If the Obama administration wins a possible power struggle over the issue, Indiana could lose more than $4 billion in Medicaid funds.
The Centers for Medicare and Medicaid Services informed the state in a June 1 letter its new law restricting the use of state-directed Medicaid funds violates federal rules.
The Obama administration reaction came barely three weeks after Republican Gov. Mitch Daniels signed into law legislation that included a ban on state-directed funding of abortion providers such as Planned Parenthood. The action made Indiana reportedly the first state to enact such a prohibition on money for organizations that perform or promote abortion.
If enforced, the law would cut about $1.3 million each year to Planned Parenthood, according to The Indianapolis Star. Indiana's refusal to alter its policy could cost the state $4 million in federal family planning funds through Medicaid and more than $4 billion in Medicaid money overall, The Star reported.
While federal Medicaid money is not permitted to pay for abortions except in limited cases, a state program "may not exclude qualified health care providers from providing services that are funded under the program because of a provider's scope of practice," wrote Donald Berwick, administrator of the Centers for Medicare and Medicaid Services, in the letter.
The federal denial of Indiana's plan may serve as a threat to other state legislatures that are considering similar bills. Planned Parenthood certainly saw it that way.
Cecile Richards, president of the Planned Parenthood Federal of America (PPFA), applauded the federal response and said it "is a strong rebuke to Indiana and serves as a warning to other states that attempt to bar federal funding for Planned Parenthood violate Medicaid law."
Pro-life advocates criticized the decision.
"The Obama administration appears to be intent on trying to force Indiana to subsidize the business of abortion in direct contrast to the desires of the state legislature and the people of Indiana," said Mike Fichter, president of Indiana Right to Life. "Indiana must refuse to be bullied by the federal government and must challenge this politically-charged determination with full vigor."
PPFA reported more than 332,000 abortions at its affiliates in 2009, making it America's leading abortion provider.
Compiled by Baptist Press Washington bureau chief Tom Strode.
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