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Medicaid is a critical safety net in Ohio, providing essential health coverage to millions of Ohioans—including low-income families, older adults, and people with disabilities. As a joint federal-state partnership, Medicaid helps ensure that Ohioans can access primary care, prescription medications, and long-term services, while stabilizing the state’s health care system by reducing uncompensated care costs.
However, a series of federal proposals—ranging from block grants and work requirements to rollbacks of Medicaid expansion and changes to drug pricing—pose serious questions about the stability of Medicaid. These proposals could fundamentally alter the availability and quality of care that so many low-income Ohioans depend on.
Current state of Medicaid in Ohio
Ohio’s Medicaid program is a lifeline for nearly 3 million residents. The federal-state partnership allows Ohio to meet local needs while benefiting from federal matching funds. Medicaid in Ohio covers a wide range of services, including hospital care, preventive services, behavioral health care, and long-term support for individuals with chronic conditions. Federal changes altering the funding formula or eligibility criteria would have profound implications for Ohio’s most vulnerable populations.
Four key proposals have raised concerns among advocates both nationally and in Ohio.
Block grants and per capita caps
One proposal under consideration is the conversion of federal Medicaid funding into block grants or per capita caps.
Currently, Medicaid operates with federal funding that matches state expenditures based on actual costs incurred in providing services to enrollees. Under a per capita cap, however, the federal government would provide states with a fixed payment per enrollee, determined by a preset formula, regardless of the actual costs of care.
Per capita caps can harm Medicaid by limiting the amount of federal funding states receive per enrollee, regardless of actual health care costs. Health care costs tend to rise due to inflation, new treatments, and an aging population. A capped funding structure may not account for these increases, forcing states to make cuts.
While block grants might provide states with greater flexibility in budgeting, block grants also risk leaving states like Ohio with insufficient funding. Medicaid block grants work by giving states a fixed federal dollar amount to cover Medicaid costs rather than reimbursing them for a percentage of their actual spending. This fixed amount is usually determined by formulas based on past spending or other baseline measures.
Several factors contribute to why these grants often leave states with insufficient funding, including the costs of health care, changes in eligibility, and economic conditions, including inflation. Typically, federal contributions rise to accommodate state spending. With block grants, if the actual costs incurred by states were to exceed the predetermined amount, states would need to cover the added costs.
This could force state officials to make decisions about which benefits to cut and which populations to leave behind, and for Ohioans, this could translate into reduced services that directly affect the health of low-income people.
The proposed Medicaid work requirement waiver in Ohio would fundamentally change how non-disabled, working-age adults enrolled in Medicaid maintain their coverage.
Work requirements
Another proposal is implementing work requirements for Medicaid eligibility. The proposed Medicaid work requirement waiver in Ohio would fundamentally change how non-disabled, working-age adults enrolled in Medicaid maintain their coverage by linking eligibility to work or community engagement. Many Medicaid recipients face real barriers to employment, including limited job opportunities, transportation issues, or even health-related challenges, which could result in loss of coverage. Even a temporary loss of Medicaid coverage could have harmful effects on the health and financial stability of low-income individuals.
Proponents of work requirements assert that these requirements encourage self-sufficiency by requiring beneficiaries to participate in employment or community service. Advocates caution that work requirements can lead to significant coverage losses. Many Medicaid beneficiaries, including those managing chronic illnesses or balancing caregiving responsibilities, often struggle to meet these requirements, resulting in gaps in coverage and higher rates of uninsured individuals.
Advocates warn that such changes could not only undermine the health of vulnerable Ohioans but also increase uncompensated care costs for hospitals across the state. The Ohio General Assembly required the Ohio Department of Medicaid to submit a work requirement waiver proposal, though we have advocated for protecting as many vulnerable populations as possible.
Expansion and rollbacks
The expansion of Medicaid under the Affordable Care Act (ACA) has been a cornerstone of Ohio’s public health strategy, extending coverage to hundreds of thousands of low-income residents who otherwise would not have had access to health insurance. However, recent federal proposals aim to roll back aspects of the ACA expansion, potentially reducing federal matching funds.
For instance, the population that gained access to Ohio Medicaid through an expansion of the federal poverty level up to 138 percent, often referred to as the expansion population, the federal match rate (FMAP) would decrease from 90 percent to Ohio’s general matching rate of around 65 percent. Under 90 percent FMAP, the federal government covers most costs, leaving the state responsible for only 10 percent of the share of Medicaid costs.
Decreasing this to 65 percent means the state must now fund 35 percent of the share of costs for the Medicaid program. This increased share would strain Ohio’s budget, forcing the state to allocate more funds to Medicaid or to reallocate money from other critical services. Reduced federal funding might prompt the state to lower reimbursement rates to providers or delay payments. This could discourage providers from accepting Medicaid patients, leading to fewer available health care services, especially in rural or underserved areas, and potentially worsening health outcomes for the expansion population.
