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February 1, 2013

Medicaid costs a growing concern for state officials

Indiana expects to spend $170 million more over next two years due to federal health care law

INDIANAPOLIS — Indiana officials expect to spend an extra $170 million over the next two years on Medicaid benefits due to the federal health care law, with most of that money going toward coverage for children.

The 90,000 or so new enrollees are part of a “woodwork effect” projected by Milliman Inc., the actuary for the Indiana Family and Social Services Administration.

The term describes Hoosiers who already meet the state’s Medicaid eligibility requirements but for various reasons are not currently enrolled in the government-funded health insurance program.

The U.S. Supreme Court ruled that states can skip a portion of the health care law intended to require a Medicaid expansion to cover those earning up to 138 percent of the federal poverty line — or around 400,000 more Hoosiers. But new sign-ups resulting from the “woodwork effect” can’t be avoided.

“We anticipate the majority of this population to be children rather than some of the other individuals,” Milliman’s Robert Damler told the Indiana House Ways and Means Committee on Tuesday.

“Where we anticipate a lot of this enrollment to occur is when children are brought to an emergency room or a hospital setting — some sort of institutional setting,” he said.

Coverage for these additional Medicaid recipients, according to Milliman’s projections, will cost $47.4 million during the 2014 fiscal year and $94.1 million more during the 2015 fiscal year. The state will also face $30.7 million in extra administrative costs during that period.

It would cost Indiana roughly the same amount in Medicaid coverage and administrative costs — another $173 million or so — over that two-year period to pursue the expansion that President Barack Obama envisioned being mandatory before the U.S. Supreme Court ruled that states could opt out.

The state’s total spending on Medicaid is expected to land at about $1.65 billion during fiscal year 2013 — the current period, which runs from July 1, 2012 through June 30, 2013. That amount is projected to increase to $1.9 billion during fiscal 2014 and $2.1 billion the following year.

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