Andrea Hunley is a rookie Democrat from Indianapolis. Will she be heard in the Indiana Senate?
Andrea Hunley and her teenage daughter stared at the rock climbing wall. Its red handholds snaked more than 10 feet into the air, but for two amateur climbers, the distance may as well have stretched five times that.
“I'm really bad at it, but it’s also really good to try something new,” Hunley, 38, told State Affairs. “I think it’s important for my kids to see me do things that are hard — and continue to push through.”
Her two daughters were also a big reason why Hunley, a longtime public school principal in Indianapolis, recently acquired another title: state senator. Hunley is the first person to represent a newly created district that spans the heart of the city.
And so, on that trip to the North Mass Boulder gym in February, Hunley reached for the first handhold. Then the next. And the next, until she soon found herself atop the wall, peering at her daughter below.
OK, Hunley said. You can do it, too.
* * *
Hunley isn’t thinking about metaphors on the trip to the climbing gym. For her, it’s a typical Saturday: She and her husband Ryan simply taking their 12- and 14-year-old daughters on an active family outing. When it’s not a hike through a state park or a historical walk down Indiana Avenue, it’s rock climbing.
But if Hunley ever let a fear of failing stop her, she might still be an English teacher living a relatively quiet life. She may not have enrolled in a master’s program while pregnant with her second child, later stepping out during breaks to meet her husband in the parking lot to nurse their newborn. She may not have become principal of the sought-after Center for Inquiry 2 in downtown Indianapolis, quickly earning the nickname “BP” from one teacher (it stands for Baby Principal) before garnering respect and admiration from educators and parents over 11 school years.
And she certainly would not have dared to join a competitive state senate race against four other candidates, including someone backed by the Marion County Democratic Party.
So far, any fear of failing has been washed away from an even greater feeling of responsibility, particularly in education policy.
“It frustrates me that people are legislating on things that I do not feel that they fully understand,” Hunley told State Affairs. “If you walk into a school and you ask a teacher what the biggest issues in education are right now, they would say teacher pay, our teacher shortage and literacy.”
* * *
It was in 2020 when Hunley began visualizing the steps that would one day take her to the Indiana Statehouse.
At the time, Hunley’s home lay in the district of State Sen. Jean Breaux, a stalwart Democrat who has represented Indianapolis in the state Senate for more than 15 years.
Hunley decided she would convince Breaux to become her mentor. And then when Breaux retired down the road, Hunley would be ready as her successor. Hunley began following Breaux’s work more closely. She attended her events, watched for bills that she filed.
“I started shadowing her,” Hunley said, “without her really realizing it.”
Breaux, informed this week by a State Affairs reporter of the secret shadowing, laughed and said she had no idea.
“I'm honored, actually,” said Breaux, who describes Hunley as someone who fights for her values and for what she wants — even if it means taking on the county Democratic Party.
“They told her no. And she said, ‘Senator Breaux, when they told me no, that's when I decided I’m running.’ And I said, ‘You go for it then,’” Breaux said. “She’s tough. And she’s not a pushover.”
Hunley does not remember a time when she didn’t plan to eventually run for office. Her high school classmates in Fort Wayne even dubbed her as most likely to become the first woman elected as U.S. president.
She grew up learning from an engaged family. Back in 2003, her mom joined her aunt, who is a Catholic nun, in a drive to Washington, D.C., to protest the U.S. invasion of Iraq. She remembers the words on her mom’s sign: soccer moms for peace.
It was Barack Obama’s campaign for president, though, that drew Hunley into Democratic politics. Still in her early 20s, and working as a teacher at Ben Davis High School at the time, Hunley volunteered by staffing a phone bank at his Indianapolis office.
Curiosity led her to attend a Women4Change event in 2017 where former Indiana Lt. Gov. Sue Ellspermann, a Republican, spoke to a crowd of women inside an Indianapolis hotel ballroom. Women, Ellsperman said, typically need to be encouraged seven times before they finally decide to run for office, Hunley recalled.
