Support for the Statehouse News Bureau comes from Medical Mutual, dedicated to the health and well-being of Ohioans, offering health insurance plans, as well as dental, vision and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, right, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at porterwright.com.

Porter Wright inspired Every day in Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.

Governor Mike DeWine, state of the state speech gets bipartisan applause and pushback from Democrats and from Republicans in charge of the budget.

And the director of the agency that spends the largest chunk of the state budget talks about changes that could be coming.

That's this week in the state of Ohio.

Just.

Welcome to the state of Ohio.

I'm Karen Kasler.

As expected, there were virtually no new proposals announced by governor Mike DeWine and his second to last state of the state speech, though in his 71 minute annual address, he drew attention to several ideas and programs that are in his two year budget that he introduced last months.

DeWine last used that line in 2022, in his first post-pandemic address this year.

But DeWine said workforce is still the state's most significant challenge.

He said his newly appointed lieutenant governor, former Ohio State football coach Jim Tressel, will quarterback what he's called Ohio's work force playbook.

DeWine also noted that Tressel will indeed lead an effort that he talked about on this show, a coming statewide initiative on physical fitness in schools.

DeWine waded into the discussion on conservatives concerns over what they've called liberal indoctrination on public college campuses, introducing the heads of the so-called academic civic centers that have been set up at five public colleges to promote constitutional research and American history.

Senate Bill one, the legislation to ban diversity programs and faculty strikes, among other things, has passed the Senate and is being heard in the House.

It is strongly opposed by faculty and student groups as well as democratic organizations, unions, and the ACLU.

DeWine also touted budget items, some of which have not gotten much enthusiasm from his fellow Republicans in the legislature.

For instance, a $1,000 tax credit for kids under seven, funded by a $1.50 per pack cigaret tax hike and a sports facility fund backed by doubling the 20% sports betting tax that is paid by operators to 40%.

DeWine noted his budget calls for vision and dental services programs for kids.

He encouraged bringing driver's ed programs back to high schools and a total ban on cell phone usage.

After pushing last year in that speech.

For a law to require districts to have policies on cell phone usage, which took effect over the summer.

DeWine did have one new school related proposal to put forward, saying kids should be learning about how to create a budget, perform basic first aid, cook simple meals, and to vote.

The speech got audible cheers from both sides of the aisle.

But some of DeWine's biggest state budget priorities fell flat among members of his own party, including that thousand dollar child tax credit funded through a cigaret tax increase, and the Sports Facilities Fund paid for with the doubling of the Sports Betting Tax you have to be careful about basing any spending historically or long term spending on a cigaret tax, because there's going to be a declining source of revenue.

It's been a declining source of revenue for years.

And I would suggest that if the cigaret tax were increased even more, above what it is, it's probably going to be even more rapidly declining source of revenue.

I don't think it income tax credit for many Ohioans is really the way to go.

And I think some of the other things that the governor has proposed, especially regarding childcare, we have to, be careful about what we're doing here.

Are going to help people get back to work.

So I guess I'd like to see some modeling on whether this particular income tax credit would really, promote, the, the ability of people to have children.

House Finance Committee Chair Brian Stewart told me on Thursday he does not support those tax increases, along with DeWine's proposed increase in the marijuana tax, and that most of the House majority caucus does not, either.

So Stewart said it's very unlikely that those tax increases will be included in the House version of the budget.

Democrats have their own critiques of DeWine's address, noting that he didn't make any mention of property taxes, though lawmakers of both parties have said that constituents have long been reaching out about skyrocketing valuations.

We can be both fiscally responsible while also being morally compassionate.

But for all the good that this budget does, there is still so much more work that can be done.

Nothing.

And the governor's proposed budget addresses the fact that prices are still too high at the grocery store, at the pharmacy, and for Ohioans who are hurting, who are struggling to afford quality housing and higher education, we have bipartisan solutions to address property taxes in both chambers that we could enact today.

It is a choice that they have not been enacted, and Ohioans deserve better.

And Democrats also shot back at the recent debate over Senate Bill one, the higher education bill, saying lawmakers should instead focus on the state's increasing brain drain and rising tuition costs.

instead of taking any meaningful action to invest in our kids or lower property taxes, the legislature, through Senate Bill one, has prioritized an egregious attack and plan to dismantle our world renowned institutions of higher learning.

