Indiana can’t afford a proposed expansion of Medicaid, even if the federal government picks up most of the cost, Gov. Mitch Daniels said today. The expansion is included in health care overhaul legislation moving through Congress.
“If that bill passes in anything like its current form, it is a disaster for taxpayers in this state,” Daniels, a Republican, said. “I think it would be terrible for the health care system of America, and certainly whoever has responsibility ought to look to see if there is a better way for Indiana.”
Not every governor sees the bill the same way. A spokesman for Michigan Gov. Jennifer Granholm, a Democrat whose state is in worse financial shape than Indiana, has said the Medicaid expansion wouldn’t overburden the state’s budget, and doing nothing would be worse.
Expanding Medicaid, the federal-state health insurance program for the poor and disabled, is a primary way lawmakers aim to shrink the number of uninsured Americans.
The Senate health care reform bill would expand Medicaid coverage to people earning up to 133 percent of the poverty level, or $29,327 for a family of four.
States have to cover certain groups, including children and pregnant women, but don’t have to cover parents earning above the poverty level.
Indiana’s main Medicaid program covers parents earning up to 26 percent of poverty, or $5,733 for a family of four. Healthy Indiana, the state’s subsidized health insurance plan covering about 56,000 lower-income adults, covers people earning up to 200 percent of poverty.
Daniels said the state’s actuary estimates the proposed Medicaid expansion would add 500,000 people to Indiana’s Medicaid rolls.
The federal government would pick up the additional costs for three years and would cover about 95 percent of additional costs after that.
But Daniels said Indiana’s share, and the impact of other provisions in the bill, would cost the state more than $2.3 billion over 10 years.
Daniels said he shared that information with Sens. Richard Lugar and Evan Bayh “and I am sure they are going to receive it with the same sense of grimness as I did.”Lugar, a Republican, opposes the health care legislation while Bayh, a Democrat, has said he is waiting to see the final version before deciding how to vote.
Bayh said that, as a former governor, he sympathizes with Daniels’ concerns regarding the proposed Medicaid expansion. But he said the federal government’s share of the expansion would be a significant improvement over the approximately 70 percent it now pays for Medicaid.
“The alternative is to have individual Hoosiers and Indiana businesses continue to indirectly pay the costs of treating the uninsured, something that is both costly and inefficient,” Bayh said.
Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, which focuses on programs affecting low- and moderate-income Americans, questioned some of the costs included in the state’s estimate.
For example, he said the estimate of 500,000 new Medicaid enrollees seems high, because only about 200,000 uninsured Hoosier adults earn less than 133 percent of the poverty level.
The state’s biggest projected expense is a $1 billion increase in the amount the state would pay Medicaid providers. State officials said they would have to pay providers more to make sure there are enough doctors willing to see the new Medicaid patients.
The House version of the bill, but not the Senate version, would require an increase in provider rates but would pick up most of that new cost.
Park said that even if no changes are made, Medicaid rolls are still expected to increase and states would not get additional assistance from the federal government
