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DATE: December 15, 2003
TO: Members of the Ohio Commission to Reform Medicaid
CC: Governor Bob Taft, Senate President Doug White and Speaker Larry Householder
RE: Charge to the Commission
The Ohio Commission to Reform Medicaid derives its charge and legislative authority from Section 59.29 of the Ohio Revised Code which states that "the Commission shall conduct a complete review of the state Medicaid program and shall make recommendations for comprehensive reform and cost containment. The Commission shall submit a report of its findings and recommendations to the Governor, Speaker, and Senate President not later than January 1, 2005."
The state Medicaid program is intended to fulfill an essential purpose for people in need across Ohio. That said, Medicaid has become Ohio's most significant budget cost driver. Increasing caseloads and exploding costs under the current system threaten to bankrupt the state, unless reforms are enacted now to restrain the rate of growth. During the period FY 01 through FY 03, Medicaid spending grew by almost 40 percent, while higher education and other enormously pressing needs in the state budget barely kept pace with inflation or received flat funding.
The Medicaid program is a state and federal funded health plan providing health care coverage for a wide range of Ohioans who either meet certain financial requirements or who have chronic health conditions. This includes:
- Covered Families and Children (CFC): children in families with incomes at or below 200% of poverty and low income pregnant women and parents, which constitute 66% of the eligible consumers and account for 20% of the total cost of the program.
- Aged, Blind and Disabled (ABD): low income elderly and persons of all ages with disabilities, which constitute 34% of the eligible consumers and account for 80% of the total cost of the program.
We need to take into consideration the challenges presented by each of these populations and their overall impact on the fiscal condition of the program. While there are reform opportunities to pursue with the CFC populations - clearly the largest cost driver for Medicaid is in the ABD population. Careful examination of the total program, with a close eye on where the significant costs are contained, will be critical to the work of the Commission
Unrestrained and rising Medicaid costs produce two destructive outcomes: (1) a shortage of funds for critical policy areas in state government important to Ohio's competitiveness; and (2) a subsequent drive for increased tax revenue to maintain needed levels of growth in areas being shortchanged.
Overall Goals
The Ohio Commission to Reform Medicaid will adopt a long-term approach to Medicaid reform, focusing on fundamental structural reform with the goals of:
- Slowing the rate of increase in Medicaid spending
- More closely matching cost effective health care services with consumer needs
- Assuring a range of consumer choice for services for Medicaid enrollees, especially to promote community integration for people with isabilities
- Addressing the challenges presented by the Aged, Blind and Disabled population, which constitutes 30% of the population and consumes 75% of the budget
- Encouraging and maximizing Medicaid consumers' ability to transition to privately funded insurance coverage
- Minimizing the amount of statutory regulation of the health care industry
- Resizing the State Medicaid program to better fit the "pocket-book" of the state budget
- Offering concrete reforms with specific, outcome-driven action items
Key questions for the Commission to address
In conducting its work, the Commission should address at least the following questions among others.
- How can the state create a program resulting in greater involvement of the consumer in their medical care? Promotion of consumer control over their health care, consideration of incentives to impact that decision making, are important factors to examine.
- How much of the state's Medicaid budget challenge relates to Medicare consumers and federal Medicare policy? What course of action should Ohio pursue to provide the most cost effective use of Medicaid dollars vs. Medicare?
- Where does Ohio stand in relation to other states in regard to reigning in costs in Medicaid? Staff will provide to Commission members benchmarking data comparing all aspects of Ohio's Medicaid system with our counterparts across the country. What is the cost for provider services? How does Ohio's beneficiary plan compare with other states? These questions must be addressed early in the process.
- What innovative market-driven solutions might be applied to the Medicaid program?
- Is there a more cost effective manner to deliver medical care to the ABD population, which consumes almost 75% of the total expenditure in the Medicaid program? Is managed care a viable option for the ABD population?
- Should specific provider groups enjoy guaranteed statutory inflationary increases within the Medicaid program? Does the provider reimbursement system need to be overhauled? If so, what recommendation does the Commission have to ensure quality health care is delivered?
- What systematic solutions to our Medicaid program may be available to Ohio through the federal waiver system?
- What specific options under federal law can be used to resize Medicaid, including options to reduce benefits, eligibility or provider reimbursement?
Commission Report
The Commission will complete its final report and submit it to the Governor, Senate President and Speaker to meet the January 1, 2005 deadline. The Commission is appreciative of the commitment of the three leaders who, along with other policymakers, have pledged their full cooperation and availability as the Commission carries out its work.
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