and Affordable Care Act (ACA) was implemented in 2014, there was a significant coverage gap for anyone without insurance tied to their employment.
The ACA marketplace—or health insurance exchanges—provide access to coverage and subsidies to make the costs of care more affordable on a sliding scale for people without other access to coverage with household incomes up to 400 percent of the federal poverty level.
Medicaid expansion and marketplace insurance options together sought to address the coverage gap
Medicaid expansion filled a gap; ending expansion now would open it, but wider
Since its passage and implementation, policymakers have explored ways to change or eliminate the ACA. Both Ohio’s in-process state budget and the federal reconciliation bill (HR 1 or the One Big Beautiful Bill Act) have proposed policies that undermine Medicaid expansion. The state budget puts Ohio’s expansion at risk with inclusion of “trigger” language, which would end expansion if the federal government reduced its portion of funding by even 1 percent. And in federal HR 1, this same federal support is being put at risk based on state decisions about their Medicaid programs.
This context is important as legislators make their final decisions. Prior to the ACA, there were significant federal, state, and local resources dedicated to supporting people who had no access to health insurance.
The ACA allowed a shift in how dollars are used to address different gaps in the system now that core coverage is available
Eliminating the expansion category would create a coverage gap, when an individual’s income is too low to qualify for coverage on the health insurance exchange but too high to qualify for Medicaid. Without expansion, as experienced in the states who have not adopted it, there are few options for accessing health insurance coverage. The data from non-expansion states outlines the impact of this coverage gap quite starkly with higher uninsurance rates and less access to any affordable coverage, even for those who are working.
- “Uninsured rates in states without Medicaid expansion are nearly twice as high as those in expansion states (14.1% vs. 7.6%)”
- “Nearly 60% of people in the coverage gap are in a family with a worker and over 40% are working themselves. However, these individuals work in low-wage jobs that leave them below the poverty level and often work for employers that do not offer affordable job-based insurance. Over half (53%) of workers in the coverage gap are in the service, retail, and construction industries, with common jobs including cashiers, cooks, servers, construction laborers, housekeepers, retail salespeople, and janitors. In non-expansion states, even part-time work can make parents ineligible for Medicaid.”
In the absence of expansion, those state and local resources would have to pivot back to pre-ACA days.
Behavioral health
Alcohol, Drug Addiction and Mental Health (ADAMH) boards
Ohio’s state-supervised, county-administered behavioral health system is comprised of local Alcohol, Drug Addiction and Mental Health (ADAMH) boards across the state. ADAMH boards plan, evaluate and contract with local providers to address the needs of the community.
ADAMH boards are funded by a combination of federal, state and local dollars
Before the ACA, the ADAMH boards handled funding treatment services for uninsured individuals in need of behavioral health treatment. Once individuals gained coverage, the boards largely shifted toward funding prevention, education, recovery support and other supportive services to improve the community's health. Any reduction or elimination of the ACA related coverage will require a shift back.
A quote from a local ADAMH board leader in a recent report from the Health Policy Institute of Ohio captures this dynamic: “After Medicaid expansion, the accessibility to treatment was significantly increased, and people were able to receive interventions before it got to the crisis and hospitalization stage. This created more funds from ADAMH for recovery support and prevention. These important supports have saved lives and kept people in treatment.”
Other behavioral health-related services
Outside of ADAMH Boards, there are many areas where the state used to pay for services, both behavioral health and physical health related, prior to expanding Medicaid that the state no longer pays for because of expanding Medicaid.
- Corrections
- State-operated health facilities
- State employee health plan
- Mental health services
Corrections is an area where the state of Ohio saw savings after expanding Medicaid. All states must provide health care services for those in the justice system; however, many of those individuals are uninsured while they are incarcerated. When incarcerated individuals need inpatient hospital services, Medicaid expansion offers a way for the state to be reimbursed for those services. Prior to expanding Medicaid, the state would have entirely been on the hook for these expenses. It is also worth mentioning that during North Carolina’s expansion debate, Ohio was offered as an example many times in support of expansion.
Specifically, it was noted that 70 percent of the Ohio’s share is estimated to be offset by savings in the budget through increased revenue from assessments on the managed care plans that serve the expansion population and lower spending on corrections as enrolling people in Medicaid after jail or prison decreases recidivism.
Ohio’s state-operated health facilities, the six regional psychiatric hospitals run by the Ohio Department of Mental Health & Addiction Services (OhioMHAS), would have generated large savings for the state once Medicaid was expanded. These savings would come from services that could be billed to Medicaid. Outside of psychiatric inpatient services that can be billed to Medicaid, another source of savings would come from treatment for substance use disorder.
Another area where savings would have been generated would be insurance coverage for state employees. Specifically, those employees whose income and family size meet the eligibility for Medicaid expansion would have saved the state money if the employee decided to enroll in Medicaid.
Ryan White HIV/AIDS Program
The HIV/AIDS Bureau of the Health Resources & Services Administration manages the Ryan White HIV/AIDS Program by awarding grants to states, counties, cities, and community organizations so they can cover vital medical and support services for lower-income people living with HIV/AIDS. A part of the Ryan White program allows for providing vital medications, prevention, and health care to those without health insurance or with limited access to health care.
