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Debate over health care expansion heating up

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In a year when the Indiana General Assembly is working on a new state budget, the debate over whether to expand Medicaid is illustrative of how murky those dollars and cents figures can be.

Take a recent exchange between Sen. Luke Kenley, R-Noblesville, and Sen. Greg Taylor, D-Indianapolis. During a legislative panel at the Indiana University Robert H. McKinney School of Law, the senators, both members of the Senate Tax and Fiscal Policy Committee, disagreed over the cost of the expansion.

Kenley argued that, at present, Indiana’s Medicaid program costs $6.4 billion. The state pays $2 billion and the federal government is making up the remaining $4.4 billion.
 

senatorskenley-luke-15col.jpg Sen. Luke Kenley, R-Noblesville, and Superintendent of Public Instruction Glenda Ritz answer questions during a legislative panel held recently at I.U. McKinney School of Law. (Photo courtesy of David Jaynes)

Even absent an expansion of eligibility, Medicaid will cost the state $9.7 billion by 2015. While the federal government will pick up the tab for $2.3 billion of that additional cost, Indiana will have to come up with an additional billion.

With the state diverting more money into Medicaid, any discussion about increasing funding for education and roads will be off the table, he said.

“This one issue is going to drive the entire state budget,” Kenley said, “and it’s going to threaten the sovereignty of every state in the country unless we get some kind of massaging effect out of Washington to help us figure out how to deal with this.”

Taylor countered that the expansion will be covered by the federal government. The amount the state is paying now will be the amount the state will pay for the next three years even as Medicaid expands because Washington, D.C., will be funding the growth 100 percent.

“I don’t care where we start, the difference when we expand our Medicaid, any increase will be paid for by the federal government,” Taylor said. “That’s one of the most important pieces of the puzzle that we have not heard.”

The debate over whether to expand Medicaid was kicked off when the U.S. Supreme Court handed down its decision on health care reform.

Historically, the program, which provides health care coverage to low-income individuals, has been funded with state and federal dollars. The Patient Protection and Affordable Care Act somewhat alternated that formula by requiring all states to expand eligibility for their Medicaid programs to 133 percent of the federal poverty level. States that did not comply risked losing all their federal Medicaid dollars.

However, with National Federation of Independent Business v. Sibelius, 567 U.S. _ (2012), the Supreme Court equated that provision with putting a “gun to the head” of the states. It struck down that section and, in turn, that opened the door for states to decide on their own if they would grow their Medicaid programs.

Even as the Indiana General Assembly debates, Hoosier hospitals and health care providers have mostly made their decision. To fend off the cuts in Medicare, hospitals, through the Indiana Hospital Association, are asking the Legislature to expand Medicaid.

Providing more indigents with health care coverage would alleviate the burden of uncompensated care, said Brian Tabor, vice president of government relations at the Indiana Hospital Association. In 2011 alone, Indiana hospitals provided nearly $3 billion in medical care for which they did not receive any payment.

Hospitals and medical providers have already been hit with cuts in Medicare reimbursements since 2010. Over the next decade, Indiana hospitals are expected to see a reduction of $3.8 billion because of these cuts.

As part of the design of the ACA, the federal government cut Medicare, the health care program for seniors, to help pay for the expansion of Medicaid. The idea is that the Medicaid expansion will provide more individuals with coverage which will lower the amount of uncompensated care. In turn, hospitals will make up for the lower Medicare reimbursements by having more paying patients.

Nationally, the $155 billion in cuts to Medicare are expected to be offset by $170 billion in payments from the expanded Medicaid and health care exchanges covering the uninsured, according to Tabor.

“I think Indiana would be foolish to pass it up,” David Orentlicher, Samuel R. Rosen Professor of Law at the I.U. McKinney School of Law, said of the Medicaid expansion.

Under the ACA, the federal government will pick up the tab for the expansion at 100 percent for three years starting in 2014. It will gradually phase down to 90 percent reimbursement in 2020.

Orentlicher compared it to a free trial. The state could try the expansion for three years then decide whether to continue.

Without the expansion, some hospitals could close or shed services, Tabor said. Some of the 126,860 jobs in Indiana hospitals would be at risk as well.

Tabor also predicted the impact could trickle down into the larger community by forcing individuals to go outside their own neighborhood or town for medical care. In addition, it could hinder economic development since companies are unlikely to want to operate in a community that does not have a hospital which offers complete services, he said.

The expansion, in Kenley’s eyes, is about more than money.

Health care reform dramatically altered the relationship between the federal government and states, he said. Before, states administered Medicaid pretty much as they wanted. Now, under the ACA, the federal government is telling them how to administer the program, reducing the states’ role to that of a clerk.

“They are taking away our authority and our discretion to make certain types of decisions within the system,” Kenley said.

To get control back, he has asked Gov. Mike Pence to enlist as many other governors as possible and argue vociferously for block grants. Turn over the money, loosen the regulations and let the states develop a health care system that could perhaps cover more people and increase efficiency so costs are pushed down, he said.

Full expansion of Medicaid through 2020 would make coverage available to about 500,000 Indiana residents and cost the state $516 million more per year, according to a study by Milliman Inc. The estimate also includes the “woodwork effect” whereby those individuals who are already eligible for Medicaid under the current guidelines but have not enrolled would come into the program to comply with the ACA mandate that all individuals carry health insurance.

More difficult to determine are the potential savings realized by expanding Medicaid.

Along with reducing the instance of uncompensated care, Tabor pointed out by increasing coverage, less of those unpaid costs would be shifted to private insurance. In addition, the overall health of Indiana residents could improve because individuals would be able to afford care and no longer wait to seek treatment until the medical condition becomes acute.

On Jan. 16, Democrats in the Statehouse tried to jumpstart the push for implementation of the ACA by offering Senate Bill 540 which calls for the establishment of both the Medicaid expansion and health care exchanges. The bill is authored by Sen. Karen Tallian, D-Ogden Dunes.

In announcing the bill, the minority party addressed the issue of savings, noting the state could offset costs of the expansion and exchange by realizing reductions in medical funding in the Department of Correction and mental health initiatives.

Tallian is uncertain of the bill’s future. However, she recognizes the effort to get the Legislature to act will likely get some outside help. Businesses and hospitals, already dealing with ACA costs, will put pressure on the Statehouse to expand Medicaid.

“I think there are a certain number of states who did a sort of knee jerk reaction that ‘We don’t like Obamacare, we’re mad that it ever passed and we’re not going to play,’” Tallian said. “I think that will eventually go away.”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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