“And so then she said, ‘I’m asking you to run. You need to run. You need to run.’ And she just said it seven times in a row,” Hunley said.
Micah Nelson, a friend and co-worker from school, attended the event with Hunley. She, too, had been considering running for office but that day clarified for her what should happen next.
“It was just clear through the conference that she should run for office and I would be happy to support her,” Nelson said. “We have a saying that strong women empower other women. I think that characterizes our relationship. We’re friends, we’re colleagues, we’re each other’s cheerleaders.”
Only one office interested Hunley, and that was state senator. She wanted a position that could shape education policy for Indiana. She’d maybe consider state representative but the two-year terms were too limiting.
So that’s why Hunley called her state senator, Breaux, in 2020. It was a step on her yearslong plan.
“And I know that my voice sounds like a 14-year-old,” Hunley said. “And she’s like, ‘Now who are you, honey? And how old are you? You want to do what?’”
But then came a shock in September 2021: Indiana Republicans, who were in charge of redrawing legislative districts following the 2020 census, changed the shape of state Senate boundaries in Indianapolis. Breaux’s district would now end northeast of Hunley’s home.
The new heavily Democratic district sat open for the taking.
* * *
Late one night, Hunley invited over two friends who know the tempo of the city’s politics. They agreed on one point: It would be hard for Hunley to win the Democratic primary.
The District 46 primary featured Kristin Jones, an Indianapolis city-county councilor backed by the Democratic Party who carried a fundraising advantage. The race also contained another strong candidate in Ashley Eason, who had experience running for another state Senate seat.
Hunley’s experience as an educator was undoubtedly valuable, said Laura Merrifield Wilson, a political science professor at the University of Indianapolis. That experience, however, is not always viewed in the same light as an elected position, she said. Hunley, after all, had never served in public office.
“But I think she either was just very bold or intuitive. She was willing to take that risk,” Wilson said. “She knew something that other people didn’t.”
Hunley confirmed to State Affairs what was rumored at the time: An awful lot of Democrats privately told her not to run.
“That’s what everyone told me,” Hunley said. “I mean, every single person told me that. Every single city councilor I talked to told me, ‘Don’t run. It’s not your turn.’ Even people who I’ve done a lot of work with and who I really trusted — even people who were in education and who I thought would be excited — they’re like, ‘Don’t do it.’”
Hunley ignored them. She announced her candidacy in November 2021.
One person who works within government affairs, though, cautioned that she lacked the financial support and it was going to be “really, really hard.”
So Hunley asked him: “Is this going to be white guy hard? Or is this going to be Black woman hard? Because I’ve only known hard.”
* * *
Hunley was still a baby in Indiana’s foster care system when her dad and mom found her.
“When she came to pick me up from the adoption agency, she says they handed her this naked baby with a dirty diaper on and she never put me down,” Hunley said. “And I feel like that is how my mom still raises me, like she has still not put me down, which I appreciate.”
Hunley grew up in Fort Wayne along with two siblings, both who were adopted, too.
Their parents were open about how their family came together. In Hunley’s childhood home hung a framed print from her parents: A prayer for my adopted child.
And her family celebrates her date of adoption — July 3, 1984 — as her special day, something more precious to Hunley than her birthday.
“I haven’t ever been a person who really gets excited about birthdays,” Hunley said, “because my parents weren’t there.”
Anyone who spends any time around Hunley can see how important her family is to her. Not only her kids and her husband Ryan — who she met while working on the high school newspaper — but her extended family.
Hunley’s parents, grandmother, sister and her sister’s four kids all live in Indianapolis now.
While taking classes in her master’s program, Hunley begged them to leave Fort Wayne to come help her. So they did, and they still gather for dinner at least once a week.
A few years ago, Hunley finally met her birth mother and half sister. She knew very little about them but was able to track them down.
“It was lovely to get to know them,” Hunley said.
