Nitty Gritty Part 6, Stepping up to the plate

Sun June 18, 2017 06:14:21 AM EST

Nitty Gritty Part 6, Stepping up to the plate

by Glynn Keno for 3rd Rail Politics

 

It's the middle of June, and the sun is shining, the birds are singing, the corn is growing in the fields,  our baseball teams are not out of contention yet (sadly, the Cavs just missed the repeat NBA championship, sorry) and the Ohio Senate is getting ready to put their particular stamp on the state's two year budget.  All is right and normal in the world.  Except...

What do you do when it's the bottom of the ninth, you are down by a run, have runners on second and third, and two outs?  Bunt, or try to squeeze one beyond the left fielder playing up on you?

If you are the Ohio General Assembly at the plate, you will likely see the signal to swing for the fences.  That seems to be the standard case when it comes to the final innings of the game we call the budget.  In this ballgame, the home team is down, but the manager is still calling for the hitter to drive the long Medicaid ball out of the park.

It's not surprising really.  This particular manager, the Governor, has been used to unconventional calls.  According to budget analyst Matt Mayer at Opportunity Ohio, general revenue fund state spending has increased 33.2% to $36.5 billion in the last six years (as we move into the final weeks of Fiscal Year 2017).  A dangerous trend is that this growth has been accompanied by an unprecedented increase of the influence of federal funds (and federal requirements) over Ohio.  

Due to revised revenue projection by the Office of Budget and Management, driven by a very sluggish economy the Governor's budget proposal (and to a lesser extent the House-passed version of HB 49)  over-committed on spending money that won't be there.  Contrary to what certain media analysts have penned, the modest business tax relief that has been put in place isn't the main culprit here, as those type of incentives will take time and tweaks (including getting people back in the workforce who are no longer, like ghosts, counted in the unemployment rolls) to create the economic recovery expected.

The Senate is faced with having to plan a diet for a budget that is over $1 billion dollars too heavy, and legislators don't have the luxury as they did when the Governor first came to office of a quick fix by taking certain expenditures offline and using federal dollars to buttress the rest.  This is general revenue fund (GRF) shortfall, knife meeting bone kind of budget cutting we are talking about now.

Adding insult to injury, the pain is coupled with the already-known-it-was-going-to-happen changes in the Medicaid expansion program, as we are reaching the point where the federal government will reduce their participation from covering 100% of the costs of the expansion population to 95%.   Medicaid spending in Ohio already represents the lion's share of the budget, clocking in at 68% of our spending before we have to pick up another 5% of expansion costs.

This is before any substantive core changes that may (and likely will) occur from the adoption of either the House of Representatives-crafted American Health Care Act (AHCA) or a yet-to-be-revealed US Senate version of health care reform.  Either option spells fewer federally-distributed dollars coming to Ohio, and the need, if the Assembly continues to want to maintain the expansion plans, to make up the shortfall through GRF state-generated tax dollars.  Where do legislators cut?  Education spending (22% of the budget)?  Other departments that don't have key roles in servicing Medicaid (the other 10% of the spending)?  Prisons?  Passing on more pain to local governments?  Something will have to give, and right now, it's not looking like it will be Medicaid to any extent that is impactful.

So, what exactly are we talking about when we are looking at an “anchored” expense like Medicaid?  After pouring over some charts and data from the state Department of Medicaid (it's sooooo big it has it's own department now), it looked instructive to prepare a snapshot to give a quick and dirty primer on the numbers around that increase in Medicaid spending. Using the July report data, as that month is the first one of each fiscal year.  The Department's data for FY 2011 didn't go back quite that far, and the data for this year has been collected only through May, but are close enough to help round out the picture.  

 

Year

Month

# Eligible

Expansion Population

Expenditure for month

FY 2012

August 2011

2,169,722

NA

$1,077,444,766

FY 2013

July 2012

2,328,863

NA

$1,343,164,003

FY 2014

July 2013

2,345,700

NA

$1,494,852,654

FY 2015

July 2014

2,709,184

338,769

$1,685,424,116

FY 2016

July 2015

2,989,111

610,362

$1,864,463,629

FY 2017

July 2016

2,955,930

683,875

$1,895,033,044

FY 2017*

May 2017

3,018,230

696,879

$1,941,036,169

* Latest numbers available 

In the last six years of this administration, the numbers of those eligible for Medicaid services has grown by 39.1% (848,508) the expansion population has more than doubled in the last three years (accounting for the majority of the growth), and the monthly expenditures have risen by 80% ($863,591,403). 

Ohio's population stands roughly at 11,614,373.  The numbers eligible for Medicaid coverage in Ohio represent 26% of the population.  Ohio labor statistics show that, as of April 2017, there are 5,499,800 Ohioans employed, or just a bit more than 47% of our total population.  So, less than half of the population has employment (where taxes to fund government programs are generated), and over a quarter of the population are eligible for taxpayer-funded services through Medicaid alone.  

There is some crossover, admittedly, as a number of the Medicaid-eligible population are also in the employment rolls, but the sheer numbers alone show that this is a trend that can't continue indefinitely, and that Ohio is not prepared to face should the amount of dollars coming from federal sources be substantially diminished with changes or outright repeal of the Affordable Care Act provisions which birthed the Medicaid expansion initiative.

$1.2 billion dollars in reductions in anticipated spending through the GRF portion of the budget seems like a hard call to make, and it is.  However, if the legislators don't get ahead of the count in this ballgame, there will be no joy in Mudville.  Swinging for the fences to keep Medicaid expansion going is how mighty Casey strikes out.

The next installment will detail the full changes the Ohio Senate has and will make to the budget, just in time for a Committee of Conference to try to put a square peg and a round hole together and still have a balanced budget to submit to the Governor by June 30th.

 

 




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