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Posted on Wed. Feb. 13, 2013 - 12:01 am EDT


State can't win on Obamacare and Medicaid

It's an ugly mess that will get uglier before it finally blows up.

If you want to be an informed voter on health care so you can decide whether Indiana should expand its Medicaid program for the Patient Protection and Affordable Care Act as the federal government has been demanding, well, good luck with that.

A study by the actuarial firm Milliman, Inc., produced at the request of then-Gov. Mitch Daniels, estimated that Medicaid expansion would cost the state an average of $140 million per year from 2014 to 2020. Heavens, we can’t afford that.

But hold on there. On Monday, the Indiana Hospital Association released a study saying the expansion would add $3.4 billion to the economy per year and support 30,000 jobs. How in the world can we pass on such a deal?

The truth, as is usually the case, is somewhere between those two extremes.

Yes, the expansion will cost the state, but probably not $140 million a year. Indiana asked Milliman for a worst-case scenario and that’s what it got. Another set of estimates, produced by the liberal Urban Institute, put the cost of expansion at less than $54 million per year.

And certainly there will be economic activity and jobs, but not in the numbers touted by the hospital-funded study, which was produced with the aim of supporting Medicaid expansion. For one thing, the activity created will depend on the federal government faithfully sending as many billions of dollars our way as it says it will. For another, any activity created with that money will be 40 percent borrowed, which is not exactly healthy. Finally, the multiplier effect used to estimate economic impacts tends to be exaggerated.

Honestly, we can’t know the true costs and benefits of any expansion until it rolls out and we experience it for a few years.

The bottom line is that 300,000 to 400,000 more Hoosiers would be eligible for Medicaid, and how we treat them becomes of paramount importance. Indiana has a good idea to use its Healthy Indiana Plan, which would require some contributions from recipients. That’s good because it would give them some skin in the game. But the federal government doesn’t like that idea because it doesn’t conform to the sense of entitlement it wants.

If we expand Medicaid – big mess, with effects we can’t even understand yet. If we don’t – big mess. Hospitals depend on Medicaid money, and some of them may close.

Obamacare is an ugly monster that’s just going to get uglier. Thanks to the federal government, Indiana is facing a lose-lose proposition. And who knows what damage will be done when the whole thing blows up, as it must.

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