INDIANAPOLIS, Indiana, June 21, 2011 ( – Cut off from state Medicaid funds, Planned Parenthood of Indiana says they are cutting clinic hours, and may have to shut down eight facilities if a federal court decides not to intervene by July 1.

Planned Parenthood has already lost access to $1.3 million in family planning funds that Indiana used to pay to the abortion provider. Those payments came to an end when HB 1210, a law signed by GOP Gov. Mitch Daniels, went into effect, barring family planning groups that provide abortions from being eligible to receive the state grants.

The law has effectively dried up funding for Planned Parenthood, which is faced with the choice of splitting its family planning clinics and abortion clinics into two separate legal corporations (with separate bank accounts, boards of directors, etc.), or embracing the new economic realities and downsizing.

State officials said Medicaid dollars ended up subsidizing the organization’s abortion franchise, not by paying directly for abortions, but by propping up their bottom line, which allowed them to stay afloat as an abortion provider.

Planned Parenthood operates 28 clinics in the state, including four abortion sites, but may sacrifice eight clinics rather than sever the abortion business from family planning, as a Texas Planned Parenthood had done.

NBC Chicago reports that almost all Indiana Planned Parenthood clinics will close on Wednesday in order to save money. The Indianapolis clinic will stay open Wednesday, and then close for all day Thursday.

The Obama Administration has joined in Planned Parenthood’s fight to retain state Medicaid funding. Obama’s Medicaid director Donald Berwick has denied Indiana’s Medicaid program changes, jeopardizing the state’s $5.3 billion share in federal Medicaid money. Indiana plans to appeal Berwick’s decision.

Obama’s Department of Justice has also joined Planned Parenthood in a lawsuit against the defunding law.

State officials are defending the changes, saying every one of Indiana’s 92 counties will continue to have family planning services for Medicaid recipients. They argue Indiana has every right as a state to determine requirements for qualified Medicaid providers. 

A federal judge says she will issue a ruling by July 1.