News and Tribune

July 8, 2012

CAPITOL CROSSROADS: Daniels puts Medicaid question before successor

By TOM LoBIANCO
Associated Press

INDIANAPOLIS — The first major test for Indiana’s next governor will likely be deciding whether to expand the state’s Medicaid rolls.

When the U.S. Supreme Court recently upheld the individual mandate as a part of the federal health care overhaul, it also struck down a requirement that the states cover more low-middle-income workers via Medicaid. That move kicked the decision back to the states, and Indiana Gov. Mitch Daniels is leaving the decision to whoever takes over for him in January.

“I’m very self-conscious not to make decisions I won’t be responsible for implementing,” he said.

Republican gubernatorial candidate Mike Pence has not said definitively that he would oppose the Medicaid expansion, but he has been pretty clear on his opposition to the federal health care law.

A spokesman for Democrat John Gregg, meanwhile, says he is sticking to Daniels’ wait-and-see approach before making any decisions.

The Urban Institute estimated last week that about 86,000 Hoosiers would be eligible for full coverage under the expansion, which would cover anyone making up to 138 percent of the federal poverty level. The federal government would pay for the entire cost of the expansion for the first few years and slowly scale it back, placing more of the cost on the states.

Pence estimates the expansion would cost the state an additional $2 billion to $3 billion a year. He said in a statement that Medicaid is “broken” and suggested he would rely on Indiana’s health savings account program as an alternative.

“Rather than expanding an already broken program, I believe Indiana should focus on solutions like our innovative, market-based Healthy Indiana Program,” he said.

Gregg, meanwhile, said he wants to consult with Hoosiers before making any decisions.

“John will bring together Hoosiers from all backgrounds; doctors, hospitals, drug makers, small business owners, insurers and consumers to determine the best way to guarantee access to affordable health care for all Hoosiers,” said Gregg spokesman Daniel Altman.

Answers from other states have been decidedly less ambiguous, with Republican governors in South Carolina, Florida and elsewhere flatly refusing to expand their states’ Medicaid coverage, while Democratic governors in states like Maryland have said they are on board with the expansion.

There is no shortage of issues awaiting whoever takes Daniels’ seat behind the governor’s desk. The new governor will walk into office with an estimated $1.4 billion in cash reserves, but also a series of questions about restoring school funding and paying for road and highway maintenance.

Of those issues, however, the health care question is sure to be the most expansive. The Daniels administration is still awaiting word from the Obama administration on whether it will approve a waiver to allow it to use health savings accounts in lieu of expanded Medicaid coverage.

David Roos, executive director of Covering Kids and Families of Indiana, said if the federal government approves the state’s request for a waiver to use its health savings account the state could rely on the Healthy Indiana Plan until 2015. Roos also said he was surprised Daniels was kicking the issue to his successor.

“I truly respect many of the things the governor has tried to do with the Healthy Indiana Plan, but I would certainly have hoped that he would have continued to exercise as much leadership as possible for his full term as governor,” he said.

That same waiver, Roos notes, was used by former Massachusetts Gov. Mitt Romney to win approval for his own health care overhaul which later became the basis for the federal plan. One of the most surprising lessons from both Indiana’s experience with the health savings accounts and Massachusetts’ version of mandatory health insurance, Roos said, has been that most people don’t mind paying for health care.