NCPA - National Center for Policy Analysis

REFORM, DON'T EXPAND, MEDICAID

January 17, 2007

After years of steep increases in spending, this year Ohio's Medicaid program will actually spend less money than last year.  This rare scenario has led some to call for expanding eligibility for Medicaid and eliminating cost-saving measures.  These suggestions ignore the fact that this decrease is temporary and would undermine necessary cost-cutting measures that are needed to contain future growth of the program, says Marc Kilmer, a research associate with the Buckeye Institute.

Consider:

  • Medicaid spending this fiscal year is down $305 million compared to a similar period of time during the last fiscal year; that is very rare, since Medicaid spending has been increasing dramatically since 1997.
  • It needs to be kept in mind, however, that in a program that spends roughly $12 billion a year, $305 million only represents less than 3 percent of the program's spending.
  • This decrease is much smaller than recent increases in spending on the program; for example, last year's total Medicaid spending grew by 7 percent and the year before it grew by almost 8 percent.
  • When it is considered in perspective, $305 million in savings is not all that much.

Unfortunately, this dip in spending is not likely to continue into next year, says Kilmer.  The last time this happened, in 1997, only saw a one year decrease in spending.  Because of this, calls to increase eligibility for the program or reverse the cost-containment actions of the General Assembly are short-sighted.

With a temporary break from a steady increase in Medicaid spending, Ohio's new governor has some breathing room to work with the General Assembly to craft truly lasting Medicaid reform.  Restructuring the system will ensure that this year's reduction in Medicaid spending is the rule, not the exception, says Kilmer.

Source: Marc Kilmer, "Reform, Don't Expand, Medicaid," Buckeye Institute, January 10, 2007.

For text:

http://www.buckeyeinstitute.org/article/899 

 

Browse more articles on Health Issues