Both visited Indianapolis for Hunley's swearing-in to the state Senate. At the ceremony, someone asked Hunley who stood with her. She worried about introducing her birth mother because Hunley believed it was her birth mother’s story to tell whenever she was ready to tell it.
So Hunley responded with something broad: This is my family.
Then the other woman spoke up: “I’m her birth mother.” It was a weight off Hunley’s back.
She still worries, though: Will her adoption be used as a weapon against people who, like her, believe in abortion rights?
* * *
Because of her progressive politics, almost no one expected Hunley to make a splash in the Indiana General Assembly, especially not this year.
She has advocated for gun control as a volunteer for Moms Demand Action. She’s a strong supporter of the teachers union. She believes Indiana is underfunding numerous public services, including traditional schools and health departments. And teachers, at a minimum, should start at a $70,000 salary.
In a legislative body firmly gripped by Republicans, how is a rookie Democrat from Indianapolis supposed to accomplish much?
She refuses to let partisan disagreements serve as excuses for inaction. For one, she understands the power of what she represents. She’s one of five Black people serving in the 50-member Senate, and one of just nine women.
Hunley also admits to being something of an “eternal optimist,” but she believes she will make a difference by building relationships with every legislator and by being true to herself.
She’s already gained a fan in State Sen. Michael Crider, R-Greenfield, who chairs a Senate committee where Hunley serves as the ranking minority member.
Crider told State Affairs he’s been impressed by Hunley’s thoughtful approach to the legislation she’s invested in. One example is Senate Bill 233, which would create a task force seeking to improve pedestrian and vehicle safety. The bill moved through the Senate — an uncommon feat for a freshman, particularly one in the superminority.
“Really, serving as a legislator is people skills on steroids, where you’ve got to be a person of your word and you’ve got to say what you’re trying to accomplish,” Crider said. “And so I think her personality and the way she carries herself is going to help her along in building that credibility that needs to happen if you’re going to be successful long term.”
She began working toward that credibility on Organization Day, the November kickoff to the 2023 legislative session that truly began seven weeks later. For veteran lawmakers, it’s a homecoming; for freshmen legislators, it’s the calm before the four-month storm.
On that day, Hunley stood inside the state Senate chambers. She stopped Republican lawmakers to introduce herself, all direct eye contact and handshakes and smiles. She said hi to their kids and grandkids.
Then when she spotted Lt. Gov. Suzanne Crouch, a Republican on the verge of announcing her run for governor, Hunley hopped to her and asked to take a selfie. Both smiled for the phone camera.
Earlier in the day, Crouch had leaned over to Hunley and said: ‘‘I am so glad we have another woman in the Statehouse.”
“Like, that’s really kind,” Hunley told State Affairs. “Here’s what I know: When women lead, regardless of party, when women lead, we really work hard to listen and to build coalitions and consensus and really make change. And so I have been really impressed by the work that she’s done. I’m looking forward to her run for governor.”
Crouch is facing Eric Doden and U.S. Sen. Mike Braun in the 2024 Republican primary for governor.
But Hunley’s interests in working across party lines may have a limit. Asked about the prospect of a Gov. Braun in 2024, Hunley’s words were less enthusiastic.
“Oh, heaven help us all,” she said. That’s because Braun made comments last March that suggested the legality of interracial marriage should be determined by states. (Braun later said he misunderstood the reporter’s question and walked back those comments.)
Hunley’s husband is white. Her parents are also in an interracial marriage.
“No. I do not have any nice words that don’t have four letters in them to say about that man,” Hunley said. “And so my mother has taught me to just keep my mouth shut when that’s the case."
* * *
In a legislative session that kicked off with talk of avoiding so-called culture war issues, the last few weeks have seen plenty of divisiveness.
Some of the fiercest debate occurred on Senate Bill 480, which would ban some health care options for transgender youth, and on Senate Bill 12, which would open up teachers and librarians to criminal prosecution over what’s contained inside school books and other education materials.
