Will Artificial Intelligence Destroy the Environment?

No.

Or rather—it can’t on its own.

AI doesn’t have the ability to stop the progress we’re forcing. Human beings are the unrelenting force destabilizing our climate.

So maybe the real question is this:

Will we allow AI to accelerate environmental collapse?

The thought settles heavy over me and I grip the steering wheel a little tighter. Next to me in traffic, the city bus spits gray emissions which dissipate by the time the light turns. From the car speakers, a podcaster’s voice floats into focus:

 “This new project—known as Stargate—would consume 15 Gigawatts of power. That’s like 15 new Philadelphia-sized cities consuming energy.” NPR’s deluge of facts rain heavy on my ears, and I feel that familiar tightness pull on my abdomen. Climate doom. 

“Stargate plans to invest at least $500 billion to build 20 new large data centers across the country…”

Like many Americans, I’ve come to rely heavily on artificial intelligence to help me puzzle out the world around me. This reliance comes at a cost. AI doesn't exist in a vacuum—it depends on an energy-hungry infrastructure. It leans heavily on energy-intensive systems: 99% of all digital data passes through 1.4 million kilometers of deep-sea telecommunication cables. These systems, which power everything from email to streaming to AI models, demand enormous energy, largely sourced from fossil fuels.

AI models rely heavily on water to cool the large data centers. The World Economic Forum reports that “a 1 megawatt (MW) data centre can use up to 25.5 million litres of water annually just for cooling – equivalent to the daily water consumption of approximately 300,000 people.” To address this, innovators are exploring new cooling technology such as cool-water tank immersion and synthetic liquid coolants as alternatives to heavy water use. 

In addition to water, the models need electricity. The Harvard Business Review found that “even putting aside the environmental toll of chip manufacturing and supply chains, the training process for a single AI model, such as a large language model, can consume thousands of megawatt hours of electricity and emit hundreds of tons of carbon. This is roughly equivalent to the annual carbon emissions of hundreds of households in America.”

It’s worth noting for anyone who has lamented that AI will take over the world—it already has—and life persists. AI is technology. Just like the automobile, the airplane, the lightbulb. Despite the environmental impacts of driving, flying, and turning on the lights, we keep using these tools. 

These tools have consequences for their use. If the private cost of driving, flying, turning on the lights, and using AI is lower than the social costs, we will happily offload those costs onto future generations and speed up climate change in the process. Common policy tools we have to bring that private cost in line with social costs is through a carbon tax or cap and trade policy that puts a price on carbon emissions. In this way we can pay for our technology usage, rather than dine and dash, and leave our grandchildren to pay the bill.

Governments play a pivotal role in shaping a future where AI development is not only innovative, but also sustainable and inclusive. Policy levers already exist to combat environmental destruction:

1. Carbon taxes and cap-and-trade programs hold producers accountable for their emissions. To learn more about how these policies work, check out Scioto’s recent breakdowns of cap-and-trade and carbon taxes. 

2. Regulatory standards ensure regular and accurate data collection on emissions and energy use. 

3. Data transparency requirements ensure equitable access to the data used to train AI models. This helps address the information asymmetry associated with the 'black box' nature of many large language models. 

4. Procurement rules are another tool to direct government spending in a way that incentivizes or disincentivizes the behaviors of producers within the AI industry. 

AI can’t destroy the environment because it would have to get in line—behind us. 

This is the moment of the AI revolution, and we still have our foot on the gas, the electricity, and the water. We have to slow our energy and AI demands in order to treat this planet like our grandchildren will live and thrive here, too.

Original analysis: universal prekindergarten would boost Ohio’s economy

A new cost-benefit analysis by Scioto Analysis finds that universal pre-kindergarten in Ohio could deliver significant economic returns. The firm estimates the program would generate $3.80 in benefits for every $1 in costs per new child enrolled. With more families facing the rising costs of childcare and early childhood learning gaps widening, this analysis presents an effective solution to these problems.

