Rising Medicaid Costs Mean Service Cuts Likely (IN)
December 2, 2010
Indiana lawmakers likely will cut some Medicaid-provided servicesin the upcoming legislative session after learning Wednesday that the state’sshare of government health insurance program costs will balloon by $1.1 billionover the next two years unless checked.
The federal government pays about two-thirds of Indiana’s Medicaid costs, buthuman services chief Michael Gargano told the State Budget Committee that thestate’s share has been growing by more than 10 percent each year. He saidthat’s because the recession has made more people eligible for Medicaid, whichserves those who are needy and disabled.
Gargano, secretary of the Indiana Family and Social Services Administration,asked for an additional $900 million in state Medicaid funds over the two-yearperiod starting next July 1. He recommended the General Assembly rein in thecosts by cutting some optional services the state currently provides.
He didn’t identify specific services lawmakers could cut. But details willlikely come when the Family and Social Services Administration presents itsannual Medicaid spending forecast to the budget committee on Dec. 15.
Lawmakers are so concerned about ballooning Medicaid costs that cutting someservices is not the only option they want to pursue. Senate AppropriationsChairman Luke Kenley,R-Noblesville, said Indiana should join Texas and other states that areconsidering opting out of Medicaid.
"We can’t afford it. We have to be serious about finding alternatives,"Kenley, who also chairs the budget committee, told The Associated Press.
The state has one of the most comprehensive Medicaid programs, providing about30 optional services including prescription drugs, eyeglasses, dental work,hospice care and smoking cessation.
Enrollment has grown from about 850,000 Indiana residents in 2005 to about 1.1million currently in programs including Hoosier Healthwise for children andpregnant women, the Healthy Indiana Plan for uninsured, low-income adults andCare Select for people with disabilities.
The Family and Social Services Administration projects that two years from now,total enrollment will approach 1.3 million. That means one in every fiveresidents would be on Medicaid.
Gargano said the Medicaid appropriation from the General Assembly two years agohas been slashed through austerity moves ordered by Gov. Mitch Daniels and ison track to create a budget shortfall in the current fiscal year. Indiana alsowill lose more than $300 million per year now provided by federal stimulusfunding while incurring more than $500 million in new costs over the next twoyears unless lawmakers cut services, he said.
"This Medicaid thing is shocking," said Rep. Jeff Espich,R-Uniondale, the new chairman of the House Ways and Means Committee, where thenew state budget will originate in the upcoming session. "We’re going tohave to reduce the growth."
David Roos, state director of Covering Kids & Families of Indiana, said heand other public health insurance advocates want lawmakers to balance thelong-term interests of their constituents against short-term budget shortfalls.
"Advocates hope the administration and our Legislature will continue toshow leadership and creative thinking to minimize any cuts in these vitalservices," Roos said.
Kenley first raised the idea of Indiana opting out of Medicaid last spring whenactuaries for FSSA projected the federal health care overhaul passed byCongress would cost the state billions of dollars. He raised that prospectagain Wednesday as a way of dealing with the immediate budget problems facingthe state.
He asked FSSA officials if the state could find a way to opt out of Medicaidwhile capturing the federal government’s share of the program’s costs tooperate an a lternative program more efficiently. Texas Gov. Rick Perry also hasraised the possibility of opting out of Medicaid in favor of a state-fundedinsurance system that backers claim could be more efficient and less expensive.Kenley said other states also are interested in doing that.
"If we’re not reacting to the elephant in the room it’s just going tosquash us all," Kenley said during the budget meeting.
Such an alternative most likely would require action by Congress, and that’sunlikely since Democrats stillcontrol the U.S. Senate and anylegislation that were to pass would need President Barack Obama’ssignature. But Kenley was hopeful, explaining that if Congress could pass the health care reformin a matter of months earlier this year, it could find a viable way for statesto opt out of Medicaid.
"This problem extends beyond the state of Indiana," Kenley said.
FSSA spokesman Marcus Barlow said the agency hasn’t planned for opting out ofMedicaid.