Hunley spoke against both. She was perhaps at her sharpest when questioning another freshman lawmaker — State Sen. Tyler Johnson, R-Leo-Cedarville — about Senate Bill 480. She started by saying the two of them were on a shared journey as new senators, and she thanked him for representing some of her family members who live in the area of her hometown, Fort Wayne.
But then she dove in. She noted the bill sought to limit the intake of estrogen and progesterone, two hormones used in birth control pills. As a mom with daughters who might one day need the medicine, Hunley wanted to ask about the bill’s impact on her eventual discussions with doctors.
So Hunley stared at Johnson and asked: “Do you think if I’m sitting in that doctor’s office deciding which hormone is more suited for my child, that the state should make that decision, or that I should make that decision?”
Johnson did not answer her question, instead staring at his lectern while saying: “And I hear that you’re wanting to put kids through this process where they really have these irreversible, unproven, life-altering procedures done to them, and we’re the only body that has this moral, medical and legal authority and obligation to protect kids from this.”
It was language he repeated several times under questioning that day.
Hunley appeared to be confused by the response. She followed up: “So do you think having progesterone is life-altering? Like I’ve not been taking progesterone for many years, like is my life completely altered because I was taking it temporarily for a period of time?”
Johnson again did not provide a specific answer, instead saying: “I'm not going to comment on your specific case.”
The bill easily moved through the Republican-controlled chamber, but Hunley’s advocacy and questioning stood out to State Sen. Greg Taylor, D-Indianapolis, who heads his party’s caucus in the Senate.
“Senator Hunley has a way of professionally telling you you’re wrong, and I think it comes from being a teacher,” Taylor told State Affairs. “Being able to tell somebody, in a nice way, that you don’t know what you’re talking about. And she’s done that several times.”
* * *
Back in 2021, at the start of the campaign, Hunley's daughter Addison dreaded talking to people.
Walking up to strangers’ doors to share her mom’s campaign literature? It was tough for the then 13-year-old.
“I could never just go in front of someone and ask a question,” Addison said.
Hunley, whose campaign centered on visiting as many voters’ homes as possible, continued to bring her. And something happened: As the weeks went by, Addison’s fears began fading.
“Continuing to knock on doors allowed me to, like, open up as a person,” Addison said. “It’s really helped me grow throughout my school experience.”
And back in February at the Indianapolis climbing gym, after watching her mom scale the wall, Addison reached for the handhold, and climbed.
Contact Ryan Martin on Twitter, Facebook, Instagram, LinkedIn, or at [email protected].
Header image: State Sen. Andrea Hunley, D-Indianapolis, stops for a portrait during a family outing to the North Mass Boulder climbing gym in Indianapolis on Feb. 11, 2023. (Credit: Ryan Martin)
Correction: This story has been updated to reflect that the protest of the U.S. invasion of Iraq was in 2003.
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Treasurer Elliott explains his plans to keep the new ESG policy from becoming a ‘witch hunt’
He calls himself the “nerdy cowboy” — wearing boots with his suit and winning his election, in part, by driving his truck to far, less-populated corners of the state. State treasurer Daniel Elliott, a farm owner from Morgan County, took over the Indiana Treasurer of State office at the start of the year, but he’s …
Plans to turn junkyards and landfills into massive park take shape in southern Indiana
CLARKSVILLE — What once was undisturbed wildlife along the shore of Silver Creek now contains a trail of weedy gravel leading to a discarded mobile home. It’s the only thing left from a junkyard stationed among this patch of forested landscape.
“We call it the graveyard,” Vern Eswine, communications director of River Heritage Conservancy, said on a recent May afternoon. “The first thing you saw as you pulled into New Albany was all these trucks and buses and junk sitting here.”
Much has already been cleared, the latest steps in a process that began in 2016 to transform an unsightly mix of junkyards, landfills and other industrial properties into a massive park along the Ohio River in southern Indiana. Think hiking trails, kayaking and treehouses, but also the restoration of land and preservation of wetlands and waterways.
