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State’s Medicaid costs in dispute

– A Washington, D.C., liberal-leaning think tank called out several states including Indiana this week for exaggerating costs for expanding Medicaid – a key plank of the federal health care legislation.

State officials fired back by saying the Center on Budget and Policy Priorities is clearly partisan and supports the bill.

“The thing that’s concerning to me is I don’t think this group is a neutral entity,” said Seema Verma, a health care consultant for the Indiana Family of Social Services Administration. “It seems like they are trying to manipulate the issue.”

Interestingly, Gov. Mitch Daniels relied on a report by the think tank for a portion of his January State of the State speech showing how Indiana’s budget deficit isn’t as bad as other states’.

The Center on Budget and Policy Priorities report released Tuesday said costs will only marginally go up for states because of Medicaid expansion in 2014. Specifically, it said states would see only a 1.25 percent increase – or $20 billion nationwide – over what they would have spent on Medicaid without the legislation from 2014 to 2019.

This covers only the first five years of the program, which is important because the federal government will pay full costs of those newly eligible for Medicaid for the first three years and then slowly phase that out.

“We are not denying it will cost states some money, but when you compare it to what they would have spent in the absence of health care reform it is really negligible,” said January Angeles, policy analyst who wrote the report for the center.

A report for the state by Milliman, an actuarial consulting firm, found that Indiana’s Medicaid costs will increase $200 million through 2019. In all, the state report says the bill will cost Indiana taxpayers an additional $2.3 billion over the next 10 years. This includes administrative expenses and costs related to other parts of the bill besides the Medicaid expansion.

The think-tank report said there are several problems with Indiana’s Medicaid estimate. First, it says there are only 264,000 uninsured Hoosiers with incomes below 133 percent of federal poverty level – the new eligibility line. But the Milliman report estimates an additional 495,000 Hoosiers will be added to the Medicaid rolls.

Verma said the difference is that the think tank uses only the number for those currently uninsured. She said there are an additional 231,000 Hoosiers with insurance who meet the new Medicaid eligibility rules. The state report assumes that every one of those people would move to the Medicaid program.

“If they have been cobbling something together they can switch,” she said. “Free is better than cheap.”

The center said it is unrealistic to assume a 100 percent participation rate, noting that even Medicare has a participation rate of only 96 percent.

But Verma pointed out there now is a national mandate for citizens to carry insurance.

“When we do our estimates we have to prepare for worst-case scenarios for budget purposes,” she said. “Milliman is not a political organization. These are actuarially certified.”

Another issue of disagreement concerns those currently on Indiana’s Healthy Indiana Plan who will transition to the Medicaid program. The state report assumes the federal government would cover those people at the current average Medicaid match rate of 57 percent. But the center’s report said they would be covered by the much higher rate set in the bill.

Verma said even if that is correct, that would change state estimates by only about $20 million.

The center report generally noted that states aren’t considering the benefits they will receive by having 16 million more low-income children and adults covered.

Angeles said Indiana was chosen only because it was one of the few states to release its estimates.

nkelly@jg.net

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