This cost-benefit analysis estimates returns ranging from $220 million to $750 million depending on how many children enroll in the program. These benefits primarily accrue from increased future earnings, reduced prison time, reduced special education services, and reduced grade school repetition. 

Key Findings:

• For every dollar spent, the program could create $3.80 in benefits. The program generates $28,000 in net benefits per child.

• Scioto’s simulation of 10,000 enrollment scenarios based on the participation rates in universal prekindergarten programs in New Mexico and West Virginia produced consistently positive outcomes.

• Ohio could see 9,300 more children enrolled in universal pre-kindergarten if the program has enrollment levels similar to those seen in New Mexico. With enrollment levels that mirror West Virginia, 29,000 more children would enroll.

The analysis also showed the benefits of universal prekindergarten as a workforce development program.

“$7 of every $10 of benefits generated by a universal prekindergarten program come from future labor market earnings of children,” said Scioto Analysis Principal Rob Moore. “According to the evidence we have, universal prekindergarten could be a strong long-term economic development investment for Ohio.”

World Happiness Report: Eating alone is making us miserable

Last month, we celebrated an unofficial Scioto Analysis holiday, the annual release of the World Happiness Report. This is the gold standard for subjective wellbeing research across the globe, and is the inspiration for many of our own projects, as well as Gross National Happiness USA, an organization my colleague Rob Moore was president of in recent years. 

There are a ton of interesting facts that come out of this report. This year focuses especially on how people care for each other, and how people are more benevolent than we perceive them to be. 

I’d highly recommend reading through the whole report. There is so much good information and it really is a good experience to read about humans being good to each other. Today though, I wanted to highlight one section that stood out to me.

The importance of shared meals

One of the seminal books in the subjective wellbeing field is Robert Putnam’s Bowling Alone which talks about how Americans are losing social capital by interacting less with others across basically every aspect of their lives. For example, bowling alone instead of in a bowling league. 

While the importance of social connections is well studied, this year’s World Happiness Report adds to our understanding by looking at a new dataset on how frequently people share meals with each other. 

One of the takeaways from this new dataset was that there is a lot of variation in meal sharing across countries, and this variation is not very well explained by income, education, or employment. It just appears that on a case-by-case basis, in some countries almost everyone shares their meals while in others almost everyone eats alone. 

This is an important note because this dataset also shows that how often people share meals is actually a very strong predictor of their subjective wellbeing. From the chapter on sharing meals: “Those who share more meals with others report significantly higher levels of life satisfaction and positive affect, and lower levels of negative affect. This is true across ages, genders, countries, cultures, and regions.”

In the United States, about 25% of people who responded to the American Time Use Survey reported eating all of their meals alone in the previous day. This is a trend that has been increasing in recent years, especially for young people. 

This is a worrying trend, especially because it is difficult to see what steps we can take to reverse it. In a meeting earlier this week, I jokingly suggested that we could incentivize sharing meals by enacting a new tax that only applies to people who go to restaurants by themselves. This is a bad idea, but it shows just how hard it is for policymakers to change these types of trends. 

Public policy is really good at shifting resources around our economy. It is not so good at getting people to change their behavior. Policymakers can adjust incentives on the margins to make certain choices relatively more appealing, but unless you actually think adding a tax on people who go out to eat alone is a good thing, I have a hard time seeing a path for policy to dramatically change what's happening. 

Part of the reason it seems like public policy doesn’t have the tools to address this issue is that we still don’t understand it very well at all. This World Happiness Report is the first time the issue of shared meals has been analyzed as a driver of subjective wellbeing. 

We’ve written about this before, but there needs to be more data collected in this country about subjective wellbeing. Because it is hard to do evidence-based policymaking without evidence.

Ohio’s exceptional libraries are an economic driver

Ohio House leaders released a range of changes in their substitute budget bill last week. Gov. DeWine’s cannabis, gambling, and tobacco tax increases were out, and his proposed child tax credit was removed. The bill also included tax cuts for coal mining, a new tax expenditure to support anti-abortion advocacy centers, and many other changes to tax, budget, and other policy areas.