The program currently helps more than half of all people diagnosed (at least half a million) with HIV/AIDS across the United States each year
It was established by the Ryan White CARE Act in 1990 and has been updated four times, though the legislation expired in 2013.
What is a payor of last resort?
Ryan White is a “payor of last resort,” meaning that before Ryan White funds can be used, all other available coverage options must be exhausted. This dynamic has meant that since the advent of the ACA, Ryan White has had more capacity to fund not only direct HIV treatment services, but also wraparound support services that help keep people in care. It also means that people living with HIV have coverage that supports other health care needs, since Ryan White is limited to paying for HIV care and often people went without coverage and care for other health conditions pre-ACA.
Ryan White provides services and medication that decrease the spread of HIV/AIDS and keeps those diagnosed with HIV/AIDS healthy through medication and has more capacity to do so with core coverage options in place through the ACA.
Hospital reimbursement dynamics
Disproportionate Share Hospital (DSH) payments are federal Medicaid funds distributed to hospitals that serve a high number of Medicaid or uninsured patients. These payments offset uncompensated care and ensure the financial viability of hospitals. In FY 2021, total national DSH payments reached $18.9 billion, split between $8.1 billion in state funds and $10.8 billion in federal funds.
Ohio’s Medicaid expansion in 2014 significantly reduced the state’s uninsured rate and improved hospital finances by increasing Medicaid enrollment. However, these improvements have led to a sharp decline in Disproportionate Share Hospital (DSH) payments of federal funds that support hospitals serving large numbers of low-income and uninsured patients.
Providers such as MetroHealth experienced a 65% drop in DSH funding between 2012 and 2015
With federal DSH allotment reductions scheduled from FY 2024–2027, Ohio hospitals may face further financial challenges, threatening their ability to deliver essential community services.
Ohio began making DSH payments in the 1980s. Under the Affordable Care Act (ACA), Medicaid expansion was offered to states to cover low-income adults up to 138% of the federal poverty level. Ohio expanded Medicaid in 2014, resulting in a 23% drop in the uninsured rate. This shift diversified the payer mix and hospital revenues, thereby decreasing the eligibility for DSH payments. Before Medicaid expansion, hospitals like MetroHealth relied heavily on DSH funds. In 2012, MetroHealth received $33 million in DSH payments, with self-pay patients making up 20% of its gross revenue. Bad debt and charity care totaled 11% of operating costs. MetroHealth’s DSH cap was $54 million.
Ohio’s 2014 Medicaid expansion resulted in a 23% drop in the uninsured rate
After the Ohio expanded Medicaid coverage in 2014, there was a sharp decline in the number of uninsured patients and increased Medicaid revenue. MetroHealth’s self-pay revenue dropped 5 percent by 2016, and Medicaid revenue doubled. Its DSH cap fell to $14 million, and actual payments dropped to $11.7 million in 2015, a 65% decrease from 2012 levels. Ohio distributes DSH funds to 79 percent of its hospitals based on a formula developed by the Ohio Hospital Association. However, since 2015, the formula has emphasized Medicaid shortfall over uncompensated care, favoring institutions with higher base payment gaps.
Current federal law would cut DSH funds by 58% nationally
Under current federal law, DSH allotments will be reduced by $8 billion annually from FY 2024 through FY 2027. This represents a 58% cut nationally. For Ohio, these reductions threaten the financial stability of providers who continue to serve high-need populations despite falling uncompensated care totals. MetroHealth uses DSH funds not only to cover unpaid care, but to fund community benefit programs addressing issues like infant mortality, addiction, and violence. DSH reductions have already caused delays or cancellations of projects, such as opening new clinics in underserved neighborhoods. Further cuts may force hospitals to shift focus from mission-driven care to financial survival.
While Medicaid expansion significantly improved hospital finances across Ohio, providers like MetroHealth continue to rely on Medicaid DSH payments to support critical services.
Abrupt reductions in DSH funding without appropriate transition planning risk destabilizing hospitals that serve Ohio’s most vulnerable populations.
Proactive state policy can help ensure these institutions remain able to fulfill their mission.
State and local revenue implications
Medicaid expansion supports low-income individuals and their ability to work. Medicaid coverage helps individuals access preventive care, manage chronic conditions, and receive much needed treatments, which can improve their ability to work and maintain employment. The ability to work has revenue implications at the state and local levels.
Those who are working pay local income tax—if the local municipality has one—and state income tax if they are making more than $26,050. In addition to income tax, individuals who are working will have more income available to them to make purchases that are taxed under sales and use taxes, which benefits state and county revenues. Without Medicaid expansion, fewer individuals will work, which will result in less tax revenue for cities, counties, and the state.
Conclusion
The impacts of Medicaid expansion are far-reaching, and this only scratches the surface. Any policy changes should consider how impactful Medicaid expansion is to the overall health care system, but also how it is connected to state and local systems and the decisions that will have to be made.
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