House, Pence split on state’s Medicaid expansion

Gov. Mike Pence is battling with House lawmakers over expanding health care coverage for roughly 400,000 Indiana residents, amid concerns that the state's health care program for the poor won't be able to handle the flood of new enrollees.

Supporters of a House measure that would expand coverage for more than 400,000 low-income residents are concerned the health savings account used as part of the Healthy Indiana Plan could not handle the increase from the 40,000 residents enrolled in the program now. The program, which is operating under a one-year "demonstration period" approved by the federal government, has a waiting list of more than 40,000 residents.

"There are questions around whether that (account) would be a viable feature on the proposed scale," said House Public Health Chairman Ed Clere, R-New Albany.

Clere pulled the bill from consideration Thursday. A top Pence aide said he pulled the bill after finding out in a Republican caucus Wednesday that he did not have the support needed to pass the measure. The aide spoke on condition of anonymity because caucus meetings are private.

Pence filed a waiver with the Centers for Medicare and Medicaid Services last week seeking to use HIP as the vehicle for the Medicaid expansion. His staff lobbied House Republicans heavily this week to ditch their plan and wait for an answer from the federal government.

Another key difference between the Pence approach and the House's: The House bill would force Pence to expand coverage. Even though Pence filed the waiver seeking the Medicaid expansion, his staff says he is waiting until he hears back from the federal government before deciding whether to expand the program.

Pence argued last week in a letter to U.S. Health and Human Services Secretary Kathleen Sebelius that Medicaid was "broken" and expanding it carried too big a price tag for Indiana. He has not yet said how much using HIP would cost, and his administration has argued that the number is not relevant until the state receives an answer from CMS.

The Indiana Hospital Association is among the groups pushing hard for the state to accept some type of expansion. The association estimates that $10.5 billion in federal aid is on the table over the next seven years. Lawmakers in the House and Senate, meanwhile, are working on legislation that would effectively expand Medicaid by building a HIP program for residents earning up to 138 percent of the federal poverty line.

The cost to the state of any expansion stifled most debate in the Statehouse until a few weeks ago. The actuary hired by the state pegged the cost of expanding Medicaid at $2 billion over seven years and estimated the state would pay more than $600 million over that same period as residents who already qualified for Medicaid but had never enrolled were forced into the program by the individual mandate.

The IHA released its own study estimating Indiana would pay $503 million for the expansion, a major decrease due in part to its expectation that doctors treating Medicaid patients would be reimbursed at 60 percent of the rate paid by Medicare. The state's actuary assumed that rate to be 80 percent.