Indiana Medicaid will be underfunded by $1 billion

Dec. 23—On TDec. 19, during the State Budget Committee meeting, it was revealed that Medicaid will be underfunded in Indiana by roughly $1 billion.

Rep. Gregory W. Porter, D-Indianapolis: "In recent years, the Medicaid forecast has usually been somewhat on track and, if anything, over forecasts what is needed when it comes to the State General Fund appropriation. This program is matched by the federal government at around 65%, meaning for every dollar spent on Medicaid, the federal government contributes about 65 cents.

"This underfunding of such a critical program is an unfortunate surprise that was hidden from the General Assembly until the last minute, and now leaves the Medicaid program to scramble to figure out which programs they are going to have to cut. Several Medicaid programs—including Applied Behavioral Therapy for autism and pediatric dentistry—are already not receiving adequate compensation. These programs are vital to improving public health outcomes for Hoosiers.

"Medicaid is a life-sustaining program for so many Hoosiers across the spectrum of years. From prenatal care to the eldest of our citizenry receiving services in home and community-based services, millions of Hoosiers depend on Medicaid to receive health care. This is a gross injustice for vulnerable Hoosiers.

"I'm at a loss on how such a substantial and substantive error was not caught, especially considering Indiana avails itself of one of not the premier actuary in the nation in the field of providing Medicaid estimating services for our state along with many states throughout the country. We need to ask why we didn't receive this information prior to July 1st of this year, when the State Budget Agency reverted $700 million to the General Fund at the close-out of the budget. Was the State Budget Agency not aware that there was no money that could or should have been reverted?

"I would like to say for the record that the House Democratic Caucus has often protested against the reversion of money intended for Medicaid for uses other than what it was appropriated for. Further, we have also contested and questioned why other money intended for Medicaid has been repeatedly sent or diverted to non-Medicaid activities such as funding the Hepatitis-C remediation lawsuit program at the Indiana Department of Corrections or supplementing the 2021 Department of Corrections medical services program. I am not questioning the need for funding these programs; however, I am questioning the diversion of Medicaid dollars to non-Medicaid programs when the state had over a $3 billion surplus at the time of the diversion.

"This is a stark reminder that we must protect Medicaid to the best of our ability as a state. Let's not make the cuts on the backs of those receiving services or our providers. Let's rise to the challenge and do the following:

"In fiscal year 2024, we must use the approximated $620 million in the Medicaid reserve to backfill the missing money and forestall cuts, as well as any additional money that we need to take from our approximate $2 billion surplus. After fiscal year 2024 closes, we need to take all of the remaining dollars needed to close the funding gap from the hundreds of millions of dollars that will most likely be reverted and use those dollars to eliminate any remaining 2025 Medicaid funding gaps.

"A long-term way to tangibly protect Medicaid is to follow what Al Gore called for to secure Social Security funding going forward. As a presidential candidate, he called for a 'lock box' that would put all Social Security dollars not needed into a Social Security savings account. We need to get a 'lock box' for Medicaid in the future and mandate that any and all money not needed for the Medicaid appropriation be placed in the Medicaid Reserve, safe from reversion and diversion.

"Lastly, every dollar that is not spent at the state level leads to about $2 not being provided as match for Medicaid programs. We cannot and should not subtract $3 billion from our health care safety net infrastructure. This should be the clarion call for the General Assembly when session begins in January.

"As they say, 'let's get it done.'"

Gov. Eric J. Holcomb: "I am pleased to see overall general fund collections are expected to continue their solid growth. Today's revenue forecast shows the strength of Indiana's employment landscape. Individual income tax collections, in particular, are expected to grow at a healthy pace even with the rate reductions taking effect January 1, which will benefit Hoosier taxpayers.

"The Medicaid forecast reveals there is work to be done. We have begun a deep dive to understand the factors driving the spending increases and what is causing the unanticipated growth. In the meantime, we will be able to mitigate the fiscal impact while continuing to deliver needed services thanks to a healthy reserve."

Sen. Ryan Mishler, R-Mishawaka, chair of the Senate Committee on Appropriations: "Senate Republicans and other Republican leaders at the Statehouse have consistently advocated for fiscally responsible policies that maintain healthy reserves so our state can withstand unforeseen circumstances. Though we are projecting revenues to come in lower than in April and are projected to spend more on Medicaid than we expected, our reserves will enable us to weather this shortfall and protect taxpayers.

"However, I continue to have serious concerns about the increasing rate of our state's Medicaid spending and its impact on our state budget, and I will be monitoring this issue closely as we go forward."

Indiana Democratic Party Chair Mike Schmuhl: "Today's report shows Republicans underfunded Medicaid by over $1 billion, a program that one out of every four Hoosiers rely upon. Twenty straight years of Republican failure has put Hoosier families in this position. We should be making direct investments in the future of our state to build a stronger workforce, give every student a world-class education, expand child care access, and protect healthcare services in every corner of our state. It's time for Republicans' unchecked power to come to an end and for the priorities of everyday Hoosiers to be put front and center."

Rep. Ed DeLaney, D-Indianapolis: "This is shocking. Due to mismanagement, Medicaid is being underfunded by $1 billion. Let me say that again: $1 billion. The lack of funding isn't due to a decision of the legislature. It's thanks to accounting errors and fund mismanagement by the Family and Social Services Administration (FSSA).

"Where's the oversight? How is it that $1 billion was misreported? Indiana prides itself on its fiscal policy, but we're doing something wrong. We passed a budget that was based on estimates that were off by a billion dollars.

"The state surplus will now be below 10%. We need to understand how this can happen. 20 years of one-party rule leads to this kind of ineptitude."