[r63] Messmer Report: The Affordable Care Act pushes additional costs onto Hoosier taxpayers

Posted by: Zach Weismiller  | Sunday, October 21, 2012

Last year, I was invited by the National Federation of Independent Businesses to testify on behalf of small business owners in Indiana at a Congressional Subcommittee meeting entitled ‘The Recent Health Care Law: Consequences for Indiana Families and Workers’. Since the passage of the Affordable Care Act (ACA) by Congress, many in our community have voiced their concerns to me about the effects the law will have, including its effectiveness and cost.

Just this week, the Health Finance Commission, made up of members of the Indiana General Assembly, met to hear an update on the implementation of ACA from the Indiana Family and Social Services Administration (FSSA) so that we may better address some of those concerns in the upcoming legislative session.

The state’s actuary, Milliman Inc., recently provided new estimates to FSSA about ACA’s enrollment and financial impact to the state’s Medicaid program based on the recent U.S. Supreme Court decision, which makes a Medicaid expansion optional for states. These estimates were presented to the Health Finance Commission and will allow them to make a well-informed recommendation to the General Assembly.

Currently, Indiana’s cost to implement the ACA would be about $2.6 billion over seven years if Medicaid is expanded. Even without the expansion, costs to the state will increase by about $612 million. In Milliman’s report, they outlined the following changes the state can expect to see beginning in 2014 when the ACA is implemented:

  • A 10 percent increase in Medicaid enrollment because of referrals, loss of employer-provided coverage and the requirement that everyone have insurance, costing $600 million.
  • A cost of up to $148 million due to a new federal health insurance tax to be imposed on state Medicaid Management Care programs beginning in 2014. The Medicaid program is required to pay that tax.
  • An increase in annual administrative costs of nearly $60 million to address the growing Medicaid enrollment and other ACA requirements.

Adam Horst, the Director of the State Budget Agency, said in a release that, “The National Association of State Budget Officers reports Medicaid spending is rapidly approaching one quarter of all state expenditures…with that growth coming at an expense of other priorities such as K-12 and higher education.”

The costs are truly staggering and will have a major impact on how we allocate funds in Indiana’s budget during the upcoming legislative session. The Health Finance Commission will continue to hear testimony from experts on the ACA, and I will be sure to update you on their recommendation to the General Assembly. 

In the meantime, if you have any questions or concerns, please contact me by phone at 317-232-9671 or by email at h63@in.gov. Thank you for your continued support.