State's Medicaid costs could rise $600M

INDIANAPOLIS (WISH/AP) The state of Indiana’s Medicaid costs could rise by as much as $600 million over the next seven years, as the deadline for the new federal health care law approaches.

That’s according to new numbers presented to legislators by the state’s Family and Social Services Administration.

It's because of what the agency calls "the woodwork effect," administrators told the state’s Health Finance Commission Wednesday.

Because the new law mandates individual health insurance, the agency expects up to 123,000 already eligible Hoosiers to "come out of the woodwork" and enroll in the program. That could cost the state an additional $600 million by 2020.

“There are people that we know that are eligible for the Medicaid program today that are not enrolled. So, we would expect in 2014 when the individual mandate goes into place which requires everybody to have health insurance, that at that point, people may be concerned. They may also be aware that there are tax credits available. And so, we may have a lot more people applying for the Medicaid program and we would expect to see an increase in the Medicaid program,” FSSA’s State Health Care Reform Lead Seema Verma told 24-Hour News 8.

That cost would come regardless of whether Indiana decides to expand its Medicaid program or not, Verma said.

The U.S. Supreme Court ruled in June that states should decide whether to expand Medicaid or not.

“If Indiana were to do a Medicaid expansion — a full expansion to 138 percent of poverty — that would [make] about 500,000 new Hoosiers eligible for the Medicaid program. That's about one in four people living in Indiana. That would be at a cost of our maximum liability of around $2.6 billion from 2014 to 2020,” Verma said.

Indiana could also choose not to expand its Medicaid program, and could also decide to establish its own health insurance exchange.

“We could absolutely choose not to do this. But, there are some higher federal dollars available between 2014 and 2017. So, the timeline is impacted from that perspective. If we delay, we lose the advantage of those higher federal dollars that are available during the first three years of the Medicaid expansion. Over time, the state is going to be responsible for 10 percent of the cost. But, in the beginning, there are more federal dollars available,” Verma said.

Gov. Mitch Daniels' said earlier this year that his administration will leave the issue to be decided by the next governor and legislature.

Verma told lawmakers Wednesday that questions about expansion and the potential of an insurance exchange are complicated by a lack of information from the Obama administration. In July, David Roos, executive director of Covering Kids and Families of Indiana, told the Associated Press that the state could rely on the Healthy Indiana Plan until 2015 if the federal government approves the state's request for a waiver to use its health savings account.

Indiana has until Sept. 30 to say which benefits would be covered in a state exchange and until Nov. 16 to decide whether to run an exchange.

Republican gubernatorial candidate Mike Pence has said he opposes the federal health care law, estimating the expansion would cost the state an additional $2 billion to $3 billion a year. Democrat John Gregg and Libertarian Rupert Boneham both want a "hybrid" exchange.