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Estimate puts Indiana health overhaul costs at $3.1B

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Indiana's human services chief and insurance commissioner warn in a letter posted online Wednesday that the federal health care overhaul will cost the state more than previously estimated and put stress on its outdated welfare eligibility system.

Family and Social Services Administration Secretary Anne Murphy and acting Insurance Commissioner Stephen Robertson sent Gov. Mitch Daniels a letter estimating the overhaul now will cost Indiana at least $3.16 billion over the next 10 years, and possibly as much as $3.81 billion. The new estimates are $235 million higher that a previous estimate in May.

Indiana Senate Minority Leader Vi Simpson, D-Bloomington, challenged the accuracy of the new figures, saying they were among barriers to implementing the health care changes in Indiana that the Daniels administration has thrown up despite leaving office in 2013, before most of the changes take effect.

The letter dated Monday and posted Wednesday on a state website said Indiana still must find ways to pay for an array of new health care costs including larger Medicaid rolls and in-house administrative costs.

"We are also reviewing current State spending on health care programs to identify potential savings that could be redirected to pay for the $3.1-$3.8B costs that is mandated by the (overhaul)," the letter said.

It said Indiana might need to restructure its health care programs including Hoosier Healthwise for children and pregnant women and the Healthy Indiana Plan for uninsured low-income adults "to identify savings that may be used to support the State's new obligations" and to avoid duplicating federal programs.

The letter also warns that Murphy and Robertson are "gravely concerned" that FSSA's 17-year-old welfare benefits computer system might need to adsorb the additional volume of Medicaid processing for more than 500,000 new recipients and tax subsidies for as many as 1.4 million other people. FSSA has started planning for a new system to go in place in 2015.

Simpson, the Senate minority leader, said the letter underscored problems, rather than possibilities, from the health care overhaul, and threw up barriers to its implementation in Indiana.

"They're exaggerating the cost of implementation, and if that's not a barrier, I don't know what is," Simpson said.

The latest cost estimates includes $600 million to $832 million in higher Medicaid fees to doctors over seven years, but the federal government pays those costs for two years and it's not clear yet whether Indiana must pay the other years, she said.

Simpson said the latest estimate also includes $881 million in questionable costs to cover benefits to people who receive Social Security disability income.

Public health care advocate David Roos of Covering Kids and Families of Indiana said the Social Security problem has loomed over Indiana since 1972 and the Daniels administration tried to get a law passed two years ago to fix it.

"They are not new problems, and to blame them on the (overhaul) seems to me inappropriate," Roos said.

Simpson also complained that FSSA has not included legislative leaders in planning the health care changes.

"I just wish there was a more cooperative spirit and a more positive attitude on the part of the administration," Simpson said. "There's this whole issue of continuity that bothers me. This administration is gone in two years."

Copies of the letter were distributed at a meeting Tuesday where state officials heard from insurers on the health care overhaul. They will hold a meeting Thursday morning for business leaders and Friday morning for doctors and other providers. Both will be at the Statehouse.

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  • Ignore the Mitch spin
    Sounds like its "pick me, pick me for President 2012" Mitch who is making up the numbers to suit his anti-health care reform narrative. The story specifically cites a 1972 problem Mitch hasn't fixed but is lumping into this to feed the negativity, not the facts.
  • Help save us Mitch
    Folks, Vi Simpson says we can't trust the numbers. She is right. Obama and his crew are not even sure. They are making them as they go. Obama Care Beware !!

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