It’s called Origin Park, and Eswine is among an army of people who have been working — often behind the scenes, but increasingly out in the open — to ensure that the transformation takes shape. Hopefully sooner than later.
River Heritage Conservancy, the nonprofit group driving the change, is close to either acquiring or reaching agreements for about 430 acres. And it just received maybe its most important endorsement to date: The two-year budget passed by the Indiana General Assembly last month contained $37.5 million to accelerate Origin Park’s timeline.
The funding is key to a business plan at the center of Origin Park’s ambitions. It will pay for about half of the costs associated with building a 35-acre Outdoor Adventure Center that will house ziplines, climbing walls and manmade water recreation. The goal is to charge fees for access to that part of the park in order to pay for the conservation of the rest — not only protecting the wildlife but also ensuring free access to hundreds of acres of Indiana nature. And it’s just across the bridge from a city full of potential visitors in Louisville.
Plans for the Outdoor Adventure Center
Planners originally slated the Outdoor Adventure Center as maybe the third phase of the project. Work can soon begin, though, because of the cash infusion from the state.
“We basically push a lot of our deadlines way forward because of that,” Eswine said. “And now that’s totally jump-started our ability to actually start planning and permitting, just to actually start building this thing while we’re finishing phase one.”
The state’s spending on Origin Park is just one part of a larger investment into conservation and nature projects that have been celebrated by Gov. Eric Holcomb and legislative leaders in recent weeks: $30 million for new trails; $10 million to the President Benjamin Harrison Conservation Trust Fund; $5 million for ongoing storm damage cleanup at McCormick’s Creek State Park; and $1.9 million toward acquiring the land for the closed Minnehaha Fish and Wildlife Area. The list goes on.
Perhaps the most ambitious plan of them all, though, is Origin Park.
“We’re not going to own it, but in terms of setting aside property for the public, we’ll be making significant gains,” Holcomb told reporters following the passage of the state budget in late April. “I’m very pleased with the trails and park potential to keep our momentum going.”
Where Eswine stood next to the mobile home, at the northern end of the park, will one day become the Outdoor Adventure Center.
The plan for the Outdoor Adventure Center is modeled after Whitewater in Charlotte, North Carolina. A group from Origin Park visited there for inspiration, learning that it pulls in $2.5 million to $3 million in revenue each year, Eswine said.
The company that built Whitewater is going to build Origin Park’s version, Eswine said. Projections show it will draw up to $3 million in revenue each year.
In materials shared with Indiana lawmakers, planners said the park will also drive at least $8 million in new spending to nearby towns.
The goal is to open the Outdoor Adventure Center by 2028.
But that’s just a small slice of the overall plan. Other parts of the park are already open, with a lot more on the way.
Contrasts of abandonment and restoration
Just downstream from the mobile home is a new entry point into the water called Croghan Launch, which opened to the public in March.
A paved ramp gives way to a place to drag canoes and kayaks into Silver Creek. The creek is deep and wide enough for anglers, too. On a recent May afternoon, a man who had launched his motorized boat at a different point still waited near Croghan, fishing rod in hand. The creek serves as a tributary into the Ohio River.
On the other side of the boat launch, however, a landfill looms. Someone might think it’s just a hill, but it’s still there, towering beyond stretches of trees and grasses.
What will happen with some of the spaces remains to be seen. At one landfill, for example, park planners watched for years as a once-level horizon grew in height, driven by trucks that were dumping in heaps every day. That finally stopped about four months ago when the conservancy group acquired the land.
“You can’t really do anything with this. You can be on it, but you can’t dig into it,” Eswine said about the landfill. “There’s plans for it, but we’re not really dealing with that part right now.”
At one of the now-closed junkyards, the debris is mostly cleared but what remains is a barbed-wire fence running along a concrete pad where a semi-truck trailer has been sitting for what seems like decades by the look of it. But almost as if to prove Origin Park’s mission about the importance of reclaiming this space for wildlife, a wild turkey trotted just beyond the trailer on its way to a patch of trees.
