By Suzannah Couch
The U.S. Supreme Court ruling on the federal health care law has left Indiana's next governor and legislature facing a tough decision about whether to expand the state's Medicaid program, outgoing Gov. Mitch Daniels said Thursday.
The high court upheld the controversial mandate that every American obtain health insurance. But it ruled that Congress can't penalize states that opt not to implement the law's Medicaid expansion. That means states get to make the call.
"It's a $2 billion plus cost to do what the federal government tried to order Indiana to do, and so that's a big decision," Daniels said.
William Pound, executive director of the National Conference of State Legislatures, said the ruling means states will have more flexibility when it comes to Medicaid. But he said residents of states that decide to opt out of the Medicaid expansion "would not get the extended coverage or it might not be expanded to a more inclusive population."
The federal government currently pays about two-thirds of the cost of Medicaid, a joint state-federal program for the poor. The health care law sought to expand who is eligible for the program and, although Congress intends to pay for the initial additional costs, states would eventually face big bills to fund care for those new Medicaid recipients.
The law calls on Indiana to - starting in 2014 - cover nearly all individuals with incomes up to 138 percent of the federal poverty level. Originally, the law said the Health and Human Services administration could financially punish states that opted against an expansion, but Supreme Court struck down that penalty.
Senate Appropriations Chairman Luke Kenley, R-Noblesville, said Thursday that the law's Medicaid expansion would be "devastating" to Indiana's state budget. The expansion could put another 500,000 people on Indiana's Medicaid rolls, which would mean one out of every four Hoosiers would qualify for the program, down from about one in six today.
"That means if we pay this additional amount...we're going to have to consider whether to cut our funding for higher education, K-12 education and any other program we have would be in jeopardy," Kenley said.
Senate Democratic Assistant Leader Tim Lanane, D-Anderson, said he hopes "political passion" can be set aside when the decision is made on whether to expand Medicaid.
Lanane said Republicans in particular should look past their animosity about the new health care law and "really take a look at what are the benefits to the state by the law going forward."
"Time will tell," he said.
Rep. Charlie Brown, D-Gary, said the choice about expanding Medicaid is one for the General Assembly to make.
"We have to remove the politics from it and we'll look at what's good for Indiana," Brown said. "I am hoping that both houses will do that."
Currently, Indiana Medicaid covers only the poorest adults - those who earn 24 percent of the poverty level or less - while making others eligible for Healthy Indiana Plan, a low-cost state insurance program that requires users to pay premiums.
The health care law would move many of the adults on the HIP plan into Medicaid. Initially, Congress would pay for those additional Medicaid recipients but eventually some of the cost would shift to states. In Indiana, that would mean roughly $2 billion over the next decade, Daniels said.
The governor has asked federal officials to give Indiana a waiver that would allow it to use HIP in place of the Medicaid expansion. Federal officials have expressed doubt about the idea but made no final ruling.
If the state's request for a waiver is unsuccessful - and Indiana officials decided to move forward with the expansion - as many as 500,000 people could become eligible for Medicaid.
The Republican candidate for governor, U.S. Rep. Mike Pence, said until the fate of the waiver is known, any decision about expanding Medicaid should be postponed.
But he said an expansion would extend a "broken and unaffordable system" and therefore he's pleased the court decided it would not be mandated.
Through a spokesman, the Democrat candidate for governor - former House Speaker John Gregg - would not comment directly on the Medicaid question. But he issued a statement on the overall court's ruling.
"We are currently examining the ruling to determine its effect on Indiana," Gregg said. "As governor, John will bring Indiana patients, physicians, stakeholders and insurance companies together to discuss how to implement this law in the most cost effective and consumer friendly way for Indiana."
Indiana Attorney General Greg Zoeller said Thursday that his office is now reviewing the Supreme Court's decision to "discern its impact on Indiana Medicaid and the rights of patients concerning their health conditions and procedures."
"My office's legal advice will be provided to state agencies and federal and state policymakers so they may decide how best to address specific circumstances families face," Zoeller said in a statement.
The U.S. Supreme Court ruling also means Indiana is faced with how - or whether - to proceed in creating a health care exchange to help Hoosiers find the required insurance.
Indiana has been in the planning stage for an exchange - which is required by the federal law and essentially provides customers with a marketplace of insurance options - for at least 18 months and has received some $7.9 million in federal grants for the work.
But Daniels said Thursday that implementing an exchange could cost the state as much as $65 million in the first several years of its operations. It will be up to him to decide whether the state will move to operate a health insurance exchange, leave its operation to the federal government or form a federal-state partnership.
The state must make that decision by Nov. 16.
"Indiana has taken steps to research the potential implications of health insurance exchanges, but absolutely no decision has been made to establish a state-based exchange," Daniels said. "Before a decision can be made, the state needs more information about how a federally-based exchange will operate and be funded."
Also, the General Assembly has not passed enabling legislation that would allow for an exchange.
Because of those factors, "there is an increased likelihood Indiana will not meet the federal timetable for implementation," according to the Henry J. Kaiser Family Foundation, which has been tracking state progress on parts of the federal law. That could lead the federal government to take over the state's effort.
Suzannah Couch is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students. Reporter Olivia Ober contributed to this report