Then they ignore the will of Ohioans by overhauling the marijuana law approved by a majority of voters.

There's a lot that we and the governor, as I said, agree on.

We absolutely should be focusing on our kids, our economy, our workforce, higher education institutions in a positive way.

But we have much work on how we do that.

A deadline was set a Friday, March 14th, for House budget amendments.

That deadline was also a focus of the newly formed House Doe's caucus.

Nearly half of GOP Republicans are part of that government cost cutting group, which says it wants the state to focus on core functions of education, public safety and infrastructure.

Chair freshman Tex Fisher says he knows Republicans have run Ohio state government for the better part of three decades.

But quoting here, I think wasteful spending and mission creep of what government does is a bipartisan issue and, quote, the largest single item in the state budget is Medicaid.

With nearly half of state spending going toward it.

More than 3 million Ohioans receive Medicaid to cover health care.

39% of those Ohioans are kids under 18.

As of this week, 769,869 Ohioans are getting Medicaid benefits through expansion of the program done in 2013 under Republican former Governor John Kasich.

Following the passage of the Affordable Care Act, federal funding for that population is uncertain, and the proposed budget has trigger language that could end state funding for it.

And the DeWine administration has gone to the Trump administration for a second time to ask for permission to implement an 80 hour a month work requirement for people who are under 55, are not enrolled in a school or training program, who aren't working a recovery program or don't have a serious physical or mental illness.

I talked about all of that and more with Ohio's Medicaid Director, Maureen Corcoran.

So the state asked to implement work requirements in 2019.

It was granted.

Then the pandemic hit, and the Biden administration overturned the original order allowing work requirements to be implemented.

So the idea is back.

Why is it back now is seen as a way to save the state money, though, in the only state that's successfully implemented.

Work requirements.

Georgia there wasn't actually an increase in costs per enrollee through work requirements.

Why do it?

Well, actually, the reason we're doing it now is that our legislature in the last budget put in a requirement that in February of this year.

So just this past month, we were to submit a waiver, hoping or assuming that that President Trump would be president and that there would be a little more receptivity to that at the federal level.

And certainly all the indications we're getting from the leadership and key policy people in Washington is a is a receptivity and openness to work requirements.

And, so what we're seeing or what in our budget, what we're planning for, it will cost us a little bit more in the first year, primarily serve start up in administrative money.

And then we're expecting, more significant savings in the second year and beyond.

So the idea is really to give people, an incentive to, as there are with people that have regular jobs, that if I need to work and or to engage in community activities or go to school in order to have my health care covered, that will provide a little bit of incentive for them to do that.

Why are work requirements a good thing, though most people in the Medicaid population are working.

Why are these work requirements something that you think are important?

Well, it's a it's a great question.

When we look at the requirements that our legislature put in the law with a certain exemptions, more than two thirds of the people that are currently in this target group, eligibility group, more than two thirds will be exempted.

So they'll and we do know that many people on Medicaid are working 1 or 2 jobs, low income jobs.

So and and then some of the other exemptions include if you're going to school, if you have a serious mental illness or you're getting drug and alcohol treatment.

So based on our our preliminary analysis, more than two thirds of people will qualify.

And then the remaining individuals will need to be further assessed.

Maybe we don't have all the information etc., but it's a much smaller number of people.

So we're assuming we cover now about 745,000 or so Ohioans in this particular expansion group is referred to.

We're assuming that about 62,000 over the first 18 months or so would fall off or would not meet those exemptions and would be required to increase their work activity in order to receive Medicaid.

The critics say work requirements are essentially cuts to Medicaid, because some recipients have no control over the irregular hours that they're working, so they can't really ensure that they're going to be able to work 80 hours a month.

There are people who will lose Medicaid if they get a job because their incomes will go up, but then their employer doesn't offer health insurance coverage.

They may have transportation issues.

There's a lot of things involved in requiring people to prove that they are working 80 hours a month.

Right.

And we as part of this process, we, the federal, process you have to follow to put one of these waivers together.

We have to engage in a stakeholder input process for 60 days, which we we did, and we got, 4 or 500 comments and feedback from people and many all the comments reflected some of these kinds of concerns or issues or things.

