Legislators struggle to nail down cost of health care expansion

The cost of health care for an additional 400,000 low income residents is something nobody in the Statehouse seems to be able to nail down firmly this year, even as the crucial decision about whether to expand Medicaid bears down on lawmakers midway through their annual session.

The Medicaid expansion could end up costing Indiana $503 million in state dollars if the state expands coverage or $10.5 billion in lost federal aid if it does not, according to estimates from the Indiana Hospital Association.

Or it could cost $2 billion, as state actuary Milliman Inc. estimates, with another $600 million or for residents who already qualify for Medicaid but are not yet enrolled.

And Gov. Mike Pence's request to use the Healthy Indiana Plan could cost a hefty 44 percent more than Medicaid, according to a January 2011 Milliman analysis, which estimates it would cost $1.3 billion to cover an additional 330,000 residents next year and $1.8 billion by 2015.

That thicket of numbers and variables makes it almost impossible to find an exact price tag, said House Public Health Chairman Ed Clere, R-New Albany, who is pushing for a compromise expansion similar to HIP this year.

"There are a lot of variables. That's why there are so many different assessments of what the cost will be," he said. "In order to calculate the potential cost, you have to make a number of assumptions, and whenever you change one or two of those variables it can cause the number to fluctuate wildly."

House Democrats have called on Republicans to move on that compromise legislation Monday, before a legislative deadline at the 2013 session's midpoint. But Pence hit the brakes on that push last week in a meeting of top House Republicans because he wants more time to see if the Centers for Medicare and Medicaid Services will approve his plan to expand Medicaid using HIP.

The battle is playing out in the context of a "budget session" as Pence and lawmakers eye how to spend between $14 billion and $15 billion a year the state collects in taxes and fees. Pence wants $500 million a year for a tax cut, House Republicans want that money for roads and schools and some Democrats say they want both.

There's little wiggle room in that battle for any new spending, making it even more crucial to figure out just how much a Medicaid expansion would cost.

The Pence administration calls Obama's Medicaid expansion the "baby elephant" that would have to be fed from the state's coffers continuously until it crowds out most other priorities. But Pence's proposal could be much more elephantine, according the 2011 Milliman report, because HIP's coverage would have to be beefed up considerably—with new vision, dental and other benefits—to meet the same level of coverage as Medicaid.

Pence staff members say they have not yet determined how much it will cost and argue the number is somewhat irrelevant until they hear back from the Obama administration. But Pence's concerns about a price tag are pretty clear, according to his recent letter to U.S. Health and Human Services Secretary Kathleen Sebelius.

Rep. Ed DeLaney, D-Indianapolis, points out another problem with HIP would be determining who pays the $1,100 contribution to each enrollee's "power" health account, which would amount to $440 million for 400,000 residents.

"That's one of the reasons everyone is staying out of the details [and saying] 'I'm surfacing when I get the biggest 'detail,'" he said.

But while macro details—about the millions and billions of dollars that would be spent—have dominated, ground-level details about who that money would be spent on has been almost invisible.

Indiana provides Medicaid for anyone earning up to 24 percent of the federal poverty level, according to the Kaiser Family Foundation. In layman's terms, that means a single adult earning up to $2,758 or a family of four earning up to $5,652. And the Medicaid expansion would barely lick at the heels of the middle class—giving coverage for a single adult earning $15,856 or a family of four earning up to $32,499.

Lawmakers have two more months to figure out the details, big and small, before they have to pass their budget and leave Indianapolis for the year.