Maybe the most historic change introduced in the new bill, however, was a proposal to eliminate the state’s public library fund, which has funded Ohio’s library system for the past 100 years.

To be clear, this is not a total elimination of public library support, just the fund. The new bill folds the special line item into the state’s general revenue fund. The proposed House budget still provides public library funding from the general revenue fund, though it does cut the governor’s proposal to fund libraries by 9% — a $100 million reduction.

Ohio ranks near the middle of the pack on a lot of metrics. Its library system is not one of those. Ohioans visit their libraries 3.41 times a year on average — second highest among all states across the country. The average Ohioan checks out over 12 books a year — more than any other state in the country. Two-thirds of Ohioans have a library card, which puts it second among states in that category.

In the early days of my firm Scioto Analysis, I pondered a lot about market failure. Okay, I still do, but at the time I had a lot fewer clients to keep me occupied. I recall being on the phone with my benefit-cost analysis professor from graduate school asking him what services libraries provide to correct market failures.

At the time, I was very focused on circulation: how does provision of books help correct market failures?

What I missed at the time was right in front of me. I built Scioto Analysis at the library. I would bike there daily to have a place to work away from home. I would reserve conference rooms so I had places where I could have in-person or online meetings. I used their computers to do work and had a place to print RFP responses — a nice resource for someone who hasn’t owned a printer in years.

Entrepreneurs aren’t the only people who benefit from libraries. A study out this year in the American Economic Journal found investments in public libraries lead to increased test scores for children who lived nearby. This means libraries are also helping build tomorrow’s workforce.

Economist Howard Fleeter estimates Ohio’s libraries provided physical and electronic circulation, computer and technology services, reference services, programs, and other services to the tune of a total value of $3.1 billion in 2019. Comparing this to the total operating cost of the system of $780 million, Fleeter estimates the system generates about $4 in economic benefits for every $1 in operating expenses.

There are certainly other benefits to public libraries. Services to low-income people and people struggling with housing security, as a place for children to spend time after school, and civic benefits from people having a place to be around others free of charge are all values of the library. The economic benefits are real, however, and they could be threatened by proposed cuts at the state level.

This commentary first appeared in the Ohio Capital Journal.

Is data a public good?

If you’ve read any amount of news over the past three months you are probably aware that President Trump has enabled Elon Musk and the new Department of Governmental Efficiency to fire employees across the federal government. As I’ve written about before, one of the things we stand to lose in the face of this dramatic scale back of the federal government is access to high quality public data

A recent U.S. Economic Experts Panel explored the impacts of this impending loss of data. The general consensus of the panel was that scaling back the number of federal statisticians who collected and reported this data would have negative consequences. One thing that stood out to me as I skimmed through the responses was one comment written by Erik Hurst from the University of Chicago. He said “To make good policy, data is needed to understand how the economy is currently performing and to examine potential key economic variables that are changing. The data is a public good and is not otherwise provided by the private sector.”

This comment essentially echoes the point of my blog post, but the last sentence sticks out to me. “The data is a public good” is a rather strong claim. 

A public good is not just something that the government provides, it refers to a classification system that economists use to understand how goods are traded in markets. In this classification system, goods need to be either rival or non-rival, and either excludable or non-excludable. 

A good is rival if one person’s consumption of that good prevents another person from consuming it. Most day-to-day purchases are rival. If I go and buy a bike at the local shop, that prevents someone else from buying and also benefiting from that bike. Roads are an example of a non-rival good. In most circumstances, one person driving their car on a road does not prevent another person from also using and benefiting from that road. 

A good is excludable if it is possible to prevent someone from using it. Anything you buy in a store is excludable, because the producer can wait until you give them money to allow you to benefit from it. An example of a non-excludable good would be something like trees on a street. Everyone benefits from the added shade of trees, and there is no way to prevent people from benefiting. 