Have we thought about this?

Thought about that?

So what we've what we've been sharing with the General Assembly and with other stakeholders as we talk to them is, you know, this is the first step in the process.

We have to go through.

It's a bit of a process with the federal government, and we'll see what what other kinds of either things that the federal government wants us to add or what kind of considerations we need to take into account.

But at the same time, you know, the county departments of job and family services work with all these individuals.

We're working with our managed care partners to be sure that they can reach out to people in advance, that they can see maybe it is transportation.

What can we do to help you?

We're we've been developing a voluntary work support program, which will now turn into a resource.

So there is we've been working with the job, agencies across the state, director Dan Schroeder and I, in anticipation of something like this.

So we know people are going to need support.

Arkansas got permission to implement work requirements along with Georgia.

A judge actually halted that.

So there's just this one state that's made work requirements work in implementing them successfully.

Does that suggest that work requirements are not, in fact, workable?

That's working 3 or 4 times.

You've said work in the same sentence is getting getting that in there.

Well, and that that is the point of these kind of waivers.

These are what are referred to as 1115 waivers.

They're a particular type of demonstration waiver.

So we have to do fiscal analysis and reporting as we go along.

And the whole idea is if it's a demonstration, let's try it out.

Let's do the research.

And we have to do you know, it's not just little reports.

We have to do formal research as we go along in order to demonstrate whether, in fact, it is saving money or not.

The Medicaid expansion population includes people who are dealing with addiction, people who have mental illnesses that they're dealing with more so than the larger Medicaid population.

So if those people leave the existing Medicaid population, it makes the rest of Medicaid sicker, does it not?

And does that cost more money?

So so we and you're right, we've got two big issues in front of Congress right now.

One is the at the federal level, they're very supportive.

The Trump administration's very supportive of work requirements.

The other is just this whole issue around how states are being paid to care for this same group of individuals.

So in the work arena, people who have a drug and alcohol problem or a mental health problem, they would be exempt.

They would be able to continue to be covered.

Now, what you're also getting at, though, is as we've come out of the unwinding from the public health emergency, we have seen quite a number of people go back to work or go back to some other kind of coverage.

And that's where your question is particularly on point.

As you lose the healthier people than those who remain in the program are more costly.

So, we've been having a lot of that conversation with the General Assembly to help kind of understand, you know, just because you reduce by one doesn't mean you save the full cost of that one person because of this, where you're getting the overall group of people then become sicker.

So there is a kind of a balancing act as we're looking at how to set the rates.

You bring up the federal funding and there's a lot of uncertainty around federal funding.

And the federal budget bill proposes $880 billion in cuts to Medicaid and the Affordable Care Act, which funds Medicaid expansion.

There are discussions about dropping the share the federal government would pay.

The federal government pays 90% for the Medicaid expansion population, 65% for the general Medicaid population.

A provision in the state budget says that if that funding for the Medicaid expansion population drops below 90%, then that eliminates the coverage for Medicaid expansion.

That's 769,869 people who would lose their Medicaid expansion coverage.

Right?

The the trigger line is we call it the trigger language, which a number of states have implemented.

And again, it's very simple because we don't know exactly what will happen in Washington.

But yeah, the way that it is currently framed, it says that the state must terminate the program if the federal funding drops below the current expected amount.

And, you know, we can all understand, I mean, if they drop it by 5%.

So if they go from just 90% to 85%, that would cost the state about $380 million.

And if they went all the way down to 65, you're right, our our regular amount, then they'd be dropping it by five times that.

So we're up, you know, up near $2 billion.

And so the discussion that we've been having with the legislature is really around.

Look, we need a clear trigger so that if this happens there can be additional conversation with the General Assembly.

They they would have to act.

They control the purse.

They would have to.

And you, you know, you know, from other situations we've had in the state of Ohio where there's been crisis and, you know, people have had to come together in the General Assembly.

So, you know, without knowing exactly what might happen, you know, the our view is we need a clear kind of trigger and then there will need to be more discussion.

But the other thing I've cautioned in, in some of the hearings is, you know, nothing like this occurs overnight.

Okay.

So it's not that you're going to show up at the hospital the next day and not have coverage.

You know, it all takes guidance from the federal government to tell you, you know, what you have to do.

