Witness urges Ohio to pursue work requirements, stricter verification and waivers to curb Medicaid costs

Trevor Carlson, a visiting fellow with Opportunity Solutions Project, told an Ohio House committee that the state’s Medicaid expansion and weak eligibility-verification practices have driven enrollment and what he described as large improper payments, and urged lawmakers to pursue federal waivers and state policy changes to reduce costs.

Carlson told the committee that Ohio’s Medicaid expansion population — able-bodied adults added under the Affordable Care Act — has grown far beyond projections and that higher enrollment has produced budgetary stress. “By 2020 enrollment reached nearly 750,000, more than 60% above what had been promised,” Carlson said, adding that average monthly enrollment for fiscal year 2024 topped about 860,000 expansion adults and at one point exceeded 1,000,000.

Why it matters: Carlson argued that the expansion population is financed differently from traditional Medicaid groups and that some federal rules that rewarded expansion (a 90% federal match for expansion adults) have increased state exposure to changing federal policy. He said improper payments and eligibility errors divert funds from core services for vulnerable Ohioans.

Carlson summarized how Medicaid eligibility groups differ, noted Ohio’s primary Federal Medical Assistance Percentage (FMAP) of about 65%, and explained that the ACA expansion population receives a higher federal match — about 90% — which he said was intended to encourage states to expand. He cited a 2019 federal Payment Error Rate Measurement (PERM) audit that estimated Ohio’s error rate at about 44.3% and warned that more recent published figures may understate current improper payments because of the pause and later “unwinding” of eligibility redeterminations during 2020–24.

Recommendations offered

- Seek a Section 1115 demonstration waiver tied directly to expansion eligibility and, if necessary, use a state-plan amendment to reset the baseline so a waiver’s work requirements will be evaluated against no expansion rather than full expansion. Carlson pointed to Georgia and Indiana as examples of states that pursued waiver-based approaches.

- Institute work and education requirements for able-bodied adults in the expansion population while exempting traditional Medicaid groups (the blind, disabled, seniors, pregnant women and most children). Carlson said these requirements should be paired with supports such as training and exemptions for those seeking treatment or caregiving.

- Consider a time-limited benefit (a lifetime cap) for able-bodied expansion enrollees — Carlson cited a 36-month cap being pursued in Indiana and compared that to TANF’s five-year limit — to encourage cycling off the rolls into employment.

- Strengthen eligibility verification and program integrity: reduce reliance on self-attestation, increase cross-checks with residency, death and wage records, require timelier reporting on hospital presumptive eligibility (HPE) decisions, and consider penalties or a “three-strikes” enforcement approach for hospitals that repeatedly misapply HPE rules.

- Seek waivers to allow more frequent eligibility redeterminations than the current 12-month interval and to end prepopulated renewal forms that can perpetuate outdated information.

Numbers and audits discussed

Carlson cited a 2019 PERM audit that he said estimated a 26.18% national error rate and a 44.3% Ohio rate. He also cited a managed-care audit finding about $118 million in improper payments to managed-care organizations (including payments tied to incarcerated, duplicate and deceased enrollees) and a separate state audit that found more than 124,000 Ohio recipients concurrently enrolled in another state’s Medicaid program, costing over $1 billion in capitated payments. Carlson said eligibility errors account for more than 90% of Ohio’s improper payments and argued that front-end verification would reduce those cases.

Committee discussion and follow-up requests

Committee members questioned Carlson about more recent PERM figures and implementation since 2019. Representative Baker noted a published 2022 PERM rate of 8.23% and said the state had taken administrative steps since 2019; Carlson replied that redetermination pauses between 2020 and 2024 make the 2022 rate less reliable and that a new PERM estimate due later in 2025 would provide a clearer picture.

Several lawmakers asked Carlson for follow-up data, including state-by-state comparisons of verification practices, details on Georgia’s waiver litigation and projections of potential savings from his seven listed reforms. Carlson offered to provide the committee with supporting materials and studies on request.

Limits of the testimony

No formal votes or committee actions were recorded during Carlson’s appearance. Carlson’s recommendations are proposals that generally require state or federal approvals — for example, a Section 1115 waiver, a state-plan amendment or legislative direction to the Ohio Department of Medicaid — and are subject to legal and administrative review.

Ending

Committee members signaled interest in further analysis and directed staff and the witness to provide additional documents and data in coming meetings. Carlson told the committee he was available to answer questions and supply the materials he referenced in his presentation.