Ohio would see more than $1 billion in revenue if Medicaid expansion group stays, new study finds

Yahoo

03-06-2025

A poll released Thursday, May 1 showed 76% of Americans oppose cuts to Medicaid. (Photo via Getty Images)
A new study of Ohio Medicaid showed the Affordable Care Act expansion group of nearly 770,000 would bring the state an economic benefit of $1 billion if it survives cuts at the federal and state level. But Ohio Republicans might include a trigger in the state budget to cut the expansion if Medicaid budget cuts come down from Congress.
The Ohio Senate is expected to release its proposed state operating budget in the next few days, a proposal that will then be compared to and combined with the Ohio House's version already passed last month, before a final draft heads to the governor for his signature.
The Ohio House's version of the budget absorbed a proposal by Gov. Mike DeWine in his executive budget that creates a trigger effect, eliminating Group VIII, or the Medicaid expansion eligibility group, 'if the federal government sets the federal medical assistance percentage below (its current level of) 90%,' according to budget documents.
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The expansion group, which was introduced administratively in Ohio in 2014, represents adults aged 19 to 64 who earn less than 138% of the federal poverty level but aren't eligible for Medicaid in other categories. For a family of two, the poverty level stands at $21,150 in Ohio and other contiguous states.
The federal budget, which is being reviewed by the U.S. Senate, could include a larger state contribution to the Medicaid program than seen in the past, dropping the federal contribution, called the Federal Medical Assistance Percentage or FMAP, from its current share of 90%. If that is passed into law, and if the state budget is passed and signed with the trigger in place, the expansion population would face cuts.
According to the Health Policy Institute of Ohio's newest policy brief, written by Amy Rohling McGee, the 10% the state currently pays to support Medicaid stands in juxtaposition to revenue and state savings generated by the program.
After accounting for the savings the state nets as a part of the program and revenue created, researchers found that the state share is effectively 1.4%.
'Discontinuing expansion would save substantially less than the state share amount, it would reduce federal funds coming to Ohio by over $42 billion over five years, and would leave an estimated 435,000 Ohioans without coverage,' Rohling McGee wrote as part of the HPIO's 2025 Ohio Medicaid Expansion Study.
The economic activity that results from those in the Medicaid expansion group having their health insurance covered 'is projected to generate over $1.1 billion over the next five years in state general revenue from personal income taxes, sales taxes and gross receipts taxes,' according to HPIO researchers.
State revenue would drop in a number of other ways without the expansion group, according to the HPIO Medicaid study. The population brings state revenue through health insuring corporation (HIC) premium taxes and franchise fees, along with prescription drug rebates.
'As part of the federal Medicaid Drug Rebate Program, Ohio's Medicaid program receives rebates from drug manufacturers in exchange for the program's coverage of most of the manufacturer's drugs,' the HPIO wrote. 'These rebates offset the costs of most outpatient prescription drugs dispensed to Medicaid patients.'
Money the state receives from drug rebates goes back into the Medicaid budget to support spending, according to the study.
Along with drops in economic health for the state, the loss of the Medicaid expansion group could negatively impact the state's overall health, dropping the number of insured Ohioans. The institute's research said Ohio's uninsured rate 'would potentially increase by 80%' in fiscal year 2026 without the existence of Medicaid expansion.
Those in the expansion group can include students, Ohioans with chronic health conditions, and older residents. Almost 50% of the Ohioans covered under the Medicaid expansion are among the state's workforce, according to the Center for Community Solutions.
If the Medicaid expansion remained as it is now, the policy institute found Ohio would get more than $42 billion from the federal government over five years to fund the population in that expansion.
'The state would have to raise considerable revenue to be able to fill the gap that elimination of expansion would leave,' the study stated.
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