INDIANAPOLIS — A study released Monday by the Indiana Hospital Association estimates that expanding Medicaid would generate billions of dollars in economic growth for the state, a stark contrast from the budget-busting projections cited by former Gov. Mitch Daniels.
The hospital association's study estimates that using the federal expansion to cover an additional 406,000 residents would cost Indiana less than $500,000 but pump several times that amount back into the economy over the next seven years.
An actuary hired by former Gov. Mitch Daniels' administration found the expansion would cost a budget-busting $2.6 billion over the same time frame.
Using those two vividly different analyses as markers, lawmakers in the Indiana House and Senate were set to consider measures this week on how to implement the federal health care law. Senate Health Chairwoman Pat Miller, R-Indianapolis, will be pushing a proposal to expand Medicaid using the state's health savings account programs, the Healthy Indiana Plan, while Democrats will be pushing for the full expansion under the federal law.
Democrats and supporters of an expansion, including the IHA, have argued the reports Milliman Inc. issued for the state ignore major benefits from covering more uninsured. The IHA study, conducted by researchers at the University of Nebraska Medical Center, found that the could generate $108 million in new tax collections as up to $3.4 billion is pumped into the economy each year.
The goal of the study is to give lawmakers a "positive" look at an expansion, said IHA president Doug Leonard.
"I think the state is taking a cautionary approach to it," Leonard said. "Medicaid has long been a growing program for them. So they're just making sure they aren't biting off something they will regret later. I think that's true of a lot of states."
Milliman determined that a "woodwork effect" — comprised largely of uninsured children joining Medicaid rolls after seeking emergency room care — would cost the state $612 million through 2020, without any expansion. Add in coverage for residents earning up to 133 percent of the federal poverty line, the full federal expansion, and Milliman puts the price at $2.6 billion.
The chasm between the two studies can be explained by Milliman's charge, which is to deliver a worst-case scenario, said David Roos, executive director of Covering Kids and Families of Indiana. The IHA study was able to account for the other side of the equation, he said, by assessing the benefits of an expansion.
"They're not caught in the conflict that Milliman is, it really does gets paid for warning states what's the worst possible scenario," Roos said. "So they're coming at it from two very different points of view."
New Gov. Mike Pence budgeted for that "woodwork effect" but did not include any money in the state's next two-year, $29 billion budget for an expansion. He has, however, said he would sign off on an expansion via the Healthy Indiana Plan, as Miller has proposed.
Senate Appropriations Chairman Luke Kenley, R-Noblesville, said he is supporting Miller's plan to expand HIP.
"One of the big issues here is that no matter what you think the cost is, it's clear there are going to be significantly more state dollars that's going to go into this program," said Kenley, who will have to sign off on any type of expansion for it to be successful. "And we would like to have some control over the expenditure of our own state dollars to try to develop a good medical plan that will get to the right people, and give them the right services at the right cost."