Ohio lawmakers propose to slash Medicaid costs as the program’s spending surges

Ohio lawmakers in the state House and Senate introduced bills hoping to save Ohio Medicaid millions of dollars by eliminating private managed care organizations, which they call “middlemen,” who drive up healthcare costs.

The bills were proposed after the program’s total spending increased over the last five years, while enrollment declined after 2020.

In a 2025 report, the Legislative Budget Office of the Ohio Legislative Service Commission found that Ohio’s Medicaid spending rose by more than 70% from fiscal 2016 through fiscal 2025, with both caseloads and federal support expanding drastically during the COVID-19 period.

According to the same report, after a drop in enrollment, caseloads were reduced by 6.6% in fiscal 2025. Yet, expenditures still climbed by 11.1% that year.

Projections for the current biennium show further increases, with all-funds spending estimated at nearly $45.4 billion in fiscal 2026 and nearly $47.7 billion in fiscal 2027.

“The enacted budget provides a total appropriation for the Medicaid Program of $45.36 billion in FY 2026, a 5.1% increase over FY 2025’s spending of $43.18 billion, and $47.69 billion in FY 2027, a 5.1% increase over FY 2026’s appropriation,” the Ohio Department of Medicaid wrote in its analysis of the budget.

Senate Bill 386, sponsored by state Sen. Bill Blessing, R-Colerain Township, and House Bill 780, sponsored by state Rep. Karen Brownlee, D-Symmes Township, would replace managed care organizations with an Administrative Services Organization model, according to Statehouse News Bureau.

According to the Statehouse News Bureau, MCOs introduced in Ohio in 2005 to help control costs are now responsible for providing healthcare to approximately three million Ohioans enrolled in Medicaid.

“This is a bill that could save Ohioans between $450 and $850 million a year,” Brownlee told the outlet. “That’s a lot of money. And this is all done by how we streamline how we deliver health care to the three million Ohioans who are on Medicaid.”

Blessing also used Connecticut as an example to promote the bills, saying the state saved $4 billion over 13 years by eliminating a comparable middleman structure.

“When you have the system of significant administrative overhead, you have a lot of profit in the MCO system that is now actually going toward health care outcomes,” he said, adding that their proposal would redirect those savings back into the Medicaid program itself.

State Sen. Beth Liston, D-Dublin, a co-sponsor and doctor, told the Statehouse News Bureau that the bills will not completely fix the problem.

“Is this a magic bullet to fix all things in Medicaid? No,” she told the news outlet. “But I think we’re really looking at being down the barrel of a gun with cuts coming up.”

Supporters of the bills said that implementing them would simplify the system, according to the Statehouse News Bureau. Additionally, participation by doctors who don’t currently accept Medicaid will increase, resulting in better outcomes for Ohioans who depend on Medicaid.

In fiscal 2024, Ohio’s Medicaid expenditures across all funds reached nearly $39 billion — accounting for about 39% of the state’s operating budget. Federal dollars covered roughly 69%, while the state’s general revenue fund share totaled $6.7 billion, or 17%, and non-general revenue state funds made up the rest.