Legislative Update for July 27, 2017

General Assembly Considers Line Item Veto Overrides
We previously reported that the Ohio General Assembly was considering override votes on several of Governor Kasich’s line-item vetoes in HB 49, the State Operating Budget for FY 18/19. Kasich vetoed 47 provisions prior to signing the budget late last month. Many of these vetoes struck down provisions related to Medicaid coverage in Ohio. The Ohio House of Representatives convened on July 6th and voted to override 11 of Governor Kasich’s vetoes. This is the first time that either chamber of the General Assembly has voted to override a line-item veto in more than three decades. The Ohio Senate is expected to return next month to consider the House veto overrides.

Of the 11 veto overrides considered by the Ohio House, ten dealt with Medicaid. Most notably, Kasich’s veto of language freezing Medicaid Expansion enrollment was not part of the vote. The General Assembly could still take up that override later in the year; however for now Medicaid Expansion in Ohio appears safe. Generally, the House veto overrides had the effect of asserting greater legislative control over the Medicaid program, delaying key Kasich Administration priorities, and selectively increasing Medicaid rates to certain providers. It is unclear if the Senate will take up all 11 veto overrides; the Senate cannot bring up other vetoes not previously voted on by the House.

Read More: Toledo Blade: Ohio House Votes to Override Kasich

Medicaid Rate Cuts Looming Following Passage of Budget
While many voters and healthcare advocates are focused on Washington, DC and potential Medicaid cuts in the Congressional Republican plan, the Ohio Department of Medicaid might be forced to reduce provider rates in the current fiscal year to address a projected funding shortfall. Recently, Governor Kasich’s Budget Director, Tim Keen, told reporters that the state operating budget approved last month (HB 49) did not fully fund Ohio’s Medicaid program. Based on the Kasich Administration’s projections, there is a $1.4 billion gap in Medicaid funding over the fiscal biennium.

The Ohio Hospital Association and other healthcare organizations, along with some members of the General Assembly, feel that this figure is high and that the Ohio Department of Medicaid is assuming a higher growth rate than is necessary. The state just finished FY 17 with Medicaid underspending of more than $1.1 billion; there has definitely been a trend in the past few state fiscal years of Medicaid expenditures coming in below estimate. Despite pushback from legislators, hospitals, and providers, the Ohio Department of Medicaid is considering provider reimbursement reductions of 5%-11%. . Further cuts might be needed should the Ohio Senate vote to override some of the Governor’s line-item vetoes in HB 49 (see above).

Read More: Columbus Dispatch: Kasich Says Legislature Has Left Medicaid $1.4 Billion Short

Ohio Prepares to Seek ACA State Innovation Waiver
The Section 1332 Waiver, also known as the State Innovation Waiver, is one of the lesser known provisions in the Affordable Care Act (ACA). The waiver, which only became effective on January 1st, would grant states an exemption from many of the ACA’s insurance mandates (essential health benefits, individual coverage, employer coverage, etc.) for five years if a number of conditions are met. To qualify for a 1332 waiver, a state would have to demonstrate through regulations, subsidies, and programming that it could offer insurance coverage at least as adequate as ACA-mandated coverage in that state. So far, only one state (Alaska) has had an innovation waiver approved.

While Governor Kasich has been a critic of recent Congressional attempts to repeal and replace ACA, he has historically been an ACA critic and seems open to pursuing a 1332 waiver. Further, the Ohio Department of Insurance recently launched a website to gather feedback on a potential state innovation waiver. And language was included in HB 49, the State Operating Budget for FY18/19, requiring the Ohio Department of Insurance to apply for a 1332 waiver by January 31st, 2018. Given the continued roadblocks that Congressional Republicans are facing with healthcare reform, the state innovation waiver might become a popular tool for GOP Governors and Republican-controlled State Legislatures to craft an ACA-alternative.

Read More: Cleveland Plain Dealer: Ohio is Trying to Get Out of Obamacare Requirements