The Indiana Family and Social Services Administration wants the federal government to give it the authority to roll back Medicaid eligibility for the state’s expansion program. The agency’s top official said it would need that authority to afford the program under recent changes proposed by the U.S. Senate.
Indiana currently uses an up-to-6 percent provider tax on hospitals to cover the vast majority of its contributions to fund the Healthy Indiana Plan, or HIP.
The U.S. Senate proposed lowering the cap on provider taxes from 6 percent to 3.5 percent.
FSSA Secretary Mitch Roob said Indiana is not asking to keep its higher cap.
“What we are asking for is, if the federal government finally decides to get its house in order, it act responsibly,” Roob said. “They give us, both the executive and legislative branches of this government, the ability to continue to be effective fiscal stewards. And currently we would not have that authority under the current law.”
Roob said Indiana would have to “significantly alter” HIP under the new federal proposal. Without the Hospital Assessment Fees, he said the state wouldn’t be able to afford it.
“This doesn't happen inside the upcoming biennium, but in the out years, it's a fiscal issue for us,” Roob said.
Gov. Mike Braun said in a statement he supports the efforts to reduce spending and promote “responsible governance” at the federal level.
“However, flexibility in managing Indiana’s HIP program will be essential for the state moving forward, especially if we are required to take on more of the financial obligation,” Braun said. “This will require a hands-on approach to updating and maintaining Indiana’s Medicaid system that only Hoosiers can provide.”
Braun said his administration looks forward to “continuing to partner with the Trump administration.”
Roob also said the federal government is likely not going to approve a significant part of the state’s new funding structure for the HIP program.
During the legislative session, state lawmakers approved a new plan that would increase Indiana’s low Medicaid reimbursement rates by introducing a new provider tax on insurance companies. The tax is meant to be a major pillar of the state’s new funding structure for the Medicaid expansion program.
“The Centers for Medicare and Medicaid Services, subsequent to the end of the General Assembly, has made clear to me that they are disinclined to approve that in its current form,” Roob said.
Roob said the federal government’s concern is that it’s structured to “just” bring additional money back to the state.
“Let’s remember: It is no different than what California, what New York, what Illinois, what Michigan, what Ohio and what Kentucky are currently doing,” Roob said. “If it's good enough for them, it's good enough for us. If it's not good enough for us, it should not be good enough for them.”
The tax on insurance companies is projected to raise about $865 million to fund the HIP program, according to state Medicaid officials. Roob said FSSA is still negotiating with CMS to move forward with the tax and other changes to the state’s funding structure, but said the tax is unlikely.
“CMS has submitted a set of rules that would prospectively preclude this tax from going into effect,” Roob said. “They have told me, because it is a new tax, it will take them approximately a year to work through the issues that surround this tax so they are essentially buying themselves a year to make our tax and other similar taxes no longer legal.”
Join the conversation and sign up for the Indiana Two-Way. Text "Indiana" to 765-275-1120. Your comments and questions in response to our weekly text help us find the answers you need on Medicaid and other statewide issues.
Several lawmakers raised concerns about the changes and what they mean for Hoosiers.
Sen. Fady Qaddoura (D-Indianapolis) criticized the proposed cuts and policy changes from federal lawmakers.
“I'm extremely frustrated with the federal government,” Qaddoura said. “They are spending like drunken sailors, $37 trillion worth of deficit that we have over the long term. Over $12 trillion in funding global wars over the last 20 years. But we can't fund and feed America's first agenda of feeding children, and covering Medicaid, and funding our schools.”
Qaddoura raised concerns about the possibility of premiums, or monthly payments Medicaid members pay, being reintroduced into the HIP program. He said he saw the implementation of the premiums when they were introduced the first time when he was an FSSA employee.
“This model of skin in the game never worked, and we're doubling down on the same policy that never worked,” Qaddoura said. “It costs more administratively to ask people to pay few dollars to get their health and it did not correlate statistically to any improvement in health outcomes.”
Roob said premiums are a part of discussions at the federal level.
“The federal law is going to say that the individual, who is an able-bodied adult, has to pay a premium.” Roob said. “While you and I can agree to disagree on this, neither of our opinions are particularly valid, because bills are being written in Washington, D.C.”
Qaddoura said he’s worried about the lack of emphasis on health outcomes in changes being made at both the state and federal level.
“I would not advocate for any solution that would bust the budget or make the Medicaid program unsustainable in the foreseen future,” Qaddoura said. “However, similar to a few years ago, when we talked about HIP 2.0, we're still not focusing — at least publicly, I did not receive any information or on the website of FSSA or anyone else that I'm aware of — any discussion about health outcomes.”
Qaddoura said the answer any time there is a fiscal issue with Medicaid is to “shrink the program” which could mean waitlists for programs or new requirements for eligibility.
“What happens when we go to the '90s era and now we have hundreds of thousands of people who are uninsured?” Qaddoura said. “Hospital systems will be burdened by that. People are not going to be able to be healthy, to work. It's going to impact education. It is going to impact the workforce.”
Similar to concerns raised by experts and providers, Qaddoura said that will could lead to bigger issues elsewhere in Indiana.
“It's like a balloon. When you squeeze it from one side, the problem is going to pop from the other side,” Qaddoura said.
Roob said the state needs to address the cost issue quickly.
“We have to find a better, faster and — most importantly — a cheaper way to deliver care,” Roob said. “Our current care model is not a sustainable care model.”
Roob said FSSA is trying to ensure health outcomes are a factor that’s considered, but he said it’s not the driving force behind the increase in Medicaid costs.
“Our expense growth is in, in my opinion, over utilization of the services that we have got to constrain and we need a cheaper care model,” Roob said.
Qaddoura also criticized Roob and other state officials for positioning fiscal questions about Medicaid as a strict decision between spending on education and health care.
“Spending money on Medicaid is not taking money away from public education,” Qaddoura said. “Last time I checked, we passed a budget of $40-plus-billion. There are many other line items in the budget that I disagreed with over the last 24 months that could fully fund this problem.”
Qaddoura said there’s overlap between the two since Medicaid funding can affect student health which can affect student performance. He said Medicaid and education should both be priorities for Indiana and there shouldn’t be a “trade off” between the two when it comes to funding.
Abigail is our health reporter. Contact them at aruhman@wfyi.org or on Signal at IPBHealthRuhman.65.