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Plan in Ohio budget seeks to create Medicaid health savings accounts, require contributions

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COLUMBUS, Ohio — About 1 million low-income Ohio residents could be required to pay a new monthly cost for Medicaid health coverage or potentially lose it under a Republican provision in the state budget, officials estimate.

The idea, which will require federal approval, was part of the $71.2 billion, two-year spending blueprint that Republican Gov. John Kasich signed Tuesday.

Under the plan, Kasich's administration must seek a waiver of federal Medicaid rules so that the state can require certain adults on the program to pay into a health savings account regardless of their income. Beneficiaries, except pregnant women, could be cut from the program if they don't annually contribute 2 percent of their family income or $99, whichever is less.

The plan comes as lawmakers seek to control costs in the roughly $23 billion federal-state health program for low income and disabled people.

Medicaid serves more than 2.9 million Ohio residents, about a quarter of the state's population.

The GOP contends that cost-sharing policies like the savings accounts will encourage "personal responsibility" in the program, and make it easier for beneficiaries to transition to private health insurance when or if the time comes. Health care advocates and Democrats argue such policies create barriers to health care for those with little money.

Kasich's administration says it will draft the waiver request in the months ahead and seek public input. But officials acknowledge its prospects for federal approval are uncertain.

"Some of the design elements we have not seen approved in other states," Greg Moody, director of the governor's Office of Health Transformation, told The Associated Press in an interview Wednesday.

PHOTO: Ohio Gov. John Kasich signs Ohio's 2016-2017 operating budget Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)
Ohio Gov. John Kasich signs Ohio's 2016-2017 operating budget Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)

Moody said Washington handles each waiver request uniquely, but federal officials tend to follow a precedent.

No state has been given approval to drop Medicaid enrollees with incomes below federal poverty for not having paid monthly fees or contributions to a health savings account, according to a policy brief from the Kasich administration. Indiana got federal permission to test its health savings accounts in Medicaid, but it does not terminate people below the poverty level for failing to contribute. Ohio officials say they cautioned state lawmakers about it.

The savings account approach replaces a plan from Kasich to charge a monthly premium to about 100,000 people on Medicaid.

Under the plan the governor pitched previously, nondisabled adults with incomes of more than 100 percent of the federal poverty level — about $11,770 for individuals — would pay about $20 per month depending on their earnings.

Kasich described the new savings account approach to reporters as "a little clunky, but probably it's in the right spirit."

Moody said the administration respected that the approach was a priority for the House. Still, he said, "it is somewhat complex in its design."

If approved, the idea could be complicated to administer, with the costs of doing so not entirely known.

Cathy Levine, co-chairwoman of a coalition of health care and consumer groups called Ohio Consumers for Health Coverage, said in a statement that the proposal "threatens the success of the Medicaid expansion and signals a big step backward for Ohio's health transformation efforts."

Moody said it was important for those who are moving out of poverty to participate in the cost of care and see the value of their coverage.

Should the government deny the state's request, he said, it would be up to the administration what to do next: "We would assess our options at that point."

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PHOTO: Ohio Gov. John Kasich presents Ohio's 2016-2017 operating budget after signing it Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)
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