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updated: 4/2/2013 8:39 AM

House panel approves Indiana HIP expansion, strips grants

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Associated Press

INDIANAPOLIS -- Medicaid would be expanded in Indiana through a state-run program under legislation approved Monday by a House committee, but while the plan keeps an opt-out provision should federal aid ever dry up, it reverses the governor's preferred funding mechanism.

The measure approved 8-5 by the House Public Health Committee removes a major part of the Senate's Medicaid proposal, which was supported by Gov. Mike Pence. The newly amended legislation restores much of what the House had been working on through February before Pence blocked the measure.

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Both the House and Senate plans called for expanding Medicaid through the state's Healthy Indiana Plan, or something similar. HIP was initially created to help low-income residents who need help with medical costs but don't qualify for Medicaid.

The House plan calls for using standard Medicaid funding from the federal government. But the governor wants the funding to instead come in federal block grants, which are more restrictive but would allow Pence more control over how the Medicaid expansion -- including the program's qualifications -- would work.

Under any expansion, roughly 400,000 additional low-income residents would qualify for coverage and the state's qualification ceiling would jump from earning 24 percent of the federal poverty level to 138 percent. Health care experts have noted that the expansion seems so much larger in Indiana because the state has previously only covered the poorest of the poor.

Throughout the ongoing debate, conservative lawmakers have argued that the state cannot afford an expansion. However, the HIP has emerged with a price tag equal to or greater than using traditional Medicaid -- a point Democrats have argued.

Pence supports expanding Medicaid using the state's Healthy Indiana Plan, but he is refusing to commit to an expansion should the Centers for Medicare and Medicaid Services approve his request for the block grants to expand HIP. His aides have said the state has until June to win federal approval, otherwise the state would likely have to start dismantling HIP, which already covers 40,000 low-income residents.

HIP has operated under a federal waiver since it was first approved in 2007. Former Gov. Mitch Daniels originally filed to use HIP as the expansion vehicle for Medicaid in 2011, but he was rebuffed by federal officials who said the program did not provide enough coverage to meet the Medicaid expansion requirements.

On Monday, the director of Indiana's Office of Medicaid Planning and Policy, Pat Casanova, appeared confused at times as she was peppered with questions from committee members. She said she had just received the revamped House plan for expanding Medicaid and was having a hard time digesting the questions.

Casanova told lawmakers that the Pence administration was worried the House measure would lock the state into something that could become a bad deal.

Rep. Charlie Brown, D-Gary, the panel's top Democrat, asked her how that was possible if the bill included an explicit opt-out provision protecting the state should the federal government back out of its promise to pay for 90 percent of the expansion's cost in perpetuity.

"I apologize for not being more conversant with it, but not having seen it, it's difficult to be absolutely on point on this," Casanova said.

The Senate author of the bill, Health and Provider Services Committee Chairwoman Pat Miller, R-Indianapolis, also said she had problems with the House overhaul. But she and Brown both acknowledged this was likely only one move in what could be drawn-out negotiations as lawmakers work toward the end of their 2013 session in four weeks.

"We are not at the end game for this, or any other bill, as usual," Brown said.

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