Will Medicaid expansion actually work?

It would be “absurd” and a “travesty” for Indiana not to expand its Medicaid program, according to two local hospital officials. And yet other health care leaders do not expect expanded Medicaid coverage to provide nearly as much help to uninsured Hoosiers as hoped.

Those were the sentiments that came out during the IBJ Health Care Power Breakfast on Sept. 28 at the Downtown Marriott hotel.

The 2010 health reform law called for all states to expand their Medicaid health insurance programs so that residents with incomes up to 138 percent of the federal poverty limit are eligible. Such an expansion is estimated to cover more than 500,000 Hoosiers and cost the state of Indiana $516 million per year by 2020.

But several power breakfast panelists pointed out that health insurance is not the same as health care—and that uninsured Hoosiers who become eligible for Medicaid may not end up with any better access to health care providers than they have now.

“It could actually impact access to health care,” said Vicki Perry, CEO of Advantage Health Solutions Inc., an Indianapolis-based health insurer. “Because more people accessing the system with the same number of providers and the same model of care is going to drain resources.” (See below for a video interview with Perry about changes in Medicare and Medicaid.)

Americans with health insurance tend to consume about twice as much health care as those without insurance. But if there isn’t a big increase in the number of doctors—and no one expects there will be—it may be difficult for Medicaid patients (and perhaps all patients) to get timely appointments with doctors. That could cause patients covered by Medicaid to frequent hospital emergency rooms and urgent care centers, as many uninsured patients do now.

“If you widen the doors to an auditorium, you don't increase the seats nor make it more comfortable. And so we can increase access to the insured but I think we still have a real problem with the current health system being incapable to take on a broader insured population,” said Dr. Greg Larkin, commissioner of the Indiana State Department of Health. “Because I don't think necessarily, at least throughout the state, we have the capability that we wish we had. Our primary care physicians and extenders are limited, particularly in rural areas.”

The decision to expand Medicaid will fall to the winner of the gubernatorial contest between Republican Mike Pence and Democrat John Gregg, and the Indiana General Assembly. Pence, who has been leading in polls, has continued to criticize the 2010 Patient Protection & Affordable Care Act, but has never said explicitly whether he would call for a Medicaid expansion. Republican legislative leaders have said they favor not expanding the program.

Hospitals certainly like the law, because it attempts to expand insurance coverage to an additional 32 million Americans. But without an expansion of Medicaid, hospitals would see only about half of those new paying customers.

“It would be a travesty if we didn't expand coverage for the 800,000 fellow Hoosiers that are bare right now,” said Bob Brody, CEO of the Franciscan St. Francis Health hospital system in Indianapolis, citing the number of Hoosiers that go without health insurance during at least part of a year. “And the fact of the matter is, the federal government is providing the bulk of the reimbursement for that expanded coverage, so we should consider moving forward.”

Indeed, if Indiana expanded Medicaid as called for under the law, actuarial firm Milliman Inc. projects the state would draw down an additional $3.4 billion per year in federal funding. Since its launch in 1967, Medicaid has been funded jointly by states and the federal government. In Indiana today, the state pays about 25 percent of the total cost of the program.

“It's absolutely absurd not to expand it,” said Dr. Ram Yeleti, president of Community Physician Network, the physician practice arm of the Indianapolis-based Community Health Network hospital system. “States like Massachusetts that have expanded Medicaid, they've reduced their actual mortality by about 20 percent. Twenty percent mortality reduction for a cancer drug can be a blockbuster for a company.”

But Yeleti agreed with Perry, the insurance executive, that expanding Medicaid by itself will not solve the health problems that often beset low-income Hoosiers. What the state really needs, Perry said, is to focus more on bringing care to poorly served areas.

“As a community, we need to figure out how to deliver a model of care to the uninsured that is not system-dependent, health-system-dependent, but is community-dependent and really figure out how can we bring care into the communities that we serve that will meet the people instead of trying to [get] the people into the health system itself,” she said, adding, “When we figure that one out, we won't have as many or it won't be as important to be uninsured because they'll still have access to care.”