Lawmakers have a herculean task: reduce Medicaid growth while still helping Hoosiers

K-12 spending in Indiana for years has been 50% of the state budget. But in the current biennial spending plan, that dropped to 47% as the Medicaid portion grew. (Getty Images)

It’s clear that state lawmakers will address exploding Medicaid costs in the upcoming legislative session. It could mean making it harder for elderly Hoosiers to protect their assets, reexamining expansion coverage for working adults or cutting benefits.

But I wanted to make sure we remember there are human beings behind those numbers.

Some have a misperception that those on Medicaid — a state-federal health insurance program for low-income people — are fleecing the state for benefits they don’t deserve.

The fact is many are just people who have medical needs beyond their means. That’s certainly the case for Jim Densmore. He was a hard-working, full-time data policy analyst in his early 60s when he suffered a catastrophic stroke.

Several years later he is still partially paralyzed, learning to walk again and struggling to cover his medical needs with social security. He is on a waitlist for Medicaid help.

Many Hoosiers like Densmore need help. But I also acknowledge that fiscal concerns about Medicaid are legitimate and can’t be ignored.

The numbers

As of last month, 1.96 million Hoosiers are on Medicaid, which has dropped since the pandemic.

The total tab for the 2024-2025 fiscal year is about $26 billion, including both federal and state dollars. The state portion alone is $8.2 billion.

Elderly and disabled Medicaid beneficiaries make up roughly 33% of the overall population but account for 94% of expenditures — making their health care more expensive than the average user.

K-12 spending in Indiana for years has been 50% of the state budget. But in the current biennial spending plan, that dropped to 47% as the Medicaid portion grew.

Growth has led the Family and Social Services to make changes to coverage and move to a managed care system for long-term care that state officials hope will save money.

So, how do lawmakers curb the growth trend? Some of it relates to national health care policy and growth in costs overall. And a recent lawsuit suggests fraud is also a problem.

House Ways and Means Chairman Jeff Thompson said everything is on the table. When crafting the budget in 2023, he told people behind the scenes that, by 2030, Medicaid would eat up all the state’s new revenue.

“And I was wrong … because it’s going to be sooner than that,” Thompson said this week at a budget panel.

Sen. Ryan Mishler, who heads the Senate Appropriations Committee, has been beating the drum about Medicaid growth for several years. He said that, in the last budget, the program grew by $2.3 billion. A mistaken forecast meant another $900 million.

But he said legislative action doesn’t necessarily mean cutting benefits.

Sheltering assets

“I think we have to look at eligibility for nursing homes. I mean, I know it sounds bizarre, but there’s millionaires going on Medicaid into nursing homes, and that’s got to stop,” Mishler said.

He noted the look-back period was extended from three to five years to try to ease that issue but said lawmakers might have to go further.

“I think there’s a lot of things we have to look at, and some changes have already been made, but I think we’ll have to do some changes legislatively as well. The last thing we really want to do is cut benefits.”

Sen. Travis Holdman, R-Berne, also has concerns about older citizens sheltering their assets in trusts and using other legal maneuvers.

He spoke to a small group of Hoosiers in a video posted to YouTube, in which he said “Medicaid is going to eat us alive, folks, if we’re not careful.”

Holdman said the biggest piece is long-term care for the aged. He noted if you put everything in a trust and get past five years before needing long-term care, then you don’t have to use those assets to pay for your own care. Instead, Medicaid steps in to pay for at-home and nursing home care.

He acknowledged it might not be popular to address the loophole but that it might be addressed next session.

“There’s nothing political, nothing in our DNA, nothing that says when you die you get to leave everything to your children. I think the bootstrap way of good Hoosier government, good Hoosier standards are: you pay your own way,” he said.

This is just one part of what promises to be a complex, even painful discussion as lawmakers try to balance state fiscal concerns with providing health care to poor Hoosiers who have no other choices.