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Request a DemoThousands of Hoosiers will soon lose Medicaid access, but the cost of the program is still increasing
- A net 400,000 Hoosiers are expected to lose Medicaid access over the next year due to the end of a pandemic-era policy.
- In the first month of the policy change, a majority of those who lost access to Medicaid did so for procedural reasons, not because they were found ineligible. That signals a problem.
- Despite the expected decline in enrollees, Indiana’s Medicaid general fund budget increased by almost 40% in the two-year budget.
Hundreds of thousands of Hoosiers are poised to lose Medicaid insurance access over the next year due to the end of a COVID-19 pandemic-era federal policy that prevented states from kicking people off Medicaid.
Despite that, state costs for the health program serving more than 2.2 million low-income Hoosiers, including more than 60% of Indiana’s children, are only expected to continue to grow over the next two years. That puts pressure on the system and the state’s budget.
Indiana spends billions of dollars on Medicaid each year, making it the second largest expense to the state’s general fund following K-12 education.
In the last decade, Medicaid assistance has doubled, growing at a faster pace than the state’s general fund budget as a whole. It now makes up nearly 18% of the general fund budget, which means less money for other priorities such as education, paying down state debt or infrastructure.
“If you ask me what I lay awake at night thinking about,” Senate President Pro Tempore Rodric Bray, R-Martinsville, said at the end of the legislative session, “it’s Medicaid spending.”
The increased pot of money needed for Medicaid makes it challenging for advocates of either expanded access or increased Medicaid reimbursement rates to make their case. It also means some Hoosiers, such as those who rely on Medicaid for autism services, fear cuts may be coming.
Why so many Hoosiers will likely lose access to Medicaid
Over the next year, the state estimates that a net 400,000 Hoosiers, or nearly one-fifth of the number currently on Medicaid, will lose their Medicaid insurance access.
During the pandemic, the federal government prevented states from disenrolling people from Medicaid even if they were no longer eligible, in exchange for more federal dollars. That caused the number of people on Medicaid in Indiana to increase by more than 800,000 enrollees over the three-year period.
The Biden administration prohibition ended at the end of March, which means that for the next year, the state of Indiana will start double-checking whether those receiving Medicaid still qualify, in a process known as unwinding.
Advocates are worried some people will be kicked off by accident, or won’t realize they lost insurance until it’s too late and they’re hit with a doctor's bill. The Family and Social Services Administration (FSSA) is sending people at risk of losing access a notice, but Adam Mueller, executive director of the Indiana Justice Project, and other advocates say it’s possible people either won’t get the notice or won’t understand its importance.
“Our biggest concern is that folks who should still be eligible for Medicaid or HIP [Healthy Indiana Plan] or any of the programs could lose coverage for procedural or administrative reasons,” Mueller said. “Even where there’s not a giant unwinding going on, people slip through the cracks.”
To that point, a recent report from the state found that of the roughly 52,000 people who lost coverage in the first month, more than 88% of them lost their Medicaid simply due to procedural reasons such as failing to respond to FSSA, not because the state found them ineligible. That could signal a problem in how Indiana is unwinding, said Joan Alker, executive director and co-founder of the Center for Children and Families at Georgetown University.
“When you see a lot of procedural losses, there’s probably a lot of people, particularly children, who remain eligible, but they’re getting terminated anyways,” Alker said. “Is the state making clear that the children and the parents may have different outcomes, that like the parent is losing [Medicaid access, but] the child is still eligible?”
Advocates also fear that those who do lose access because they are no longer eligible won’t know where to find low-cost insurance options and will go uninsured instead.
So why are the costs still ballooning?
With a net decrease in Medicaid enrollees on its way, it seems counterintuitive that the costs for the program to the state would increase, so why is Indiana’s Medicaid general fund spending poised to increase by almost 40% from the previous budget?
It’s partially because the process of double-checking Medicaid eligibility will take 12 months, which means Indiana will continue to feel the effects of the pandemic requirement until May of next year. Meanwhile, the extra funding from the federal government, which typically covered the extra costs of continuous enrollment to the states, will be phased out by the end of 2023.
“There’s been some inaccurate rhetoric and claims flying around that states have been forced to carry this population, that it’s been very burdensome on them,” Alker said. “That wasn’t true because the federal government was giving them extra money.”
