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How Much Could Be Saved By Slowing Medicaid's Growth to 3 Percent?

by Demian Brady / /

Ohio Governor John Kasich faced some controversy for the way he pushed through an expansion of Medicaid enrollment in the Buckeye State. Under the Affordable Care Act, states that expand Medicaid will receive a 100 percent match from the federal government for the new enrollees through 2016. After that the federal match rate will gradually drop to 90%. Kasich avoided a vote in the state legislature and instead turned to a special bipartisan Control Board which approved the expansion in a 5-2 vote in 2013.

The expansion has dramatically increased Ohio's Medicaid enrollment and its costs. According to OhioWatchdog.org, costs grew by 4 percent in 2012 and 2.5 percent in 2013. In 2014 costs grew by 10.6 percent and in 2015 by 12.5 percent.

John Kasich is also a Presidential candidate. His recently unveiled balanced budget plan includes reforms intended to control Medicaid costs. He would base Medicaid payments to the states on a monthly per-member allocation and he would give states latitude to "innovate and tailor programs to their individual health care markets." Several states, including Florida, have found savings through pilot reform efforts. 

Kasich's goal would be to hold Medicaid growth to 3 percent annually. How much could that save?

In his overview of Kasich's plan, NTUF's Michael Tasselmyer noted that Medicaid has grown by an average of 5.2 percent over the last five years. Looking forward, the Congressional Budget Office projects that Medicaid costs will grow by 7 percent in 2016 to $376 billion. From 2017 through 2025, Medicaid costs will grow by an average of 4.8 percent annually, and outlays over that time will total $4.27 trillion.

Assuming implementation of Kasich's reform before 2017, successfully limiting Medicaid to 3 percent annual growth could save taxpayers $331 billion - about $37 billion per year - compared to the latest projections based on current law.


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