Indiana may cut Medicaid services to check costs

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The General Assembly likely will cut some optional Medicaid services rather than resort to raising taxes to check the overall growth in the government health insurance program at a time Indiana revenues still lag behind current overall spending, a key legislative budget writer said Wednesday.

State Senate Appropriations Chairman Luke Kenley, R-Noblesville, said he and other members of the State Budget Committee were "speechless" after the state Medicaid actuary projected Indiana's share of the program's costs will rise by about 25 percent this fiscal year and next, or by $1.46 billion and $1.84 billion respectively, and by nearly 9 percent, or $2 billion, in the 2013 fiscal year unless some services are cut.

Actuary Robert Damler of the private firm Milliman Inc. said the Legislature can cut some optional services such as chiropractors, podiatrists and adult dental services to reduce its overall Medicaid bill. He also presented an alternative scenario in which the state's share of Medicaid costs rises by about 19 percent, or $1.74 billion, during the fiscal year that begins July 1, and by about 8 percent during the following 12 months.

Kenley said the challenge to lawmakers is to control the growth in Medicaid costs at a time when other state spending is flat, and they're more likely to do that by cutting optional services rather than raising taxes to balance the budget.

"If the forecast numbers hold up . . . I think we're beginning to see a path where Indiana can continue to be a fiscally solvent state without raising taxes," Kenley said after the committee's hearing.

Kenley, who also chairs the State Budget Committee, said he was backing away from his early suggestion that Indiana follow Texas' lead in exploring alternatives to Medicaid, because there was no enthusiasm for such an option from Gov. Mitch Daniels' administration.

An updated forecast projects Indiana's sales and income taxes and other revenue will be about 1 percent higher than previously believed and will grow by about 4 percent in each of the next two fiscal years, the period covered by the biennial budget that lawmakers will write during the upcoming session of the General Assembly.

However, current state spending is about $13.9 billion per year, and revenues during the next fiscal year will reach only $13.4 billion even with the projected growth, State Budget Director Adam Horst said.

Revenues would reach $13.9 billion in state fiscal year 2013 under the latest forecast, rebounding finally to where they were in 2008, before the economic downturn began.

"We essentially lost five years," Horst said.

Despite austerity moves by Daniels over the last several years as revenues fell short of projections, the state still has had to dip into Medicaid and state tuition reserves and its Rainy Day Fund to keep its books balanced. It likely will have a structural deficit of about $700 million when the current fiscal year ends next June 30.

Kenley and his House counterpart, Republican Ways and Means Chairman Jeff Espich of Uniondale, said the next state budget won't have any money for new programs because lawmakers must find ways to eliminate the structural deficit while also closing the gap between current spending and forecast revenues.

Damler said Indiana's Medicaid population of about 1.11 billion needy children and parents and elderly and disabled people will only keep growing because the state can't reduce eligibility before June 30 without risking losing some federal stimulus funds and can't cut it through the end of 2013 without possibly losing some federal funds under the health care overhaul.

He said the Medicaid population will reach a projected 1.25 million Indiana residents during fiscal year 2013 and grow by an additional 400,000 when key provisions of the health care overhaul begin in 2014. Medicaid will then cover about one in four Indiana residents.


  • lower cost
    I am an RN and have seen many people who are abusing the system by using the ER (which is more expensive) as their doctor and women who are living with the father of their childre who has insurance on them but do not tell the nurse unless they are asked use medicaid to pay the bill. Need more investigation into people applying and those that are using it. Also a girl here in town was living with her mother but mother could not afford the extra cost of 3 people so she applied for medicaid but could not get it unless she moved out of her mothers home and got an appartment which medicaid paid for/ really dumb rull as she would have had free rent and only needed to have some help with water and electric if stayed with her mother. Need changes and nurses who see this need to report it to state so investations could be done.
  • food stamp abuse
    I agree,Urine screens Grocery reciepts with food stamp # showing purches at randon Some way to verify food stamps are not sold .50 on the dollar I see this so many times. These familys can do drugs and take food from their childrens mouths?? some how make accountable with proof Even photo id to use Anything to start the misabuse
  • Totally Agree
    K.Tharp-I completely agree with you! There are thousands of people abusing Medicaid, Food Stamps, Government assisted babysitting it is sickening! People who are well able to work but are just too lazy to keep a job so they just lie lie lie and live off of us who bust our butts to make ends meet and still put food on the table with our own hard earned money! Makes me sick. Drug test them, do home visits, if they can buy alcohol and Smoke a pack or two of cigarettes everyday they can damn well get a job and pay for their own food! do a credit check on them, get their bank account records or tax returns, these government funded offices should do some real digging and they wouldn't have to cut those who actually NEED the help and assistance down to where they won't be able to get the care and medical attention they have to have! This world is coming to an end and it's because of the lazy pathetic people who just keep popping out more and more kids so they get more money!!
  • medicaid needs reform
    I agree whole heartedly with your comments. I am a medically disabled person with a very long work history. I do not have enough money coming in from disability to even pay my bills, let alone food and other essentials. Yet medicaid approves me with a spend down of over $1,000. It's a joke. I need medical and prescription coverage for a spinal cord injury! There seems to be a lot of people that get food stamps and medicaid by lying about their conditions and income. Instead of supplying these case workers with piles of medical justification and nonsufficient income documents, we should just lie. It seems to work well for many whom are perfectly able to work. The problem is they are lazy and have figured out how to fool the system.
  • Medicade abuse/cost
    Medicade is for people and children that really need it. Instead of cutting cost and raising taxes, I believe some people that are receiving Medicade benefits, insurance and food stamps need to be investigated and screened more closely. They should have to take a drug test and show proof that the food stamps are used for their intended purpose. People are drawing medicade and working under the table for money "they can work", also I hear alot of people are selling food stamps for drugs. This is taking advantage of the tax payer's money. Taxpayer's are working hard to make end's meet and getting more taken away from them while some people are just abusing the system.

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