Proposed Medicaid cap, work requirements in Indiana bill a cause for concern, researchers say

Yahoo

02-03-2025

The cap on enrollment and work requirements are the two most concerning parts of a Medicaid bill that the Indiana legislature is considering, said two public health researchers.
At the federal level, Medicaid doesn't have work requirements or a cap on those who can enroll in the program, Leo Cuello, a research professor with the Georgetown University Center for Children and Families.
'That leads you to two ways in which this bill would propose to make some significant changes,' Cuello said.
Sen. Ryan Mishler, R-Mishawaka, authored Senate Bill 2 which would place restrictions on Medicaid, like work requirements on an insurance program for Hoosiers with a medium income and between the ages of 19 to 64.
The bill also creates a program cap, which threatens access for hundreds of thousands of Hoosiers. The bill includes 11 exemptions for the work requirement, including volunteering, receiving unemployment, or participating in a substance abuse program.
Mishler called Senate Bill 2 the 'right size' for Medicaid, which has grown exponentially in recent years. In the last four years, Medicaid costs have grown by $5 billion, he said. Meanwhile, since COVID, Medicaid participants have nearly doubled — from 390,000 to 750,000.
'We're spending more on Medicaid alone than the percentage of our total revenue,' Mishler said. 'You're going to see that when we do the budget that Medicaid and the Department of Child Services are going to suck up most of our revenue and we're not going to have a lot left to do other programs.'
Under Senate Bill 2, the Healthy Indiana Plan can't be advertised and the program is 'arbitrarily' capped at 500,000, Sen. Rodney Pol, D-Chesterton, said.
'We haven't seen the data that demonstrates why it should be 500,000 people or how that is ultimately going to reduce costs. We know that every action has a reaction and our worry is that we're going to end up paying for it,' Pol said.
Medicaid is a healthcare program operated under a federal and state partnership, Cuello said. Meaning, Medicaid was created under federal law but each state chooses if it wants to participate — which all states have chosen to participate — and the two government entities share in the cost.
'As the state spends money on Medicaid health services, it qualifies for federal matching funds, fairly generous federal matching funds. The federal government is always paying half or more than half of the bill. The state retains control over how the program is administered,' Cuello said.
The federal government has a list of minimum requirements for states to meet to receive the funds, Cuello said. But Medicaid looks different across the country because states get to control how the program works, he said.
In Indiana, the federal government pays 65% and the state pays 35% of the bill for standard Medicaid services, Cuello said. For the Medicaid expansion group, which includes adults 19-64 years old earning up to $1,800 a month for a single person or slightly above the poverty line, the federal government pays 90% and the state pays 10% of the bill, Cuello said, which is the case for all 50 states.
As of 2023, 21.8% of Indiana residents are covered through Medicaid, according to Georgetown University data. Lake County has a rate higher than the state, with 24% of county residents covered by Medicaid, and Porter County has a lower rate than the state average, with 19.2% of residents covered by Medicaid, according to the data.
For Indiana's non-elderly adults, which most closely resembles those on the Medicaid expansion program, Cuello said, the state coverage rate is 17.6%, according to the data. In Lake County, 19.6% of non-elderly adults are on Medicaid, and in Porter County 16% of non-elderly adults are on Medicaid, according to the data.
At the federal level, Republicans in Congress are considering massive cuts to Medicaid. If the federal government decreases its contributions to the Healthy Indiana Plan and the state doesn't step in to fund the program, about 366,000 Hoosiers would be left without health insurance, according to a study from the Urban Institute and the Robert Wood Johnson Foundation.
'(Indiana's) legislation could be totally irrelevant based on what happens in the federal legislative process,' Cuello said.
When it comes to work requirements, Cuello said it leads to termination and suppressed enrollment for workers. Hardworking families, who are struggling to pay bills and juggling their children's lives, will have to provide monthly documentation of their employment to have health insurance, he said.
'What this thing does is it creates red tape for working families and many of them don't get through,' Cuello said. 'We know the majority of Medicaid enrollees are in working families. The data shows that the ones who aren't working usually have a very good reason, they have a disability or they are in school. The whole thing is trying to solve a problem that doesn't exist.'
Arkansas and Georgia are the only two states that have implemented work requirements, Cuello said, and the results were concerning.
During President Donald Trump's first administration, roughly a dozen states, including Indiana, requested and got approved for work requirements under Medicaid, Cuello said. The HealthWell Foundation and state partners filed lawsuits against the work requirements, and they won the lawsuits, he said.
Arkansas was able to implement work requirements before the lawsuits were filed, Cuello said, and stopped the practice after the state lawsuit was resolved. But, when the work requirements were in effect for about six months, roughly 18,000 people in Arkansas were kicked off Medicaid, he said.
About 18 months ago, Georgia implemented a work requirement, Cuello said, which resulted in 6,503 people enrolling in Medicaid, which is a microscopic fraction of the people eligible. In contrast, North Carolina, a state comparable in size to Georgia, started its Medicaid expansion program after Georgia without a work requirement and has enrolled more than 600,000 people, Cuello said.
'The work requirement basically, if you dump this onto the Indiana program, what it's going to do is it's going to take people who are currently enrolled and terminate a whole bunch of them and it's going to really throttle new people getting on to the program. It's going to have that suppressive effect,' Cuello said.
In Arkansas, the data showed further that the work requirements didn't result in more people working, Cuello said. In fact, in many cases, Medicaid helps people continue to work, Cuello said, pointing to a case where a worker, who lost Medicaid, then lost their job because they could no longer afford their lung disease medication.
'The work reporting requirements don't help anyone work. They create that red tape, including for workers, and then when people fail to report their insurance gets taken away,' Cuello said. 'The data tells the reason that people don't work. It's childcare, it's transportation, lack of jobs or job training, and sadly, in a rural state like Indiana, dealing with the fallout of opioid addiction. Work reporting requirements don't help with any of those problems.'
Kosali Simon, associate vice provost for Health Sciences at Indiana University's Paul H. O'Neill School of Public and Environmental Affairs, said hospitals will be impacted if people don't have coverage under Medicaid.
'It's not that only insured people come to a hospital,' Simon said.
In 2005, Tennessee disenrolled 190,000 people from its Medicaid program, Simon said, which resulted in a reduction in mammograms and an increase in personal bankruptcies and eviction filings, among other things.
'People thought, in Tennessee, maybe when you cut people's health insurance they'll want to go work and find a new job, but research papers just aren't showing that people in Tennessee went to find new jobs,' Simon said.
For any program, Simon said the administrative costs of requiring people to file paperwork, like a work requirement, are very expensive, she said.
'Anytime costs are being cut it's got to be done very carefully in a way that ensures the state doesn't end up paying in some other way,' Simon said.
Medicaid is an entitlement program where eligible people have the right to enroll in, Cuello said, so placing caps on it could likely lead to legal action against the state. It's also unclear how the state will decide which people to kick off the program, he said.
'The legislature should steer totally clear of any kind of numerical cap on who should enroll in the program. It's just going to cause themselves a lot of headaches,' Cuello said.
Capping Medicaid 'is leaving a bunch of money on the table,' Cuello said, because the federal government helps pay for the program. If federal funding is reduced, the state would be left alone to pay for those hospital care costs when people seek treatment, Cuello said.
'It's nonsensical that the state wouldn't take that deal and would cap itself and limit the federal dollars that it can leverage to solve a problem it has,' Cuello said. 'The state has a phenomenal thing going and to upend it for politics is terrible, terrible policy.'
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