But even if the pandemic requirement had not been a factor, Indiana’s Medicaid costs would likely have increased due to the growth in those enrolling, and are poised to continue increasing in the future. Michele Holtkamp, a spokeswoman for FSSA, said that’s being driven largely by an increase in the number of seniors in Indiana, who often require more costly care.
Hoosiers aged 65 years and older are making up a growing share of the population, and that trend isn’t expected to slow down in the coming years. By 2030, 1 in 5 Hoosiers will be senior citizens, according to a 2018 report from the Indiana Business Research Center.
“That’s just something we and every other state in the country will have to deal with,” Allison Taylor, interim Medicaid director for FSSA, said during an April Medicaid forecast presentation.
Likewise, the state is spending more on behavioral health costs for children. There’s currently no uniform reimbursement rate for Applied Behavior Analysis therapy, commonly used to help children with autism, which means reimbursement amounts are often significantly higher than in other states, Holtkamp said. In 2022, the state spent $420 million on such services, which she called “not sustainable.”
Indiana has also expanded Medicaid in other ways. For example, a new federal rule will require states to provide 12 months of continuous coverage for children enrolled in Medicaid. That protects children from going off and on Medicaid due to minor changes in their parents’ income or other “red tape losses,” but once again, there is a cost. Indiana also extended postpartum eligibility.
The most recent data available from Kaiser Family Foundation puts Indiana near the middle of the pack when it comes to per-enrollee spending for Medicaid and 39th when comparing how much of the general fund is made up of Medicaid spending. But without more recent data, it’s challenging to know how Indiana compares today to other states.
What’s the solution?
Finding a way to stop costs from increasing is complicated because, typically, activists and lawmakers are pushing for an increase in Medicaid access or reimbursement rates — both of which might help Hoosiers but could drive up costs more. Already, Indiana requires those making over a certain income level to make a monthly contribution to their health care.
Some lawmakers pointed to one solution: fix Hoosiers’ dismal health outcomes in hopes that it will reduce the need for care among those using Medicaid. Valparaiso Republican Sen. Ed Charbonneau, who championed a revamp of the public health system in Senate Bill 4, hopes his bill will help.
“This may be a way to bend the curve just a little bit, because unless we prevent people from getting sick … it’s going to get worse,” Charbonneau said. “We can’t keep it up.”
Beyond that, Indiana could strengthen eligibility requirements or lower Medicaid reimbursement rates, both of which would likely be unpopular.
Starting this year, FSSA is undergoing regular Medicaid reimbursement rate reviews. That means costs to the state could go up or down depending on what rates the agency lands on.
Could those reviews cause problems?
They could. This year, for example, lawmakers are coming up with a uniform reimbursement rate for Applied Behavior Analysis therapy. That means some providers could experience cuts.
Indiana ACT for Families, which aims to protect access to care for children with Autism Spectrum Disorder, actively pleaded with lawmakers and the Holcomb administration during the legislative session not to cut funding.
“The outcome of this review has existential repercussions for the children we serve,” the organization wrote in an April letter to lawmakers. “A sudden and steep funding cut would make it extremely difficult for some providers to continue operations and would reduce availability of quality ABA therapy that is critical to the children and families that we serve.
Meanwhile, other Medicaid recipients spent the legislative session pleading with lawmakers to increase reimbursement rates. The Indiana Hospital Association, for example, said Indiana’s current rate only covers about 53% of costs.
What’s next
Indiana is poised to share the first batch of proposed Medicaid reimbursement rates within the next few weeks, Holtkamp said. The state will look at others, such as hospital reimbursement rates, during the next budget cycle.
Aside from that, Mishawaka Republican Sen. Ryan Mishler, the chief budget architect on the Senate side, has made it clear that he wants to be very picky when it comes to legislation that would increase Medicaid costs.
“We still have a lot of bills out there where members want to keep expanding it and adding more people to the program, and that’s something we have to take a look at is how much do we really want to keep expanding? Because once we do it’s ongoing,” Mishler said during the legislative session. “We just have to figure out the growth of the Medicaid.”
Contact Kaitlin Lange on Twitter @kaitlin_lange or at [email protected].
