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Cost of Healthy Indiana Plan expansion unknown

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Friday, February 15, 2013 - 8:13 am

INDIANAPOLIS — Gov. Mike Pence and the state's top lawmakers have signed off on expanding Medicaid using Indiana's medical savings accounts. But one key bit of information was missing: the price tag.

The Pence administration submitted a waiver to the federal government that would expand Medicaid on its terms, by expanding the Healthy Indiana Plan.

Pence aides and leaders of the Indiana General Assembly said Thursday that expanding the program without knowing immediately its cost is a better option than relying on traditional Medicaid.

"Of course, we don't want to operate in the dark in this regard, and they are making progress on a fiscal note to give some projections," said House Speaker Brian Bosma, R-Indianapolis. "We do know that the HIP has been successful, it has been a consumer-driven response to public health and one that most of us on the Republican side supported when it was proposed, even when we were in the minority."

The Medicaid waiver would use the Healthy Indiana Plan to cover roughly 400,000 residents who would qualify under the federal expansion of coverage for anyone earning up to 138 percent of the federal poverty level. If approved by the Centers for Medicare and Medicaid Services, it would bring in the generous federal aid that comes with a traditional Medicaid expansion, while giving state leaders more control over how the program is run.

"Our administration will not pursue an expansion of traditional Medicaid as permitted under the Affordable Care Act," Pence wrote in a letter Wednesday to U.S. Health and Human Services Secretary Kathleen Sebelius. "To do so, in my view, would be to expand a highly flawed program in Indiana and place an enormous burden on Hoosier taxpayers. The people of our state deserve better."

The CMS and HHS have not yet commented on the Pence letter or waiver, but have pointed to previous statements from Sebelius that the administration is encouraging innovations from the states.

The price tag of any expansion has dominated the health care debate in Indiana.

Indiana's actuary, Milliman Inc., predicted, that the federal health care law would cost the state a whopping $2.6 billion over seven years. More than $600 million would cover the cost of Indiana residents who are eligible for Medicaid but not yet enrolled, as they come out of the "woodwork" when faced with buying insurance because of the federal mandate. The other $2 billion is the expected cost of every Indiana resident who qualifies under the federal expansion enrolling.

Pence, Bosma and others have said that is too expensive.

The Indiana Hospital Association released its own study this week, conducted by researchers at the University of Nebraska, showing that an expansion would cost $503 million over that same time frame and reap $10.5 billion in federal dollars. The key differences: Milliman does not account for any economic benefits from the federal aid, nor any increased tax collections expected.

But the cost of this alternative path Indiana has chosen is unknown.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said that any health care spending should be gauged based on sustainability and control, but said it might be premature to place a cost on it without getting an answer on the waiver first.

"It could be subject to the same kind of measurement and tests as 'Well, we can't afford to do that,' " he said of running HIP against the same standards as Medicaid. "I think the first step is to see if we can't get the feds to help us try and find a way for us to use our talents to make this program be better and at the same time gives us some opportunities to control costs."

He said he's expecting an answer from Milliman on the HIP cost soon.