In committee rooms at the Statehouse, Ohio lawmakers have been debating a measure that would upend the state’s Medicaid managed care system altogether.
Ohio Senate Bill 386 and its House companion, the bipartisan Medicaid Savings Act, would move Ohio away from the managed care system that currently serves roughly three million Medicaid enrollees and toward an administrative services model, similar to one Connecticut adopted years ago.
The sponsors argue it could save the state hundreds of millions of dollars a year by cutting out what they call the “middleman.”
They’re not wrong that Ohio’s managed care program has room for improvement and there may well be room for direct state/provider partnerships, but scrapping it altogether, in this particular moment, would be a mistake.
This debate isn’t happening in a vacuum. It’s happening just as Ohio finalized a new two-year state budget ahead of the July 1 constitutional deadline, and just as federal Medicaid cuts signed into law last year begin working their way through state budgets, with Ohio expected to lose tens of billions of dollars in federal Medicaid funding over the next decade and hundreds of thousands of Ohioans expected to lose coverage.
At its core, managed care works like a fixed payment plan for a state’s health care spending.
Instead of absorbing the seasonal swings and unpredictable spikes of a fee-for-service system, Ohio pays managed care plans a set amount per member, per month, and the plans largely absorb the risk of what happens after that.
In a time when the state’s fiscal footing feels shakier than usual, that kind of predictability isn’t a nice-to-have. It’s a hedge against the very volatility Ohio is trying to manage.
And even more importantly, Ohio’s managed care contracts create real incentives to measurably improve the population’s health while decreasing costly inefficient care — a real boon to the people covered by Medicaid and to Ohio’s taxpayers.
Ohio requires its Medicaid health plans to share financial rewards with providers that deliver high quality care while lowering costs, and health plans tout specific innovative provider partnerships as selling points when bidding on state contracts.
Those commitments should be treated as exactly that — commitments, not marketing copy.
Ensuring that plans follow through on the value-based partnerships and other population health solutions in their winning bids isn’t a nice-to-have; it’s central to whether managed care delivers on its promise.
When done right, managed care is one of the few tools Ohio has that actually aligns incentives, improves outcomes, and creates budget stability for the people who need it most.
The transparency critique is fair — but there is a fix
One of the strongest arguments for the Medicaid Savings Act is that the state has too little visibility into how managed care dollars are actually spent.
That’s a legitimate frustration, and I saw it firsthand when managed care plans’ pharmacy benefit managers failed to serve the public interest and hid highly questionable business practices behind “proprietary” labels.
But Ohio’s General Assembly and the Department of Medicaid have spent the last seven years building tools to fix exactly that problem, including ensuring state legislature’s access to plan-level eligibility, billing, and spending data.
ODM also holds the health plans accountable to the highly detailed terms of their contracts and the promises they made when bidding to secure the work.
Better transparency is achievable through better oversight. It doesn’t require walking away from a model that, when done right, does something a Connecticut-style administrative services organization wouldn’t: put plans’ own money on the line for outcomes.
What Ohio would actually lose
Ohio’s Next Generation Medicaid and MyCare managed care programs tie substantial financial incentives to outcomes: increasing preventive screenings that save lives, delivering blood pressure and diabetes management that help people feel better while lowering costs, and providing care coordination for people with serious mental illness and complex chronic conditions.
Ohio’s MyCare program, for example, fully integrates Medicare and Medicaid benefit access and financing for dually eligible members, closing a gap where a bifurcated system creates fragmentation across Medicare and Medicaid and removing incentives to shift costs between programs rather than actually reduce them.
MyCare’s coordination greatly improves member experience and streamlines access to needed care while reducing administrative burden for the state, for members, and for the care teams advocating on their behalf.
As federal rules tighten Medicaid eligibility and coverage, that kind of integration becomes more valuable, not less.
In Connecticut, while the administrative costs have been reduced relative to managed care, the state is still facing high costs with individuals using home and community-based services — a similar population to the Ohioans served through MyCare.
Ohio has already addressed this gap with this mature integrated program to serve these exact members — why cut off our nose to spite our face?
Reform the model. Don’t demolish it.
None of this means the status quo is good enough.
Legitimate questions remain about whether managed care plans are saving money on the right things and the state should keep pushing for more transparency and for plans to create more downside risk among the value-based providers, so everyone in the chain has real skin in the game.
With over half of the state’s budget dedicated to Medicaid, member advocates and policy experts alike should continually push for systems that deliver better results at a lower cost, and alternative delivery systems, including the ASO model, may emerge as a viable solution for certain populations in certain circumstances.
But lawmakers should be honest that the Medicaid Savings Act is a big bet — one being made at the exact moment Ohio can least afford budget uncertainty.
Before trading a system built around aligned incentives and shared risk for one built around administrative efficiency alone, the state should make sure it isn’t solving a transparency problem by giving up the very structure that gets results for the Ohioans who need them most.
This story is republished from the Ohio Capital Journal under a Creative Commons license. View the original article.