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Here’s how to vote in Indiana’s primary election
Thousands of Hoosier voters will head to the polls Tuesday, May 7, for Indiana’s primary election. This year’s ballot includes a competitive contest for governor, as well as dozens of state and federal legislative races and a few school referenda. The primary will decide which candidates will represent their respective parties in the Nov. 5 …
$15B in 72 hours: ‘Our economy is on fire,’ says Commerce chief
A banner week for investment within Indiana has capped off the state’s biggest financial quarter in recent history, as three major companies agreed to deals estimated to bring in billions of dollars.
The state has long advertised itself as business-friendly, and its chief executive appeared thrilled by the week’s news.
“This is about $15 billion in about 72 hours,” Gov. Eric Holcomb told reporters on Friday. “This used to take four years to achieve.”
One announced project, an $11 billion Amazon Web Services data center in north-central Indiana, is the biggest single investment in the state’s history.
Google also broke ground on a $2 billion data center near Fort Wayne, while Toyota announced a $1.4 billion investment in its Princeton plant.
“Our economy is on fire,” Secretary of Commerce David Rosenberg said.
His agency, the Indiana Economic Development Corp., negotiated the deals. The state is offering millions of dollars in tax incentives in order to create some 1,500 new jobs.
“These industries bring generational change for families, putting more money in their pockets and allowing them the opportunity to have a better quality of life on their own,” Rosenberg said.
The projects
Amazon’s new data center will be built near New Carlisle. It’s expected to bring in at least 1,000 new jobs in the artificial intelligence and cloud storage sectors. No timetable for completion of the project was given.
According to Amazon, the company has invested $21.5 billion in Indiana since 2010, creating 26,000 full- and part-time jobs.
Google’s new data center will hire up to 200 new workers, the tech giant said, “in the coming years.”
Toyota will build a new assembly line that will assemble battery-operated SUVs by the end of 2025. It expects to add up to 340 new jobs to the plant, which Toyota said now employs more than 7,500.
The company has spent $8 billion on the Princeton plant since breaking ground in 1996, Toyota said.
The new projects’ figures represent early estimates and could change as they move forward.
Incentives aren’t the only factor
Rosenberg praised the Indiana General Assembly for passing legislation that allows the state to offer sales tax exemptions as a lure for new businesses. Both Amazon and Google will receive such boosts, and the Amazon project could receive up to $100 million in additional credits based on various incentives.
But Rosenberg stressed tax breaks are only part of the equation as the state looks to compete internationally.
“We don’t have to have the highest offer because we bring the university partners, the state and local governments, utilities — everyone around the table to make sure that company has what they need,” he said.
The Google project, for example, includes partnerships with Ivy Tech Community College on a new job training program and Indiana Michigan Power to bring clean energy resources to the local grid.
Recruiting new industries
Rosenberg said tech recruitment has been a particular focus for the IEDC, as Indiana is looking to provide an “ecosystem” for these companies to thrive off one another. The state’s semiconductor facilities will provide the materials needed for these new data centers, he noted.
Recruiting new business takes anywhere between six months to several years. Zoning, road construction, utilities and more need to be worked out ahead of time.
The IEDC has been on a hot streak, Rosenberg said. During the agency’s first 11 years, it secured just under $50 billion in new projects. It has now pulled in more than $71 billion since the beginning of 2022.
In the first four months of 2024, $20.68 billion has been pledged to projects in Indiana — the most for a quarter since IEDC’s founding in 2005.
‘Strong partners for the Indiana economy’
“The key is that these investments represent long-lasting and continued commitment to being strong partners for the Indiana economy,” said Andrew Butters, an associate professor of business economics and public policy at Indiana University’s Kelley School of Business.
Large companies came out of the pandemic looking to reorient their supply chains, Butters said, and some states have reaped the benefits of projects that might have previously moved overseas.
Indiana has been able to compete by selling its location, workforce, labor force participation in addition to offering incentives, Butters said.
“I would not be shocked to see more of these as the state attempts to transition toward more high-tech and high-skill industries,” Butters said.
Contact Rory Appleton on X at @roryehappleton or email him at [email protected].
6 races to watch in the Indiana primary election
The first openly competitive contest for the Republican gubernatorial nomination in a generation will end with Tuesday’s primary election, as will crowded races for several open congressional seats.