Moments like that are common right now. The park is a study in contrasts between abandonment and restoration. It’s not just wild turkey surviving among the vestiges of a junkyard; within some draining wetlands live beaver that recently dammed Mill Creek, and soaring above a landfill is a red-shouldered hawk.
The lands are home to flying squirrels too, Eswine said, and more than 150 types of birds. A late May hike revealed the unmistakable calls of eastern wood-pewee and Carolina wren, in addition to much of the backyard fare typically found in Midwestern cities, such as American robins, blue jays and northern cardinals.
A 2019 ecological report also identified 20 species of mammals, including four types of bats, and several amphibians, reptiles and insects that have found homes amid the emerging wilderness.
Elevated walkways and protecting wetlands
What’s unique about much of this land is that it’s within the flood plain. Rather than fight the occasional floods, Origin Park’s planners are incorporating it into the design. Elevated walkways will allow visitors to have access year-round.
“It will literally be in the trees,” Eswine said. “When we started developing this park, we embraced the fact that it’s going to flood more often than not.”
Another goal is to add protections for the wetlands contained within Buttonbush Woods.
And on the southern end of the property, which stretches along the banks of the Ohio River, much of the land is eroding into the waters below. It’s so bad that a riverside road has been closed to motorists because large pieces of concrete have snapped like a Hershey bar. Planners are hoping to bring in a partner organization to slow the erosion.
Meanwhile, Origin Park is being supported by the Environmental Protection Agency. An $800,000 grant, announced last week, will help pay for cleanup of polluted and industrial sites inside the park.
Eswine, who runs New Albany-based The Marketing Company and has lived in southern Indiana for almost all of his adult years, said he is witnessing a revival among Indiana’s river communities, where downtowns are booming and festivals are filling with visitors.
And he sees Origin Park, which is aptly named to acknowledge that it’s linked to a new beginning, as inherently connected to the region’s revival.
“There is a lot of history along these banks, other than just the formation of Clarksville, New Albany and Jeffersonville,” Eswine said. “Wildlife and civilizations have called this home and we’re trying to honestly get back and protect as much as we can.”
Contact Ryan Martin on Twitter, Facebook, Instagram, LinkedIn, or at [email protected].
The debt ceiling, a lack of integrity and the possible fallout
In the coming days, the United States again confronts our statutory debt ceiling. This is a 1917 law (increased every year or so) establishing a cap on federal government debt. The law itself runs up against the 14th Amendment to the Constitution, which was intended to reassure bondholders that we pay our Civil War debts. That means the debt ceiling may be unconstitutional, giving the Biden administration the option of simply printing money to cover the debt.
The debt ceiling law is politically convenient because it offers an opportunity for members of both parties to engage in a bit of political theater. It is important to remain focused on the real issue of debt rather than the political shenanigans. I expect some sort of compromise, but that is more hope than actual analysis.
Neither the Republicans nor Democrats have performed satisfactorily on this ballooning public debt. The GOP showed zero concern about debt when a Republican president was in office. Not a single Hoosier Senator or member of Congress voted against the Trump administration’s Tax Cut and Jobs Act (TCJA) or the CARES Act. These bills fall in first and third place in terms of recent contributions to the debt.
The Democrats, who voted almost unanimously against the TCJA, voted unanimously for the American Rescue Plan, which came in second place for debt loading. There’s not a clean hand in Congress on the current debt. Insofar as I can tell, the sole Republican speaking honestly about the GOP’s profligate history is Mike Pence.
As I wrote at the time, each of these large spending bills had some merits, and there remain reasonable arguments for each. The problem is that so many now in office want to remake themselves as thoughtful budget hawks, but when it mattered, they were nothing of the sort. It is the lack of integrity that highlights the real problem. No one can be honest about the root of the problem.
