Hoosiers had best hope that 9th District Rep. Baron Hill is right in this claim that Gov. Mitch Daniels and others are exaggerating the fiscal impact of health care reform on Indiana taxpayers. Otherwise, under a worst-case scenario presented Wednesday to the State Budget Committee, Indiana could be faced with taking on an additional $3.6 billion in new costs over a 10-year period.
That dramatic projection, contained in a report from the actuary for the state's Family and Social Services Administration, has established the political battle lines for debating health care reform in Indiana.
We have Indiana Republicans talking about a budgetary doomsday scenario — with one suggesting the state might have to consider dropping Medicaid — and Democrats saying the estimates are flawed, that new enrollments in health insurance programs never hit the maximum.
Caught in the middle are Hoosier taxpayers, stressed already about paying for cash-deprived public schools, and uninsured residents who have hope now for medical coverage.
Indiana residents would do well to pay close attention to how this discussion unfolds in the coming year. Indeed, the issue promises to offer Hoosiers some of the arguments on both sides that never quite materialized in the months leading up to congressional approval of health care reform.
The report presented Wednesday by the actuary, Milliman Inc. of Indianapolis, analyzed the cost of expanding Medicaid eligibility to families with incomes up to 138 percent of the federal poverty level. That would be about $30,400 for a family of four.
Eric Bradner of the Courier & Press Capitol Bureau reported that according to the analysis, full participation could add a whopping 522,000 adults and children to Medicaid in Indiana. And that could cost the state about $1.8 billion over 10 years.
The report included other new potential costs: $576 million for revamped eligibility standards; $832 million for increased reimbursement rates to doctors who treat Medicaid patients; and $303 million for administrative costs. Also, Indiana will lose $298 million in prescription drug rebates that will go to the federal government.
Even before Wednesday, Republican Gov. Mitch Daniels had been warning that if a high percentage of uninsured Indiana residents signed up for the new Medicaid, it would place further demands on state revenues.
But Hill said the Daniels administration was playing politics and that its doomsday scenario was not plausible. Likewise, the liberal Center for Budget and Policy Priorities said Indiana and other states are exaggerating the impact of new Medicaid provisions on their state budgets.
Which side is right? Probably a bit of both.
The budget committee has asked the actuary for more information, particularly cost projections based on less that full participation in Medicaid by newly-eligible Indiana residents.
That is most likely a more realistic approach to assessing the depths of Indiana's potential financial woes, and should be more helpful to Hoosiers looking for straight answers.