The primary won’t officially decide any political race — only the Nov. 5 general election can do that. But Republicans hold major advantages in statewide and many district-level contests, and who secures which nominations will go a long way toward deciding who may lead the state in the years to come.
>> Related: How does voting by political party work in Indiana?
Here are six key primary contests to watch on election night.
Governor
The race to be Indiana’s next chief executive has been perhaps the most noteworthy of the election cycle, with six Republicans bringing a variety of experience and outsider credentials to the competition.
Sen. Mike Braun has led in the polls from day one, including running up a 34 percentage-point lead in an April State Affairs/Howey Politics Indiana survey.
The other five candidates are: Lt. Gov. Suzanne Crouch, former Attorney General Curtis Hill, Indianapolis mom Jamie Reitenour and two former state secretaries of commerce in Brad Chambers and Eric Doden.
The winner of Tuesday’s Republican primary will face Democrat and former state Superintendent of Public Instruction Jennifer McCormick, who will advance for her party unopposed.
Republican candidates spent tens of millions of dollars in an attempt to stand out in their crowded pack. The primary race also featured four televised debates, including a chaotic final display on April 24.
U.S. Senate
Two Democrats are vying for the chance to replace Braun in the U.S. Senate: Former state Rep. Marc Carmichael and Valerie McCray, a clinical psychologist.
Carmichael has outspent McCray in the race by a margin of nearly $63,000 to $15,000.
Both are attempting to become the state’s first Democratic senator since Joe Donnelly’s election in 2012.
Rep. Jim Banks is running unopposed in the Republican primary.
3rd Congressional District
Banks’ entry into the Senate race leaves his seat in Congress open, and a bevy of Republicans are seeking to replace him: Grant Bucher, Wendy Davis, Mike Felker, Jon Kenworthy, Tim Smith, Marlin A. Stutzman, Eric Whalen and Andy Zay.
State Affairs has identified Stutzman, a former congressman; Smith, a self-funding former Fort Wayne mayoral candidate; and Davis, a former Allen County judge, as candidates to watch in the crowded race.
Kiley Adolph and Phil Goss are running against one another in the Democratic primary.
5th Congressional District
After initially deciding against another run, Republican Rep. Victoria Spartz reversed course to seek re-election in 2024.
Eight other Republicans are running against Spartz: Raju Chinthala, Max Engling, Chuck Goodrich, Mark Hurt, Patrick Malayter, Matthew Peiffer, L.D. Powell and Larry L. Savage Jr.
Goodrich, a member of the Indiana House of Representatives, has spent more than $2 million on TV ads as he seeks to unseat Spartz, according to AdImpact.
Two Democrats, Ryan Pfenninger and Deborah A. Pickett, are on the ballot.
6th Congressional District
Seven Republicans are attempting to replace retiring Rep. Greg Pence: Jamison E. Carrier, Darin Childress, Bill Frazier, John Jacob, state Sen. Jeff Raatz, Jefferson Shreve and state Rep. Mike Speedy.
Shreve, who ran unsuccessfully for Indianapolis mayor in 2023, has spent nearly $4 million — predominantly through TV advertising — in his bid.
Cynthia Wirth, whom Pence defeated by 35 percentage points in 2022, is running unopposed in the Democratic primary.
8th Congressional District
Republican Rep. Larry Bucshon is also retiring, and a dozen candidates in both parties are seeking to fill his seat.
On the Republican side, former Rep. John Hostettler, state Sen. Mark Messmer, former President Donald Trump White House staff member Dominick Kavanaugh and frequent Bucshon primary challenger Richard Moss are each making a push.
Fellow Republicans Jim Case, Jeremy Heath, Luke Misner and Kristi Risk are also running but trail the above pack in campaign spending.
Four Democrats are also seeking a nomination: Erik Hurt, Peter FH Priest II, Edward Upton Sein and Michael Talarzyk.
Contact Rory Appleton on X at @roryehappleton or email him at [email protected].
State Republicans keep spending to protect House incumbents in primary
House Speaker Todd Huston expressed confidence Tuesday that Republican House members will prevail over challengers in next week’s primary. Nineteen of the 63 House Republicans seeking reelection this year are facing primary races. Those challenges have been lower-key than two years ago when about two dozen candidates seized on COVID-19 discontent and other issues in …