For something to be a public good, it needs to be both non-rival and non-excludable. If you think about what those two things mean together, it makes sense why the government should be providing these goods. Non-excludable means there is no way for a private firm to profit from providing this good, and non-rival means there isn’t a limit on how many people can use a good. 

Unlike private firms that would not be able to raise any sort of revenue from providing these goods, the government has the ability to collect taxes, essentially charging everyone and spreading the burden of paying for these goods across the population. We even see taxes for specific public goods, such as gasoline taxes that help pay for roads. 

So, does Census data qualify as a public good? 

First, Census data is certainly non-rival. My ability to download a spreadsheet does not prevent anyone else from doing the same. Is Census data non-excludable, that requires some more thought. 

For private firms that do data collection, data can certainly be excludable to some extent. Companies can require people to pay to access their data, and they can require some agreement that prevents data sharing. For context, non-rival, excludable goods are called “club goods.”

While it is technically possible for the Census Bureau to adopt this business model, it would essentially amount to adding a user tax on data. However when we increase taxes on a good, people consume it less than they otherwise would in a tax-free market. This can be a good thing if a good creates negative externalities, but as someone who works for a company whose mission is in part to “provide policymakers and policy influencers with evidence-based analysis of pressing public problems,” I believe that it is clear that this type of data has a ton of positive externalities. 

The basic rules of microeconomic theory suggest that turning Census data into a club good would reduce the total benefits people are getting in our economy. We all benefit from good access to public data. The upside to making sure that high quality data remains a public good is extremely clear: it helps us create better policies and make better decisions.

How discriminatory legislation contributes to brain drain

For me, the experience is visceral—a flush of heat in my neck and cheeks, a rush of shame, sweaty palms, a quickened heartbeat. These physiological responses surface every time I enter a public restroom. I keep my head down and don’t make eye contact with anyone for any reason. I avoid restrooms when children are present, fearing accusations and confrontation. I am transgender. 

There’s something profoundly unsettling about your state legislating where you can and cannot use the restroom. It goes beyond “no women in the men’s room” to “no trans people in public.” That is the desired effect of these laws, and they work. 

I no longer participate in public life the way I used to. I don’t attend sporting events or theatre productions, and I only eat out at restaurants with gender-neutral restrooms, a fact I need to research in advance. I find myself keeping money in my wallet that I otherwise would have spent, had I felt welcome in public. 

Very few white Americans will understand the intense melancholy of being legislated against, of having your state restrict where you can live, work, and contribute. It certainly depletes my state pride. 

So I’m leaving Ohio. 

And I’m not alone. 

I’m moving with my wife and we are joined by her father, sister, and brother. Our family represents a combined 8 undergraduate degrees and 3.5 graduate degrees leaving the state of Ohio. 

This is a concrete manifestation of Ohio’s self-inflicted brain drain resulting from anti-transgender legislation.

While this is our family’s experience, this is a wider phenomenon than just us. The problem with discriminatory legislation (and lack of protections for minorities) is that it increases the cost of living in a certain community relative to other communities. This phenomenon has been studied in Ohio for over a decade, with a survey conducted by researchers at Wright State University revealing that LGBT marriage equality laws, LGBT anti-discrimination employment laws, and LGBT anti-discrimination housing laws, were important factors for college students considering whether to leave Ohio.

Living in a state that legally sanctions discrimination levies significant costs on families, especially considering nearby alternatives. 14 states and the District of Columbia currently have “sanctuary laws,” for transgender people designed to protect access to gender-affirming healthcare services. These fourteen states include Washington, Oregon, California, New Mexico, Colorado, Minnesota, Illinois, New York, Vermont, Maine, Massachusetts, Rhode Island, Connecticut, and Maryland. 

It can be hard to estimate the number of transgender individuals living in a state. LGBTQIA+ people have concerns around data privacy when disclosing such personal information as gender identity or sexual orientation. Especially given recent concerns around data privacy at the federal level, this data gap is unlikely to close soon. 

