Parsing Cato’s Analysis Of Kasich’s Fiscal Record

As a resident of Ohio I was intrigued by Cato’s article on Kasich’s fiscal record. The paragraph that caught my attention was:

Just 18 months after the expansion took effect, the costs have exploded. According to a recent report from the state’s Legislative Service Commission, costs are 63 percent, or $1.4 billion, over budget. The report says the overage is because of “higher than expected caseloads and per person costs.”  The expansion population was 600,000 in June of 2015, compared to estimates of 366,000. Medicaid expenditures are 9.5 percent higher in fiscal year 2015 than they were in fiscal year 2014.

When you are $1.4 billion over budget it is kind of a big deal for states. What had me confused is why the local papers are so quiet about the budget overrun and who is the Legislative Service Commission? The second question was the easiest. The Legislative Service Commission is a nonpartisan agency providing the Ohio General Assembly with drafting, research, budget and fiscal analysis, training, and other services. They are the people who should know about budget overruns. Since Cato referenced their report, Status Of The GRF, I read it looking for references about Medicaid and the $1.4 billion dollar budget overrun. I did not find it. So I downloaded the tables for the report and looked for the budget overrun. I did not find it. So I went back to the original blog post and noticed that two of the three links refer to the LSC report. The other link refers to a post at called, “Ohio’s Obamacare expansion has cost $4 billion”.  It is that article that says that “Kasich underestimated the cost of the first 18 months of his Obamacare expansion by roughly $1.5 billion” and the expansion population was 600,000 compared to estimates of 366,000. Both Affordable Care Act supporters and I would agree that was not surprising. The only question in my mind was whether the state was running deficits because they expanded Medicaid and who was paying for the overrun. If you look at the first page of the LSC report you will find that the FY2015 revenues for the state($31,473.1 millions) are approximately in balance with the expenditures($31,461.5 millions). Since the “budget overrun” was a federal obligation that was paid for by the federal government, the local papers did not care.

That got me suspicious about the statement that Medicaid expenditures were 9.5% higher in fiscal year 2015 than they were in fiscal year 2014. If we look at LSC table 2 we see that the FY2015 state’s share of Medicaid expenses grew 2.7% over FY2014. This is exactly the same growth as it was for the previous year. In FY2016 the state’s share of Medicaid expenses is expected to grow 4.4%. This number is inline with budget increases for education. When we look at LSC table 3 we see that FY2015 state and federal share of Medicaid expenses grew 9.7% over FY2014. This is worse than the previous year growth of 7.6%. The scariest number I saw was a 22% growth in the FY2016 Medicaid expense. From this data it looks like the state portion of Medicaid is in control and the federal portion is out of control. Since most Affordable Care Act supporters say the bill is working as intended, it is hard to blame Kasich for the out of control federal portion of the Medicaid mess. Is anyone surprised that Ohio has their act together and the federal government does not!