Taft: Medicaid costs threaten other programs

The reimbursement formula pays nursing homes owners for empty beds.
COLUMBUS (AP) -- Ohio faces catastrophic consequences affecting all state-funded programs if changes aren't made to the way nursing homes are funded, Gov. Bob Taft said Wednesday in a speech warning of out-of-control Medicaid spending.
Medicaid, a joint state-federal program for poor children and families, now accounts for almost 40 percent of spending in the state's annual budget, which is about $24 billion, Taft said. The figure was 30 percent in 1999, Taft's office said.
"Ohio pays for nursing homes through a formula that is locked into Ohio law and not based on supply and demand," Taft said.
"Because of this outdated formula, Medicaid spending for nursing homes has risen by more than 40 percent in the last eight years even though the number of people served in nursing homes has declined by more than 4,600."
He said the current system reimburses nursing home owners for thousands of empty beds. Taft also called on lawmakers to retain a limit on how much nursing homes could be reimbursed.
"If that ceiling is removed in the next budget, and if the formula remains unchanged, the consequences will be catastrophic for all other state programs," Taft said.
He wouldn't give specifics, saying it was too early in the budget process, which begins formally in January.
In 2001, the state spent about $7 billion on Medicaid, compared with more than $10.5 billion this year, according to the Department of Job and Family Services.
Response
Lawmakers appeared cool to Taft's call for change.
"Unfortunately, the issue is way more complicated than that," said Rep. Shawn Webster, a Cincinnati Republican and chairman of a committee studying state spending on nursing homes.
Nursing home populations are declining in part because more healthy people are choosing state-funded home care. As a result, the patients who end up in nursing homes are often far sicker than in the past, Webster said.
"If you're treating multiple problems, it's going to cost a lot more money," he said.
Taft said he will ask for additional money to increase programs that allow the elderly to live at home or in assisted-living facilities, both of which are less expensive than nursing homes.
"It is unacceptable that at a time when demand for home and community-based services are growing, we are spending more and more money to serve fewer people in nursing homes," he said.
Taft said unrestrained Medicaid spending could lead to declining funding for schools.
Taft's proposals are in line with recommendations being debated by the Ohio Commission to Reform Medicaid, a committee created by lawmakers to study Medicaid, said executive director Jen Carlson.
Discussion
The incoming Senate president said lawmakers tried two years ago to balance the goals of reducing nursing home spending while keeping control of the method for spending that money.
"We'll continue to have that discussion and try to work it out," Sen. Bill Harris, an Ashland Republican, said Wednesday.
Taft, a Republican, left open the question of whether he will seek to keep a temporary one-penny sales tax increase lawmakers used to balance the current two-year budget.
During his speech, he referred to the money provided by that increase as "dollars that will not be available next time around."
Afterward, he said it was too early to say either way. "We're not even there yet. We're not even close to making those decisions," Taft said.