NCPA - National Center for Policy Analysis

Averting Ohio's Medicaid Crisis

April 23, 2003

Medicaid costs in Ohio have skyrocketed. With 2003 direct spending of over $7.5 billion, Ohio's Medicaid program costs $661 per state resident (or $2,644 per year for a family of four). Direct Medicaid spending is expected to grow to $12.5 billion in only four years. Unless these costs are brought under control, the Medicaid program will literally bankrupt the state.

The Buckeye Institute proposes several options to completely restructure Medicaid in order to reduce costs and increase the quality of services provided. Among those options:

  • Follow the lead of private insurers, Medicaid should choose to contract with those hospitals that provide the lowest price for a given quality level.
  • Enroll substantial numbers of beneficiaries with disabilities into managed care programs to better meet their unique needs.
  • Consider block-granting Medicaid funds to innovative localities.

Additionally, Ohio could apply for a federal waiver so that it can make long-term reforms to the Medicaid program. These include:

  • Giving Medicaid enrollees an opportunity to enroll in employer plans.
  • Giving beneficiaries who do not qualify for a private-sector plan opportunities to enroll annually in a plan that provides a Medical Savings Account (MSA).
  • Exploring a consumer-driven grant system for nursing home care.
  • Restructuring benefit levels and options for people with disabilities and low income families.

Once implemented, these reforms are estimated to produce savings of as much as 15 percent or $1.5 billion per year in the short-term and more than $100 billion by 2025.

Source: Michael T. Bond, John Goodman and Ronald Lindsey, "Reforming Medicaid in Ohio," March 2003, Buckeye Institute.

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