And all that.

So we don't know how much time, but there would be, you know, some back and forth in some time that would be needed before any kind of terminations of individuals would occur.

So there is discussion going on among Medicaid and lawmakers about that trigger language to ensure that maybe it wouldn't be 90%, 80% something else like that.

Yeah.

Or or does it become, you know, is it does it get framed more as a, you know, the administration may is opposed to show.

So yeah, there's there's been quite a bit of discussion about that already in the hearings that we've had.

There are more people on Medicaid now than there were before the pandemic.

Why is that?

Yeah, it's probably the most common question we get from the legislators.

We at the time, just before the pandemic began, Ohio was at its strongest place economically.

We had the greatest number of people or percentage of people employed.

We had seen some 36 months of continuous decline in the Medicaid population.

It was like the the opposite of the perfect storm.

It was kind of the perfect, perfect.

And so even as we began our work on The Unwinding two years ago, we said to the General Assembly, we will not get back to the pre-pandemic level, at least not right away, because we know and we see it today.

While the economy is doing much better, we do not have the degree of work purchase of employment participation that we had before.

We have a lower percentage, the economy is is not I mean, not that there's anything wrong with it, but it's not where it was when we started.

And so we have seen a significant decline in the number of people, but there still are about 200,000 people.

We're still at about 200,000 people higher than we were before the pandemic.

One of the biggest drivers of your costs is drugs.

And in fact, it was $6.2 billion spent on drugs just last year, not last budget, but just last year.

There were some unusual and expensive drugs that are funded.

That's part of that.

But there's one particular class of drugs that you say there's going to be a 459% increase expected over the next two years, and that's these GLP one drugs, these diabetes drugs that are also being used for weight loss.

A lot of insurance companies don't cover those for weight loss.

Why do you expect such a serious increase in just that category of drugs?

It's a great question.

So the the Medicaid program, under federal law, if we participate in the rebate program.

So today for our $6 billion of drugs, we get about half of that back in rebates.

So our net spend is only about half.

But the the in exchange, what the federal law lays out is that if a manufacturer participates in the rebate program, they give us that degree of rebate, then we must cover any of that manufacturer's drugs if they are approved by the Federal Drug Administration.

So what that means is today we cover these drugs, the GLP ones for obesity, be not because they're for obesity, but as you say, because they're also being used primarily because the person has diabetes and the weight loss is a significant contributor.

We're covering them for certain kinds of heart conditions, not because the person is obese, but because the obesity is contributing.

And so we are seeing a significant increase in their use, but we're also seeing that there are a number of additional, what we refer to as comorbidities that the drug companies are asking the FDA to approve.

So sleep apnea, we even saw some things recently about, you know, our GLP ones are, helpful in treating depression.

So as those go through the the review process with the FDA, if the FDA comes out and says yes, GLP ones can treat sleep apnea depression, then we must cover it.

That's going to drive those costs up big time.

Well, it is, it is.

However, we're also you know, we've had questions from some of the legislature that there still though is a push not just for those comorbidities.

You know, diabetes, sleep apnea, but there's a push toward, you know, why can't we open them up more broadly?

And and so that's where you that's why both in Medicaid programs as well as in commercial insurance, as you mentioned, there's been a lot of nervousness about these drugs because they the, increase in utilization is pretty dramatic.

And it's pretty.

It happens fairly quickly.

So we're trying to just be a little bit more cautious as we roll this out.

And there are serious side effects.

So we're trying to be just a little bit more cautious.

And that is it for this week for my colleagues at the Statehouse News Bureau of Ohio Public Media.

Thanks for watching.

Please check out our website at State News Talk or find us online by searching State of Ohio Show.

We'll keep you up to date via Ohio State House alerts.

If you register through this QR code or text state news to this number or go to this website.

You can also hear more from my colleagues Joe Ingles, Sarah Donaldson and me on our podcast, The Ohio State House Group, every Monday morning.

Thanks for watching and please join us again next time for the state of Ohio.

Just.

Support for the Statehouse News Bureau comes from Medical Mutual, dedicated to the health and well-being of Ohioans, offering health insurance plans, as well as dental, vision and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, right, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at porterwright.com.

Porter Wright inspired Every day in Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.