‘Not a deadbeat’: House amends out cap on Medicaid plan, keeps work requirements

A House committee opted on Tuesday to remove an explicit cap on the Healthy Indiana Plan that would restrict enrollment to 500,000 people but kept the controversial work requirements, passing Senate Bill 2 on an 8-4 vote along party lines.

Nearly two dozen Hoosiers, many of them Medicaid recipients or health care providers, testified in opposition to the bill in addition to four supporters and two neutral speakers over three hours. The Healthy Indiana Plan, which covers the so-called "expansion population" in Indiana, provides health insurance for moderate-income Hoosiers. Many of the recipients are working though advocates presented conflicting numbers.

Emotions were high throughout the hearing, as conservative lawmakers defended the plan to add red tape and bureaucracy to the program against Hoosiers who were worried they'd lose their health coverage.

"I just want you to know that I'm not a deadbeat. And if it weren't for the Healthy Indiana Plan, I wouldn't be here," said Susan Brackney, a full-time freelance writer who lives in Columbus. "It has been life-saving. I worry a lot about what would happen if I didn't have it."

Brackney's chronic autoimmune disorder, rheumatoid arthritis, and treatment-resistant depression meant that she qualified as "medically frail," a specialized subset population included under the Healthy Indiana Plan, or HIP. The new bill includes quarterly checks on an enrollee's eligibility, which could disrupt her coverage because her freelance income is unpredictable month to month.

Many people, including Brackney, reported technical difficulties when submitting documents. They noted the bill requires even more paperwork.

"After a while, you just feel so worn down," Brackney said. "And how many other folks are affected and they don't have … the wherewithal to try to get help to navigate this and they just give up.

"Maybe that's, in a way, what some people want. Because then those people are not a problem anymore. But that's not success."

Conservatives touted the wide-ranging proposal as a way to wean off some members and protect the program's accessibility for those who need it most. Many of the proposal's provisions would need to get the approval of the federal government.

"We know a lot of people that are on HIP or on Medicaid and they aren't deadbeats," said Rep. Matt Hostettler, R-Patoka. "There are some people that are, I think, trying to take advantage of this."

Previously the bill capped HIP enrollment at 500,000, which meant upwards of 200,000 people would be kicked off. The amended version allows the Family and Social Services Administration to stop enrolling people once the state appropriation runs out. That appropriation is still under negotiation and could mean fewer or more people would lose coverage.

Bill background

The 20-hour work requirements under Sen. Ryan Mishler's bill would have 11 exceptions, with a 12th – for students – currently in progress, according to Rep. Brad Barrett, the Republican House sponsor for the measure. Other exceptions include: caregiving duties, substance use treatment, physical and mental disabilities, and more.

Mishler, a Republican from Mishawaka, cited the growth of Indiana's HIP program and overall Medicaid cost increases as the impetus behind the bill.

"Medicaid has grown by $5 billion over the last four years and that rate of growth is greater than our entire revenue increase … most of our new revenue in this budget is going toward Medicaid and that's going to take away from other programs and services," Mishler said. "I just feel we have to get Medicaid under control."

During the COVID-19 pandemic, Indiana couldn't remove people from Medicaid in return for an enhanced federal match – a move that saved the state money, partially due to the decreased administrative costs.

The state has since completed a year-long case-by-case redetermination of eligibility for Medicaid.

And now that Indiana's cost burden has returned to normal, lawmakers have balked at the price tag, which is the second-largest and fastest-growing state expenditure.

Indiana pays for 10 percent of HIP using a combination of provider and cigarette taxes while the federal government covers the rest, making it particularly vulnerable in light of federal uncertainty around the program.

But the bill, and its work requirements, has a powerful ally in Gov. Mike Braun, whose support was conveyed by FSSA Secretary Mitch Roob, whose agency oversees Medicaid.

Roob launched the first – and more limited – version of HIP while serving under former Gov. Mitch Daniels two decades ago. He said his agency had already implemented quarterly reviews.

"Since I arrived, we have begun doing redeterminations on a quarterly basis (for) about 47 percent of those who are eligible for Medicaid," said Roob.

Some populations, like those who are disabled, have been excluded from quarterly determinations and will only be reviewed annually.

Roob also listed various ways in which the Braun administration hoped to pressure Congress to allow for more program flexibility. Specifically, something to help an "individual become self-sufficient."

"We would like to see that done," Roob concluded.

Testimony details

But testimony sharply diverged on whether the program, and Indiana's administration of it, could be considered a success. The bill appeared to be heavily influenced by the right-leaning Foundation for Government Accountability, which explicitly pushes for work requirements across government services like food benefits, Medicaid and public housing.

Jonathan Ingram, the organization's vice president of policy and research, criticized Indiana's post-COVID redetermination process and alleged that 30 percent of Indiana's Medicaid spending was improper, with "two-thirds of that … due to eligibility errors."

A 2023 report from his group cites a federal audit on improper Medicaid payments that identified $81 billion in misspending in 2022, which concluded that Indiana has an improper payment rate of 28.8 percent in 2022.

Ingram additionally said, "Less than a quarter of people approved (by hospitals) for presumptive eligibility are later determined eligible and enrolled in the program by FSSA."

According to an online copy of his testimony, found on FGA's website, Ingram is citing reports from 2016-2018 from the state to the federal government.

"Most able-bodied adults on HIP today do not work at all. They have no reported earned income whatsoever," Ingram said. "We've seen work requirements effectively work in other welfare programs, both here in Indiana and around the country, and we think this is a great way to move these folks from welfare to work."

Ingram's footnote adds that "approximately 48 percent of HIP enrollees had zero income," citing the lower end of an estimate from a 2020 Lewin Group report, which reported that 48 percent, or 273,000 enrollees, had zero income in 2018. In a previous version of this story, the Indiana Capital Chronicle relied on a 2016 report with the same title that didn't have this information.

However, data from health policy experts at KFF contradicts Ingram's assertion about non-working Medicaid recipients.

In Indiana, roughly 47 percent of all adult Medicaid beneficiaries are working full-time while another 27 percent work part-time. The remaining 27 percent who are not working include caregivers – such as families with medically complex children or elderly parents at home – those too ill or disabled to work and Hoosiers attending school, according to KFF.

Those numbers are similar to national figures.

KFF further details that 52 percent of Hoosiers on Medicaid work in the agriculture or service industry and another 21 percent are in manufacturing. The report doesn't specify whether its analysis is limited to expansion adults, but includes only those who are 19-64 and considered able to work, a population covered by HIP in Indiana.

Another recent report from the Robert Wood Johnson Foundation found that Indiana's cost per HIP enrollee was $667, calculated by dividing Indiana's $491 million expense by the 737,000 Hoosiers covered in 2024.

Medicaid advocate Tracey Hutchings-Goetz additionally noted that Georgia, one of the states that recently implemented work requirements, faltered after reportedly spending 80 percent of its dedicated funds on administration and consulting fees.

"We urge you to study the failures and pitfalls of work reporting requirements before you go down the path of arbitrary coverage loss and increased cost," Hutchings-Goetz said. "… fundamentally, the problem with these so-called work requirements is actually the reporting itself, which is really expensive to run and really burdensome for members and for employers."