According to Governor Mike DeWine's 2026-27 state budget proposal, “If the federal medical assistance percentage for medical assistance provided to members of the expansion eligibility group is set below ninety percent, the department of Medicaid shall immediately discontinue all medical assistance for members of the group.” If the federal medical assistance percentage for medical assistance provided to members of the expansion eligibility group is set below ninety per cent, the department of Medicaid shall immediately discontinue all medical assistance for members of the group.”
Rollbacks of Medicaid expansion categories (currently at 138 percent poverty level) could reverse the gains Ohio has made in reducing the uninsured rate. For many Ohioans, particularly in rural areas, such changes would mean losing access to critical health services and facing higher out-of-pocket costs.
Rollbacks of Medicaid expansion categories could reverse the gains Ohio has made in reducing the uninsured rate.
Medicaid and drug pricing
Another area of concern is the proposal to alter the drug pricing rules that currently help lower the cost of prescription medications under Medicaid. Ohio’s Medicaid program benefits from statutory drug pricing rebates that make medications more affordable for beneficiaries. However, proposals aimed at modifying these rules, intended by some to reduce federal spending, risk increasing the financial burden on Ohioans who rely on medications to manage chronic conditions.
The proposed changes to the drug pricing rules aim to reduce federal spending by altering the statutory rebates that currently help keep Medicaid drug costs low. In practice, however, these changes could lead to unintended consequences that may ultimately increase federal spending rather than reduce it. The statutory drug rebates negotiated under current rules lower the effective cost of prescription medications for Medicaid programs.
Potential consequences of proposed changes for Ohio
The implications of these proposed changes are far-reaching for Ohio.
Impact on vulnerable populations
Reductions in federal funding or tightening of eligibility criteria are likely to hit Ohio’s most vulnerable residents the hardest. Low-income families, children, older adults, and people with disabilities could experience a reduction in benefits or even lose coverage. Such losses could lead to delayed care, poorer health outcomes, and an overall increase in health disparities within the state.
Effects on state budgets and healthcare systems
Ohio’s state budget is intricately linked to federal Medicaid funding. If block grants or per capita caps limit federal dollars, Ohio will be greatly impacted and will have to account for this through reallocation of resources, cuts to essential services, or even raising taxes to bridge the gap. This fiscal strain could have cascading effects on the state’s broader public health system, from community clinics to major hospitals, all of which rely on Medicaid reimbursements.
Governor Mike DeWine's 2026-27 state budget proposal outlines how Medicaid is still one of the largest components of Ohio’s operating budget. The recommendations underscore that Ohio’s fiscal planning is built on the expectation of robust federal Medicaid funds that help support a significant share of the costs for care provided to low-income and vulnerable populations. If federal dollars were limited through mechanisms like block grants or per capita caps, the state’s budgetary outlook would change drastically.
Many community health centers, rural clinics, and safety-net hospitals are highly dependent on Medicaid reimbursement.
Many community health centers, rural clinics, and safety-net hospitals are highly dependent on Medicaid reimbursement. A reduction in federal Medicaid funds would strain these providers’ budgets even further. With thinner operating margins, such providers could face challenges maintaining service levels, investing in quality improvements, or even keeping their doors open. Hospitals, particularly those serving a high volume of Medicaid patients, might see an increase in uncompensated care if Medicaid benefits are reduced.
This could lead to financial instability, potentially resulting in service cutbacks. Changes in Medicaid funding do not occur in isolation. Reduced federal support would not only strain the state budget but also have ripple effects throughout the entire health care ecosystem. Community clinics and hospitals that have traditionally served higher populations of Medicaid beneficiaries would be forced to cut costs or scale back services. Providers, especially those serving low-income communities running on tight budgets, would be disproportionately affected, potentially undermining the stability of the entire public health system in the state.
Broader economic and public health implications
Limiting Medicaid coverage would have a widespread, systemic impact. A surge in uninsured individuals can lead to increased uncompensated care costs for hospitals. In Ohio, where many rural hospitals are already operating on thin margins, an influx of uncompensated care would further strain resources, potentially leading to hospital closures and diminished access to care.
Medicaid is not merely a budgetary line-item.
Advocacy responses in Ohio
Advocacy groups and public health organizations in Ohio have mobilized quickly in response to these proposals. State-based organizations, together with national groups, are actively engaging lawmakers and the public to highlight the risks associated with proposed Medicaid reform. Medicaid is not merely a budgetary line-item. It is a critical lifeline that upholds the health and dignity of millions of Ohioans.
