375,000 Hoosiers to lose Medicaid coverage once COVID-19 emergency ends

The Republican chief executive recently joined 24 fellow GOP governors in a letter urging Democratic President Joe Biden to allow his COVID-19 public health emergency declaration to finally expire in April 2023 and not be renewed again.

Alternatively, Congress could use its power of the purse to cut off pandemic-related funding even if the emergency remains in effect.

“While the virus will be with us for some time, the emergency phase of the pandemic is behind us. We have come so far since the beginning of the pandemic — we now have the tools and information necessary to help protect our communities from COVID-19,” Holcomb said.

More importantly, Holcomb said ending the public health emergency once again will allow states to regularly investigate whether individuals enrolled in Medicaid health coverage continue to meet program qualifications, as well as enable states to drop those who do not.

Data presented Dec. 15 to the State Budget Committee show Indiana Medicaid rolls have swelled by nearly 800,000 lives during the pandemic to a projected April 2023 peak of 2.3 million lives, or 1 in 3 Hoosiers.

Medicaid in Indiana goes by a variety of names including the Healthy Indiana Plan, Hoosier Care Connect, Hoosier Healthwise, Medicaid Managed Care, as well as specialized programs for the disabled, institutionalized, nursing home residents, pregnant women and others.

No matter the name, each program jointly is funded by the federal government and Indiana, with the federal government generally picking up about 65% of the cost of health care for covered individuals, or 90% for Hoosiers enrolled in the Healthy Indiana Plan.

While the public health emergency remains in effect the federal government is paying an extra 6.2% of state Medicaid expenses, or about $540 million a year to Indiana, in exchange for states maintaining continuous coverage and not investigating eligibility or booting individuals who no longer qualify for Medicaid.

Holcomb said that mandate is keeping individuals on Medicaid longer than they need assistance and driving up state health care expenses, even after accounting for the extra federal funding.

“We know that a considerable number of individuals have returned to employer sponsored coverage or are receiving coverage through the individual market, and yet states still must still account and pay for their Medicaid enrollment in our non-federal share. This is costing states hundreds of millions of dollars,” Holcomb said.

Ironically, ending the public health emergency as Holcomb requests actually will further drive up Indiana Medicaid spending in the short-run because the 6.2% extra federal support will be reduced or eliminated as soon as April 1, 2023, if the public health emergency is allowed to expire or Congress cuts off funding.

Indiana Medicaid anticipates it then will take up to 12 months to identify and remove the 375,000 Hoosiers it believes no longer qualify for Medicaid, who will, in the meantime, continue using health services that cost the state more absent the extra federal share.

“We will start immediately looking and doing the redetermination process,” said Allison Taylor, Indiana Medicaid director. “That number (of Medicaid participants) will start to decline as soon as we hit go. But it will take 12 months to work through that volume of individuals. So we’ll see sort of an incremental step down each month.”

Altogether, Indiana Medicaid projects the state share of Medicaid services will jump 48% to $3.5 billion during the 2024 budget year that begins July 1, 2023, and grow a comparatively normal 5.9% to $3.7 billion in 2025 — even after removing ineligible Medicaid recipients.

Most of the increased state cost is due to the loss of extra federal aid and delayed collection of the Hospital Assessment Fee and Healthy Indiana Plan contributions. But increased managed care and nursing home costs, plus 2,300 annual Medicaid-eligible births tied to the state’s near-total abortion ban also will play a role, according to Rob Damler, a Milliman actuary working for Indiana Medicaid.

The additional Medicaid expense could consume a large share of the $1.6 billion in projected state tax-revenue growth over the next 30 months, leaving little new funding available for education, public safety, quality of life grants and other Hoosier wants and needs.

Though records show Indiana should have about $900 million in unspent Medicaid appropriations from the current two-year budget that could be carried over into the next one, since the spending plan enacted in April 2021 assumed the federal public health emergency already would be over.