Health care reform will cost Indiana $612M to $2.6B - 13 WTHR Indianapolis

It will cost the state of Indiana anywhere from $612 million to $2.6 billion to implement the federal Affordable Care Act, the Indiana Family and Social Services Administration (FSSA) said Tuesday.

The cost would be $2.6 billion over seven years if Medicaid is expanded. It's expected to increase by $612 million without expansion. 

Milliman Inc, the state's actuary, provided the new estimates to the FSSA. The recent US Supreme Court decision makes a Medicaid expansion optional for states.

More from the report: 

Generally, Medicaid expenditures in Indiana are expected to grow at an annual rate of 4.5 percent, from $2.9 billion in Fiscal Year 2014 to more than $3.8 billion in 2020. (FSSA's estimate is more conservative than the 6 to 7 percent growth projected by the Centers for Medicare and Medicaid Services.) The Milliman projections for the additional ACA-related Medicaid costs are on top of annual Medicaid expenditure growth.

"In addition to the customary annual increase in our Medicaid budget, this analysis indicates even without expansion, Indiana will experience additional costs of nearly $612 million over a seven-year period starting in 2014," said Michael A. Gargano, FSSA Secretary.

As passed, the ACA required states to expand coverage to all adults at or below 133% of the Federal Poverty Level (FPL). The Supreme Court ruling has made the Medicaid expansion optional. According to the Milliman report, the state can expect to see these changes beginning in 2014 when the law is implemented:

· A 10% increase in Medicaid enrollment because of referrals, loss of employer-provided coverage and the requirement that everyone have insurance, at a cost of $600 million.

· A cost up to $148 million due to a new federal health insurance tax to be imposed on state Medicaid Managed Care programs beginning in 2014. The Medicaid program is required to the pay the tax.

· An increase in annual administrative costs of nearly $60 million to address the growing Medicaid enrollment and other ACA requirements.

"The National Association of State Budget Officers reports Medicaid spending is rapidly approaching one quarter of all state expenditures," said Adam Horst, Director of the Indiana State Budget Agency. "This analysis confirms Medicaid spending under the Affordable Care Act will consume a greater and greater share of the state's budget, with that growth coming at the expense of other priorities such as K-12 and higher education."

Previous Milliman estimates were released on December 3, 2009 (based on draft language of ACA), updated on May 6, 2010 (to reflect final passage legislation), on May 21, 2010 (to reflect a range of fiscal results based on differing participation assumptions) and on October 27, 2010 (as a result of the guidance from CMS on the Federal offset of Medicaid prescription drug rebates).

See the report here.