The Indiana Medicaid Expansion Flop

October 31, 2019

North Carolina Medicaid expansion supporters hold out Indiana as their model. And their model is collapsing like a busted tire.

The tax hikes that weren’t supposed to happen? They’re mounting. And hospital cost increases are raising private health insurance premiums.

Here are the facts:

Pence’s Healthy Indiana Plan (HIP 2.0) is both an expansion and a reform, albeit a very mild reform. Five years in and HIP 2.0 is showing the limits of what states can accomplish by tinkering around the edges of Medicaid. To begin with, Indiana’s Medicaid work requirement is being challenged in court, as are similar requirements in other states. Second, the copays are quite low, albeit higher than traditional Medicaid. For these and other reasons, the plan is not paying for itself. In 2014, Pence’s office explicitly promised that “HIP 2.0 will not raise taxes and will be fully funded through Indiana’s existing cigarette tax revenue and Hospital Assessment Fee program, in addition to federal Medicaid funding.

Yet, in 2019, Indiana increased taxes in order to help pay for higher-than-anticipated Medicaid costs. Indiana lawmakers also came very close to tripling the cigarette tax because, as the Indiana Hospital Association now readily admits, “The hospitals’ share of HIP 2.0 is increasing at an unsustainable rate and increasing the cigarette tax can help provide necessary relief to hospitals.

Perhaps worst of all, Indiana’s health care costs for employer-based insurance plans are so high that out-of-state companies have adopted the watchword of “ABI: Anywhere But Indiana.”

As a January 2019 report demonstrates, not even millions in profits from Medicaid expansion is preventing hospitals from shifting costs to consumers with private insurance.Indiana’s experience with Medicaid expansion is the same as every other state’s: expensive and of arguable value for anyone but the hospitals. There is no reason to expect different results for Mississippi, even if expansion is cloaked in a veneer of “reform.

Indiana is no model to go by. Rather, it’s an example of what happens when conservative reformers go wobbly and hand the ball to liberals.

Any reformer considering a vote for ObamaCare’s Medicaid expansion should remember this. Liberalism doesn’t work. Liberalism screws things up.