A New Approach to Financing Medicaid? Block Grants, Per Capita Allotments, Shared Savings and the State Budget

A New Approach to Financing Medicaid? Block Grants, Per Capita Allotments, Shared Savings and the State Budget

Loren AnthesPublic Policy Fellow, Medicaid Policy Center

December 6, 2016

On December 2nd, House majority leadership sent a letter to governors and state insurance commissionersi asking for input on a way to refine and augment Speaker Ryan’s A Better Way policy package regarding health care reform. Indeed, with Republicans maintaining control over Congress and Donald Trump winning the presidency, Medicaid, as entitlement reform, might be one of the most significant targets of policymakers on the national level. However, in Ohio alone, Medicaid comprises nearly 56 percent of the state budget, pays for one in two childbirths, and covers one in four Ohioans. Medicaid is also big business in Ohio, contributing one out of every four dollars spent in Ohio’s $82 billion health care economy, supporting major employers like hospitals and nursing homes, as well as the higher education institutions that supply their workforce and the multiplying effect those dollars can have on general economic activity. Given the size and scope of Medicaid in Ohio’s economy, policymakers in the Ohio Statehouse should understand what some of these new financing options may be so as to better inform their federal level counterparts.