Indiana underestimated Medicaid cost by nearly $1 billion, new report says

Indiana Medicaid Faces $1 Billion Expense Shortfall

Indiana’s initial estimate for Medicaid expenses is nearly $1 billion short of its now-predicted need, according to a report that has raised concerns over the state’s budget and access to the low-income healthcare program. A December outlook found that Medicaid is predicted to need $984 million more than what was originally thought when the state’s biennium budget was finalized in April.

State budget director Zachary Jackson stated that the flawed April forecast was based on data that did not reflect the latest needs of enrollees, with demand for certain categories such as elderly care outpacing state officials’ expectations. As a result, Indiana is now facing a significant shortfall and will need to appropriate an additional $255.2 million for the program before July 2024 and $457.9 million for the following year.

Medicaid director Cora Steinmetz told lawmakers that the agency is working on proposals for cost containment, prompting concern over access to the program. Indiana’s lawmakers finalize the state budget during odd-numbered years, leaving them with limited options for enacting legislative changes in the upcoming 2024 session.

These developments come as states across the country are unwinding pandemic-era protections that kept millions of people covered by Medicaid. In Indiana, the number of Medicaid enrollees steadily grew every month from March 2020 until May of this year, when the federal budget law ended the protections. While Indiana’s total enrollment has fallen since then, the demand is still greater than before the pandemic, with a net growth of over 370,000 Medicaid enrollees since January 2020.

The historic background of Medicaid can be traced back to the passage of the Social Security Amendments of 1965, which established both Medicare and Medicaid as part of President Lyndon B. Johnson’s “Great Society” program. Medicaid specifically aimed to provide Health coverage to low-income individuals and families, pregnant women, and certain people with disabilities.

As Indiana grapples with its Medicaid budget shortfall, the state faces the challenge of ensuring access to essential healthcare services for its most vulnerable populations. It remains to be seen how the state will address this issue in the coming years.