Generally we estimate transgender people to make up half to one percent of the total population. That means that there could be anywhere from 59,400-118,800 total transgender people in the state of Ohio. According to the Data for Social Progress survey results, 8% of transgender people reported already moving, a potential loss of 4,700-9,500 Ohioans. 

An analysis from McKinsey and Company found that cisgender employees make 32% more money per year than transgender employees, even when the latter have similar or higher education levels. Despite the small size of the transgender population and the relatively small impact we have on the economy, many states continue to push anti-transgender legislation. McKinsey’s analysis found that annual consumer spending could actually grow by $12 billion annually following concerted efforts to increase employment and wage equity for transgender people.

Discrimination against transgender people has wide-ranging effects on the economy. For example, a white paper from the Sports, Events, and Tourism Association published evidence from the Texas Association of Business that discriminatory anti-trans legislation could result in an estimated economic loss to Texas’ gross domestic product ranging from $964 million to $8.5 billion.

Despite the promise of economic growth, Ohio has continued to legislate against LGBTQIA+ residents. The evidence shows this will worsen Ohio’s brain drain problem and hamper Ohio’s economy.

Another likely unanticipated effect of this legislation is the self-inflicted brain drain Ohio perpetuates with these laws.

I have a bachelor’s degree from the University of Iowa and many hours of advanced graduate course work from the Ohio State University. My wife has a bachelor’s degree from Otterbein University and is a licensed educator. We both work full-time jobs, volunteer regularly, and contribute essential grassroots support to the homeless individuals in our communities. But we’ve decided Ohio is no longer a place we want to call home, because its laws don’t want us here. 

So we are taking our college degrees, my father-in-law, sister-in-law, and brother-in-law in addition to two of our closest friends to Chicago, where Illinois has made it clear that we will all be welcome. 

This isn’t just about individual choices; it’s about broader economic implications. Policies that are unwelcoming to certain populations don’t just push out those directly affected—they also drive entire communities to leave. When people relocate, they take their expertise, their purchasing power, and their tax dollars with them.

As we prepare to leave Ohio, I'm keenly aware that our departure represents more than just a personal decision—it's emblematic of a larger exodus that has significant human and economic costs. 

Ohio's human capital loss will be Illinois’s human capital gain. I'm moving toward a future where I won't need to calculate the risk of using a public restroom. Time will tell: was the political victory of targeting a vulnerable population worth the cost of driving away educated, productive citizens and their families?

Which U.S. states are growing the most?

"Population growth and human ingenuity go hand in hand. More people means more minds, more innovation, and ultimately, more solutions to the world's challenges."

— Julian Simon, Economist

When state policymakers wring their hands about population growth, they are channeling Simon. Population growth means more people buying goods, more employees, more people starting businesses, and more people paying taxes. While there have been states that have been able to maintain high quality of life despite a plateauing population (looking at you, Vermont), many state leaders are interested in population growth as an indicator of a state’s health.

In 2024 the Pew Charitable Trusts released a map which details the changes in population over the past fifteen years. Let’s take a look at which states are succeeding the most on this metric of state health.. 

1. Utah

Over the last 15 years, the fastest growing state in the country is Utah. Utah has seen a 1.68% increase in population yearly between 2009-2023. Historically, the rise in Utah’s population was primarily attributable to natural increase, or annual births minus annual deaths. Now, interstate migration is contributing significantly to the state’s growth. Growth in Utah and Salt Lake Counties accounted for 64% of statewide population growth in the last year. As Salt Lake County becomes more expensive, more people are settling slightly farther out from the city in the Provo area. 

Three of the top five fastest-growing states seem to be growing at least partly due to wildfires and the rising cost of living sweeping the western sea board. In August of 2024, the NIH released a study finding that “wildfires were only associated with heightened out-migration in tracts that experienced the highest levels of structure loss.” Still more alarming were the findings by Nature Communications that in the last two decades, “only the most extreme wildfires (258+ structures destroyed) influenced migration patterns.” The increasing frequency and severity of wildfires on the west coast contributes significantly to the population change experienced there.

