The PJ Tatler

Medicaid Expansion Covers More Prisoners While Harming the Most Vulnerable

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The good news is that Ohio saw a reduction in medical costs for prison inmates in FY 2014. The bad news is that the cost reduction was a result of cost-shifting smoke and mirrors as inmates in Ohio prisons were moved onto the federal dole after Republican Governor John Kasich signed the state up for ObamaCare’s Medicaid expansion program. The worse news is that the most vulnerable in Ohio and other states that have expanded Medicaid — including at least six states that have included prison populations in their expansion — will bear the brunt of burgeoning Medicaid rolls during a time of shrinking state budgets.

The Ohio Legislative Services Commission (LSC) reports that the Ohio Department of Rehabilitation and Correction (DRC) saw a reduction of $10.3 million in medical service expenditures “as a result of implementing Medicaid coverage for inmate hospitalizations.” According to the LSC, the bulk of the reduction comes in the form of a net savings to the state “since the federal government reimburses the state for the majority of Medicaid expenditures.” Beginning March 17, 2014, Medicaid coverage was extended to nearly all Ohio inmates. Prior to that Medicaid covered only inmates who were either under the age of 21, over 65, or pregnant and who were hospitalized for more than 24 hours.

For inmates and others who became eligible for Medicaid through the ACA (including those with incomes up to 133 percent of the poverty level, or nearly $32,000 for a family of four), the federal government will pay 100% of the costs through calendar years 2016. For inmates and others in Ohio who were eligible for Medicaid pre-expansion, the federal government only pays around 64%, leaving the state to pick up the balance.

Policy experts say this creates a perverse incentive for the state to add inmates, able-bodied adults, and those who refuse to work to the Medicaid rolls at the expense of the most vulnerable populations. According to a report from the Foundation for Government Accountability (FGA),

Able-bodied, working-age adults; almost all of whom (82 percent) have no children to support, nearly half of whom  (45 percent) do not work, many of whom (35 percent) with a record of run-ins with the criminal justice system. ObamaCare has picked this population as the winner of its Medicaid expansion. The losers? Low-income children, poor moms, the elderly, the blind, the disabled. The very people Medicaid was created to protect. And what do these ObamaCare losers have in store for them? States that previously expanded Medicaid had to eliminate coverage for life-saving organ transplants, overload waitlists for services, cap enrollment and raise patient costs, all because promises were broken and costs exceeded projections.

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In Ohio, Medicaid expansion under ObamaCare triggered a plan for potentially hundreds of thousands of newly released inmates to continue to receive medical care in the next few years. The Bucyrus Telegraph reported last week,

“On Monday, female inmates at the Ohio Reformatory for Women in Marysville who are slated for release in late December or early January will be signed up for Medicaid. Prison officials are working with the Office of Medicaid to create a technology solution to streamline the process and minimize the needed staff time to get people enrolled,” said Stu Hudson, deputy director of health care and fiscal operations for the DRC.

Once the process is refined in Marysville, the Medicaid enrollment program will be expanded to other female prisons and then male prisons.

“This is a massive undertaking. More than 20,000 (inmates) are released each year,” Hudson said. He added that once fully in place prison officials intend to reach out to local officials to help them replicate the changes in their jails.

The FGA report notes how the Affordable Care Act incentivizes states to prioritize care for new enrollees, including the prison population:

In order to save $1.00 in state Medicaid spending, states must make an average $2.32 in total cuts to the Medicaid budget. This is because state funds typically cover only 43 percent of the costs of currently–eligible individuals. In the states that hope to get Medicaid spending under control, an ObamaCare Medicaid expansion puts truly vulnerable patients at even greater risk. While states would have to cut an average $2.32 in spending for currently- enrolled Medicaid patients in order to save $1.00, they would need to cut services and benefits for the able- bodied, childless adult expansion population by a whopping $10.00 just to save a single state dollar in 2020. This is because state funds will cover only 10 percent of the costs of newly-eligible individuals. If the state wished to reduce Medicaid spending before 2020, when ObamaCare promises higher matching rates, it would need to cut even more services and benefits for this group. For example, if the state wished to save $1.00 in state spending by cutting services for able-bodied, childless adults in 2017, it would need to cut roughly $20.00 from the program.

According to the Kaiser Family Foundation 28 states (including the District of Columbia) are implementing Medicaid expansion and two more (Indiana and Utah) are considering it.

Ohio added more than 300,000 people to its Medicaid rolls this year. Governor Kasich, who used the obscure Controlling Board to subvert the legislature’s intent to block Medicaid expansion, only has authorization to continue the program through June 30, 2015, when the current two-year budget cycle ends. Kasich will once again need to ask the legislature to authorized continued expansion (or once again go around lawmakers) during the next biennium budget cycle, when the federal government’s drawdown on Medicaid reimbursement is scheduled to take effect.