In 1946, right after winning World War II, our debt-to-GDP ratio stood at 119%. Today it sits at 121%, down from 127% two years ago. But, there is no peace dividend. Our spending problems are not about our military spending, which is today at near historical lows as a share of GDP.
The big-budget items driving our deficit are spending for Medicaid, Medicare, Social Security, and federal government and military retirements. And yes, I know Social Security and Medicare are supposed to be separate budget items. They are not.
If we cut all foreign aid (including Ukraine defense), housing subsidies, environmental remediation, research, discretionary education spending, immigrants, parks, and clean air or water, we wouldn’t make a dent in our debt. Altogether, these spending items wouldn’t even cover the interest payments on our debt.
In order to reduce our debt in the coming decades, we are going to have to do two very unpopular things: raise taxes and cut spending. We are going to have to do more of both than almost anyone really imagines.
On the revenue side, we are going to have to sunset the TCJA and raise marginal income tax rates on middle- and high-income households. By middle, I mean everyone who pays an income tax. Also, we probably must extend the Social Security taxes (FICA) across all earned income types.
On the spending side, we are going to have to extend retirement age, probably to 70 years or so for younger workers. We won’t have to means-test benefits, because we will have higher taxes on more affluent households. But, we will reduce retirement benefits for younger workers, and end the practice of increasing Social Security for older adults who work. We are also going to have to reduce the rate of inflation adjustments for Social Security recipients.
If all of that sounds distasteful to you, too bad. What I have just outlined is probably the easiest resolution to our current debt problem. But, what if we choose a different path?
We could cut defense spending. I’d vote to eliminate the entire Marine Corps. If we did that, it would only take another 117 years to eliminate today’s debt, though that wouldn’t come close to balancing the current budget. So, we’ll have to cut something else. If we cut our foreign aid, we could pay off the current debt, not counting interest, in 600 years. Alternatively, we could reduce overall Social Security costs by 10%, through later eligibility, and extend FICA taxes to a further 10% of earnings, and retire the debt in 60 years.
It is probably wise to ignore the political talking points about our debt and focus on the arithmetic. Still, many might wonder what if we ignore all this and blow off our debts, and default. After all, many Americans declare bankruptcy. Well, that step would be somewhere between a crisis and a full-blown economic catastrophe.
The United States borrows money like every other government does. We have treasury bills notes, bonds, inflation-indexed securities, floating rate notes, domestic series bonds and the like. Altogether this is about $31.5 trillion in borrowing. About 13 cents on every federal tax dollar collected goes to paying interest on these debts (or about twice the annual cost of the entire Marine Corps).
The reason the U.S. can borrow all this money is simply that everyone believes we will pay it back. Our creditworthiness ensures a reasonably low rate of borrowing and keeps our currency as the world’s reserve currency. So what happens if we default?
Well, there will be a flight away from U.S. securities. This will lead to financial markets devaluing our bonds, leading to higher borrowing rates on futures. Since our bonds turn over all the time, that would mean an almost immediate increase in the share of taxes we have to spend to service the debt.
If the U.S. defaults on our debts, the stock market will decline precipitously. It would strengthen China and Russia, while weakening the U.S., perhaps sliding our economy into recession along with most of our allies. The worst forecast I have seen suggests that an extended default would result in a Great Recession-level shock to the global economy.
I think this is an unlikely scenario, only because the domestic political backlash would be so severe we will come to some compromise. But, I’m a notoriously bad political forecaster. Rather than risking default, we’d be wise to heed the rare wisdom of then-President Donald Trump’s advice on the debt ceiling: “That’s a sacred element of our country. They can’t use the debt ceiling to negotiate.”
Michael J. Hicks, Ph.D., is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. He can be reached on Twitter @hicksCBER.
Header Image: Debt ceiling (Credit: Douglas Rissing / Getty Images/iStockphoto)
Thousands of Hoosiers will soon lose Medicaid access, but the cost of the program is still increasing
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.
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].