According to the National Interagency Fire Center, there have been nearly 15,000 wildfires since January 1, 2025. These fires have burned almost 400,000 acres across the United States. This is already above the 10-year average of nearly 8,800 wildfires per year. 

The UCLA Anderson School of Management found that Los Angeles County rents were slightly higher after wildfires. Decreased housing supplies, increased fire risk, and rising insurance rates give workers reason to emigrate. As fewer houses remained standing after the fires, an increased demand for housing must compete with the decreased supply, and prices rose. Displaced families are moving to interior states like Utah in search of safe, affordable housing. 

2. Idaho

Idaho is the second fastest growing state in the country. Between 2009-2023 the state grew by 430,000 residents. More than 17,300 of these new residents came from Washington, just barely more than the 17,000 from California. About 7,000 of these new Idaho residents came from Oregon. Because these individuals are moving from more expensive states, 50% of newcomers own a home within a year. Meridian, a suburb of Boise, has grown the fastest over this time period. 

3. Texas

The third fastest-growing state is Texas. Texas has experienced a large population increase due to international immigration. In 2022, more than 1,000 migrants per day crossed into the state of Texas. Domestic migration also significantly increased Texas’s population—most of these new residents hailed from California. Interstate migrants were attracted by the state’s affordability and job opportunities. 

4. Florida

Florida is the fourth fastest growing state in the country. Florida has not had the same wild-fire impacts as states like Utah and Idaho. Rather, Florida’s rise in population has largely come from international migration. In 2024, there were 411,322 new Florida residents who came from other countries. Overall, there were 23 million people living in Florida, with an increase of 467,000 people over 2023. Due to the older population in the state, Florida was one of 17 states that had more deaths than births. 

5. Nevada

In fifth place is Nevada. Between 2009-2023, Nevada experienced 1.24% population growth per year. Since 2018, about 48,000 new residents cross into the state each year. According to the Reno Gazette Journal, the state is anticipated to reach 4 million residents by the year 2043.

Overall, two trends seem to be driving growth in the fastest-growing states. With rising prices and more frequent, intense environmental disasters battering the west coast, Americans are voting with their feet and seeking safer, more affordable homes in inland western states like Idaho, Nevada, and Utah. Opportunities in the United States are driving people from other countries to come to states like Florida and Texas. We will have to see how changing dynamics in housing and immigration will impact these trends over the next fifteen years.

Do carbon prices actually work?

Carbon prices have been suggested as a tool for mitigating climate change for decades now, but despite many countries adopting official carbon prices and implementing cap and trade programs, there is very little empirical evidence about how effective these programs are at actually mitigating global climate change.

The main reason this question is difficult to answer is due to leakage. Because climate change is a global problem, local reductions in carbon emissions could be offset by increased emissions elsewhere. We might expect this to happen in places where a carbon tax is implemented because it would be marginally less expensive to outsource high pollution industries to places with fewer restrictions. 

Last week, a new article made progress on answering this question. 

These researchers looked at the impact of the European Union’s Emissions Trading Scheme, a cap-and-trade plan implemented in 2005. While a cap-and-trade program and a more straightforward carbon tax are technically different, they achieve the same goal theoretically. 

Both of these setups encourage industries to adapt their methods to reduce their carbon emissions, and provide a bonus incentive for industries that can adapt at lower costs. Both policy choices result in polluters having to pay some cost for their carbon emissions.

To understand whether or not carbon prices were truly lowering global carbon emissions, these researchers looked at three possible channels of leakage. First, they explored whether or not firms were outsourcing their carbon intensive parts of their production chain to places with fewer regulations. They concluded that this was not a major factor because if this were happening, firms would have reduced value added to the economy. 

To understand value added, consider a car manufacturer. If the manufacturer imports all of the individual components of a car and then assembles it, their value added comes from the labor used to assemble the car. If this firm decided they needed to dodge regulations and switched to importing mostly assembled cars that they just had to put the finishing touches on, then we’d see that in the value added. 

