A new estimate has lowered the expected cost of the federal health care overhaul to Indiana's state government to perhaps $2.6 billion over the next decade — $1 billion less than an initial projection made last spring.

That estimate given to state legislators by an outside actuary hired by the administration of Republican Gov. Mitch Daniels drew criticism from some Democratic lawmakers.

Robert Damler of the actuarial consulting firm Milliman Inc. told the state's Medicaid oversight commission on Monday that new information provided by the federal government will drop the possible costs an additional $330 million. The firm in May had lowered its initial estimate to $2.9 billion.

The initial estimate of $3.6 billion assumed the Medicaid program would enroll all eligible Indiana residents — federal estimates project only about 80 percent — and that they will drop existing private insurance through employers and other means for the government coverage, The Journal Gazette of Fort Wayne reported.

The latest change is because the Centers for Medicare and Medicaid Services in late September changed its interpretation of the law regarding a prescription rebate program, which Damler said dropped Indiana's potential fallout to zero.

House Ways and Means Chairman Bill Crawford, D-Indianapolis, said that previous estimates had been $500 million for that expense.

"There's not a lot of confidence in this report," Crawford told WRTV.

Damler declined to remove an estimated $600 million in costs from the report that could come as a result of increased physician reimbursements. Several lawmakers pointed out that the increased reimbursements are not required under the federal law .

"This report is supposed to reflect the state's projected expenditures based on the act. I am looking forward to additional corrections," said Senate Minority Leader Vi Simpson, D-Bloomington.

Damler said the federal act increases physician reimbursement rates for a two-year period and provides funding to cover the increase. After that, he said, states will likely have to pick up the cost even though it is not currently required.

Indiana Family and Social Services Administration spokesman Marcus Barlow said the federal government has been slow to provide details, making it difficult to estimate the impact of the health care overhaul.

"As we get more information from the federal government, we are constantly revising what the estimates will be," he said. "Even under the best case scenario, that's still $2.5 billion we'll have to find somewhere."