Planned Medicaid cuts seem reasonable, says policy analyst

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Cutting funding from Medicaid might not seem like the best idea in the midst of a global pandemic. But an analyst of state Medicaid policy on Wednesday said cuts planned for the Ohio program seem reasonable, based on what’s known about them so far.

State tax revenue has plummeted with the state economy choked down in response to the coronavirus pandemic. So Gov. Mike DeWine on Tuesday announced $775 million in spending cuts to balance the state budget for the fiscal year that ends June 30. 

Predictably, the cuts will fall heaviest on the programs that cost the state the most: Medicaid and education. The latter will take a $465 million hit, while Medicaid will be cut $210 million and other state operations will absorb the remaining $100 million in cuts.

The move to cut Ohio’s $22 billion annual Medicaid budget was immediately panned in some quarters. After all, there’s a pandemic afoot and the program’s roles are expected to grow rapidly as masses of Ohioans lose jobs and health insurance — if they had it in the first place.

“Slashing Medicaid funding at any point in time is irresponsible and dangerous. Doing so now, while many Ohioans are reeling from the effects of COVID-19 and in need of preventive health care, is heartless,” Iris E. Harvey, President & CEO of Planned Parenthood of Greater Ohio, said in a statement after DeWine announced the cuts on Tuesday. “This move will disproportionately impact communities that are already medically underserved, who already stand at a greater risk of harm from COVID-19, and who depend on Medicaid to access health care. We call on Gov. DeWine and the legislature to reconsider this path.”

But Ohio’s top budget official said that cutting Medicaid can be done without kicking people off of the program or by skimping on benefits. The reason is an ironic one: Because of the pandemic, elective procedures have been canceled and many have avoided hospitals and doctors’ officers for fear of contracting COVID-19.

“It is not a cut that will impact the ability of individuals to be enrolled in Medicaid or their benefits,” Office of Budget and Management Director Kimberly Murnieks said Wednesday in a conference call with reporters.

“The reduction will be focused on Medicaid managed-care organizations.”

She explained that the Ohio Department of Medicaid regularly adjusts the per-member, per-month rates it pays to the five managed-care organizations that serve the great majority of the 2.4 million Ohioans covered under the state’s Medicaid program based on their utilization of the program.

“Given that many of those services have not been happening because of the pandemic, it’s kind of a natural adjustment to the rates to the managed-care organizations,” Murnieks said.

She added that helping to cushion the blow to Ohio Medicaid is that as part of its response to the coronavirus pandemic, the federal government in March added 6.2% to the 64% of the cost of Ohio Medicaid that it already covers.

Loren Anthes, who leads the Cleveland-based Center for Community Solutions Center for Medicaid Policy, said that extra money is accompanied by requirements. They include not cutting eligibility for Medicaid — earning up to 138% of federal poverty guidelines — and not cutting services covered by the program. (Correction: This figure has been updated to reflect accurate information. We regret the error.)

Murnieks said details of adjustments to managed-care rates still are being worked out and must be approved by the U.S. Centers for Medicare and Medicaid Services.

Anthes said those details are important, but based on what’s known now, the plans are a reasonable way to get through the last two months of the fiscal year.

“It’s a sound strategy in terms of what this means,” he said. “It means that instead of making a more difficult policy decision — cutting back health coverage in the middle of a crisis — they’re making cuts through sound, smart, independently derived accounting principals.”

Anthes warned, however, that easing coronavirus restrictions too quickly as its spread appears to be rapidly increasing could explode the Medicaid budget.

“If you see a spike in people seeking hospital services, you’re going to see spending go way, way up,” he said.