When these researchers looked at data from French manufacturers, they found that value added did not substantially decrease, nor did the carbon intensity of their imports increase. This suggests that instead these manufacturers were changing their practices to lower their emissions without relying on increased pollution from outside the regulation’s jurisdiction.

The second avenue for carbon leakage would be if consumers switched to purchasing goods from unregulated firms. If this were happening, there would be economic contraction among the regulated firms as they would have to face increased competition from unregulated firms. Again, among the French manufacturers there was no such trend. 

The final channel for leakage would be if firms operating multiple facilities could shift their production in such a way that more production was happening in unregulated facilities. To account for this they performed their analysis at the firm level, so they would have directly observed any shifting of pollution that was not captured by the regulation. The researchers found no evidence of this.

It’s easy to see that carbon prices reduce local pollution, but it is encouraging to see new evidence to support the idea that this is actually making a global difference. Evidence like this should make local policymakers worried about the impact of leakage more confident that prices placed on carbon locally will lead to global results for slowing climate change.

Two ways policymakers are trying to reshape Medicaid in Ohio

Medicaid is one of the largest health care programs in the state of Ohio. This federal health care program for low-income families and children pays for more than one in five hospital visits and provides health care coverage for over three million Ohio residents–more than a quarter of the state population.

Medicaid was created over half a century ago as part of the 1965 Great Society amendments to the Social Security Act. Originally granting public health insurance coverage to children, pregnant women, retirement-age people, and people with disabilities, Medicaid was expanded in the 1980s to allow more state flexibility and expand eligibility to pregnant women and children regardless of welfare status.

While Medicaid dodged the chopping block that other public assistance programs faced during welfare reform in the 1990s, the 2005 Deficit Reduction Act introduced cost-sharing measures and gave states more flexibility to design benefits, allowing premium charges and service-specific copayments for some populations. The Affordable Care Act in 2010 expanded Medicaid to cover nearly all adults with incomes under 138% of the federal poverty level, but a 2012 Supreme Court decision relegated that coverage to state discretion.

All this has led to a system of low-income health coverage that is heavily dependent on decisions made by state policymakers.

In the state of Ohio, over half of the state General Revenue Fund is designated to Medicaid spending. This has made the program a focus for policymakers interested in reducing state spending.

In the proposed state budget, the Governor has included two provisions that could reduce the state’s spending on Medicaid.

Work Requirements

Medicaid has not traditionally been a program that requires its recipients to work. Since it was originally targeted at pregnant women, children, people with disabilities, and retirement-age people, work requirements were not much of a consideration even during the welfare reform era of the 1990s.

During the first Trump Administration, the Department of Health and Human Services started approving waivers for state governments to impose work requirements on Medicaid recipients. While the Trump Administration approved the request for 13 states, only Arkansas fully implemented the requirements before they were struck down by a federal judge. In Arkansas, about 18,000 people lost health care coverage under the requirements. About half of cases closed were due to problems with communication, with red tape causing thousands of Arkansas residents to lose health care coverage.

Ohio was one of the thirteen states that were approved by the first Trump Administration to impose work requirements on Medicaid recipients. More than a month before President Trump took office in January of this year, the state Department of Medicaid had applied for a waiver from the federal Department of Health and Human Services to impose work requirements on Medicaid recipients. The state estimates 61,000 Ohio residents could lose health coverage under the work requirements. The Center for Community Solutions, a Cleveland-based health and human services think tank, estimates the number of people who could lose their health insurance under work requirements could be as high as 450,000.

Medicaid Expansion Repeal “Trigger”

When Medicaid was expanded under the Affordable Care Act, one of the bill’s provisions was to have the federal government cover 90% of Medicaid spending for this newly-eligible group of low-income people. This was meant to ensure the group continued to receive medical coverage without overly burdening state budgets.

This provision became even more important when the Supreme Court made Medicaid expansion an optional element of the Affordable Care Act. One of the largest selling points for states deciding whether to allow coverage of these residents was that nine dollars would be coming into the state for every dollar they spent–a pretty good investment of state dollars.

