NCPA - National Center for Policy Analysis


March 16, 2005

Ohio is on a growing list of states whose budgets are being consumed by Medicaid. Medicaid represents about 40 percent of the state's general revenue spending and is expected to grow an additional 13 percent by 2006.

The Ohio Commission to Reform Medicaid recommends short- and long-term measures:

  • Growth in Medicaid programs should not exceed the state's annual revenue growth, or about 4.5 percent; on a per recipient basis, average expenditure growth should not exceed the medical inflation rate.
  • Eliminate the formula used for nursing home reimbursements and allow Ohio's executive branch to negotiate competitive rates with nursing homes based on quality and performance measures.
  • Move Medicaid recipients into managed care programs when medically appropriate.
  • Restrict the number of drugs eligible for Medicaid payment and instead substitute lower-cost drugs that are just as effective; require authorization for drug purchases not included in a formulary.

Furthermore, the Commission recommends reducing the number of enrollees into the program by:

  • Requiring the aged, blind and disabled (ABD) population to apply first for federal benefits, such as Social Security Income (SSI) and federal Old Age, Survivors and Disability Insurance (OASDI) before turning to Medicaid.
  • Requiring some employed Medicaid recipients to enroll in private insurance, and collecting premiums from those who are receiving transitional benefits.

Medicaid spending threatens to crowd out expenditures on education, public safety and economic development, among other things. Therefore, the program must be transformed into a more cost-effective, consumer-driven and competitive program, says the Commission.

Source: "Transforming Ohio Medicaid," Ohio Commission to Reform Medicaid, January 2005.


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