A new estimate has lowered the expected cost of the federal health care overhaul to Indiana’s state government to perhaps $2.6 billion over the next decade — $1 billion less than an initial projection made last spring.

With health care reform we are going to see an expansion of medicaid. This expansion is going to cost the state a lot more money. So our governor is trying to to estimate the cost of health care reform as it pertains to Medicaid.

Robert Damler of the actuarial consulting firm Milliman Inc. told the state’s Medicaid oversight commission on Monday that new information provided by the federal government will drop the possible costs an additional $330 million. The firm in May had lowered its initial estimate to $2.9 billion. The initial estimate of $3.6 billion in a 10 year time period.

When Medicaid is expanded we are going to see a huge cost to the state. As it stand right now there are no incentives to get off of a Medicaid health plan. These plans have very rich benefits to where it cost the insured almost nothing for services.

The  health care reform creates a huge expansion of Medicaid and how are the states going to pay for it?