A total of 41 states have now expanded Medicaid. Most of the states which have not expanded eligibility are in the South. Ohio expanded Medicaid under the Kasich administration and as of February 2025, 770,000 Ohioans receive health care coverage under that expansion program.

A number of states, however, have also adopted laws that make this health care coverage contingent on continuing support from the federal government. A total of 12 states have implemented “trigger language” that would automatically revoke health care coverage from people covered under the Affordable Care Act expansion of Medicaid if the federal match drops below 90%. About 4.2 million Medicaid recipients across the country would lose coverage if these trigger laws were invoked at the same time. Governor DeWine’s budget includes a provision to have Ohio join this list, making it the 13th state to include trigger language if the federal government reduces its match.

This is especially salient right now as Congress is debating an extension of the 2017 Tax Cut and Jobs Act, the signature legislative accomplishment of the first Trump Administration. Cuts to pay for federal spending increases would have to come from somewhere, and Medicaid is one of the top targets of Congress today. Reducing the federal match rate could be an easy way for Congress to cut spending on Medicaid across the country and free up space for federal tax cuts. This would mean removing health care coverage for 770,000 people in Ohio to pay for federal tax cuts.

What do these mean?

Both of these changes to Medicaid policy in Ohio would mean fewer people with health coverage in the state. Ohio currently has 94% of its residents with health insurance. Medicaid is the most common non-employer form of health insurance in the state, covering more Ohio residents than Medicare, individual insurance, and military insurance combined.

Both of these policies could remove coverage for the 770,000 Ohioans who receive health insurance due to Medicaid expansion. Medicaid expansion led to more preventative measures like colon cancer screening and HIV testing, so loss of coverage may lead to more serious disease among low-income state residents. It also led to less use of emergency room care, which suggests reduction of coverage may lead to more crowded emergency rooms and costs shifted onto the public. Loss of insurance also leads to financial instability. That is the purpose of insurance, after all: to pool risk and reduce financial exposure of people to one of life’s most dangerous contingencies–threats to our health.

Ohio economists optimistic about impact of free school lunch

In a survey released this morning by Scioto Analysis, 14 of 17 economists surveyed agreed that universal free school lunches will improve student outcomes such as test scores and graduation rates, with three uncertain of the impact and none disagreeing with the statement.. This comes after Senate Bill 109 was introduced last month, a bipartisan bill that would offer free breakfast and lunch to all children in Ohio’s public and charter schools. If passed, this bill will cost the state an estimated $300 million.

“There is an abundant body of literature that finds that universal free school lunches not only improve average test scores and overall academic performance (Gordanier et al. 2020 among others), but also reduce suspensions (Gordon and Ruffini 2018)” wrote Will Georgic from Ohio Wesleyan. “While not every student's academic achievement will improve, the average effect for all students will be unambiguously positive.”

14 of 17 respondents also agreed that universal free school lunches would promote equitable outcomes in Ohio’s K-12 education system. Jonathan Andreas from Bluffton University wrote “Universal benefits are more equitable than means-tested benefits because they literally treat everyone the same.  They increase equitability of social status by eliminating the stigma of singling out the needy for special help.  They also increase equality of opportunity by eliminating a high shadow-tax-rate whereby higher earned income can be completely ‘taxed’ away by radically reduced benefits thereby eliminating the marginal incentive to increase earnings.  The tradeoff is that they are a lot more expensive to fund than means-tested benefits, so they are a relatively inefficient way to increase equity.”

The one respondent who disagreed that universal lunch would improve equitable outcomes was Michael Jones from the University of Cincinnati. He considered the impact of providing free breakfast as well, writing: “Encouraging children to eat breakfast at school rather than at home shifts parental responsibilities to government programs. This sends the message that providing basic needs such as food is something families can opt out of rather than prioritize. Parents who value family time together should not be put at a financial disadvantage simply because they do not use a free school breakfast. Families are strengthened when children see their parents taking care of them.”

The Ohio Economic Experts Panel is a panel of over 30 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.