Columbus Regional Hospital officials say Gov. Mike Pence’s reluctance to expand Medicaid coverage in Indiana threatens to take a big chunk out of its revenues just as other federal payments the hospital collects are being cut.
“I strongly urge you to increase (Medicaid) coverage because, after careful review, I feel a responsible and fiscally sound plan can be created,” Columbus Regional Hospital President and CEO Jim Bickel said in a recent letter to legislators.
But Pence and Columbus-area state legislators remain skeptical of promises from the Obama administration that the federal government will pick up the lion’s share of the cost of adding an estimated 406,717 new Medicaid enrollees to Indiana’s health rolls through 2020.
“We quite frankly have estimates on this Medicaid expansion, but we really don’t know the cost of it,” state Sen. Brent Steele, R-Bedford, said last week. “We have no idea how many additional people are going to hit the Medicaid rolls.
“There’s a wave coming, to be sure, but whether it’s a 10-footer or a tsunami isn’t clear,” Steele said.
Other area legislators and Pence himself have warned of catastrophic extra costs that could hit $1.5 billion to $2 billion during the next seven to 10 years if Indiana ends up paying to expand Medicaid eligibility to 138 percent of the federal poverty level without adequate safeguards.
State Sen. Greg Walker, R-Columbus, said he’s skeptical of federal promises to pay the entire cost of covering newly eligible people from 2014 to 2016 and then 90 percent or more after that.
“The federal government has never kept a commitment to Medicaid reimbursement as long as I can remember,” Walker said. “It’s like Lucy holding the football for Charlie Brown. How many times will they pull that football away before you say: ‘I’m not kicking that football again.’”
Hospital officials have a different view. They say allowing Medicaid coverage for more Hoosiers will create more paying patients, protect hospital-industry jobs and make up for other federal health-care spending cuts they’ve had to absorb.
Bickel said his hospital was forced to write off $31 million in bad debts and charity-care expenses last year alone. Those bills added up as the hospital treated people who were uninsured or under-insured and couldn’t pay for services.
Such costs have doubled since 2006, he added.
On top of that, Columbus Regional and other hospitals across the state say they need a larger Medicaid program, and the federal money pledged to come along with it, because of looming cuts in other federal programs.
Under the federal Affordable Care Act, for instance, Medicare payments to hospitals across Indiana will drop by $3.8 billion over the next 10 years, Bickel said.
He said expanding Medicaid coverage would provide an offset to those financial losses by creating another pool of paying patients for hospitals.
“If Indiana doesn’t expand (Medicaid) coverage, the results could be devastating,” he said.
Pence talks with feds
Pence’s stance up to this point, though, has been a flat refusal to expand Medicaid unless the state can couple the program with its own Healthy Indiana Plan, which promotes preventive care and shifts some costs to participants in the form of co-pays.
Healthy Indiana currently serves about 41,000 people and has a waiting list.
This month, Pence sent a letter to the U.S. Health and Human Services Secretary Kathleen Sebelius, outlining his fear that sharply higher Medicaid enrollment would carry a huge financial risk for Indiana taxpayers.
“Medicaid is broken,” Pence told her. “In Indiana, an expansion of traditional Medicaid under the Affordable Care Act would cost our taxpayers upwards of $2 billion over the next seven years.”
Pence hasn’t estimated how much it might cost to use the Healthy Indiana Plan to expand Medicaid coverage, saying such calculations are irrelevant unless federal health officials agree to the idea.
It’s unclear how or when the General Assembly will act on the Medicaid issue. Some legislators have argued the Healthy Indiana Plan can’t afford nearly 400,000 additional enrollees if it’s directly linked to Medicaid expansion.
Meanwhile, the estimated costs of expanding Medicaid, as well as some possible financial benefits that proponents envision, are all over the map.
The Indiana Hospital Association is among the groups pushing hard for the state to accept some type of expansion. The association estimates that more than $10 billion in federal assistance is on the table for the asking over the next seven years; and if Indiana doesn’t claim its share, other states will divvy up that money.
Today, Medicaid is available to people who make up to 127 percent of the poverty line. If it’s expanded under the Affordable Care Act, it would cover anyone earning up to 138 percent of poverty level.
The definition of poverty in 2012 was $23,050 for a family of four, or about $11,000 for someone who’s single.
Meanwhile, Bickel argues that Indiana is much better off than many other states in being able to afford broader Medicaid coverage.
In his letter to legislators, he said the Healthy Indiana Plan has a funding source through a tax on cigarettes that brings in more than $100 million a year. And a trust fund for the plan has a balance of more than $300 million to help offset any costs the state’s general fund has to absorb.
Also, the Indiana Hospital Association doesn’t agree with the dire cost estimates suggested by the Pence administration of Indiana facing $2 billion in extra Medicaid costs over the next seven years.
The hospital group released its own study recently, estimating Indiana would pay $503 million for the expansion and that some costs would be offset by hidden benefits, such as:
A total of $3.4 billion in new economic activity for the state through 2020, supporting 30,000 jobs.
Potential savings for other Hoosiers on their health insurance premiums as health costs are shared over a larger pool of paying patients.
Other states also are grappling with the Medicaid debate, and some Republican governors who were initially reluctant to expand the program are bowing to political pressure and hospital industry lobbying efforts.
Just last week in Florida, Gov. Rick Scott reversed his position and said he’d support the expansion of Medicaid to save jobs and boost the economy.
So far, national data show 22 states have said they’ll agree to expand the program, 17 have opted against it, and 11 (including Indiana) are still mulling over their final choice.
“Coverage expansion is critical to our future financial stability,” Bickel told Columbus-area legislators.
He said hospitals need the revenue to protect jobs, arguing that Indiana should accept the estimated $10 billion in federal aid being offered through 2020 to expand Medicaid.
Any other reductions in how hospitals are paid “will put both jobs and services at risk,” Bickel said in his letter.
The Associated Press contributed to this story.