State spending on Medicaid in Indiana grows 27 percent after expanding Obamacare

By Steve Wilson
September 11, 2019

Expanding Medicaid bears a large fiscal cost, as evidenced by the experience of Indiana.

Indiana’s general fund budget grew overall by 13.33 percent or about two billion dollars from 2014 to 2021. 

The biggest driver in the increase was the expansion of Medicaid in 2015 in Indiana under the Affordable Care Act, better known as Obamacare, for able-bodied working adults up to 138 percent of the poverty level.

General fund spending on Medicaid in the Hoosier State increased by 26.9 percent, growing from $1.98 billion in 2014 to $2.7 billion in the 2021 budget. 

Medicaid went from 13.7 percent of the state’s general fund budget in the 2014 and 2014 budget cycles to 14.8 percent in the 2020 and 2021 budgets.

In 2013, the Hoosier State had 1,120,674 enrolled in Medicaid and CHIP. By July 2019, that number swelled to 1,421,594, an increase of 26.85 percent or a difference of more than 300,000.

Indiana taxpayers will spend more than $5.2 billion combined in general fund revenue and nearly $3.7 billion in dedicated (non-general) funds on Medicaid for the 2019 and 2020 budgets. Federal taxpayers will add more than $21.4 billion.

In 2014 and 2015, Hoosier State taxpayers spent $4.13 billion in combined general fund revenue and $1.34 billion in dedicated funds on Medicaid. Federal funds added up to $12.9 billion pre-expansion. 

Indiana’s legislature, the General Assembly, passes a biennial, consolidated budget, one of 15 states with an annual legislative session and a biennial budgetary process.

K-12 education, the biggest line item in general fund revenues for Indiana, increased nearly 13 percent during that same period while its share of the biennial budget decreased from 45.5 percent to 44.8 percent. 

Medicaid spending in Mississippi will add up to more than $931 million from state taxpayers and nearly $4.94 billion in federal funds for a total of $6.3 billion for fiscal 2020, which started on July 1. 

Increasing general fund spending on Medicaid by the same percentage as Indiana (26.9 percent) would add up to $1.18 billion, an increase of more than $250 million. 

That’s more than the spending for the state Department of Mental Health ($213 million), public safety, military and veterans’ affairs ($114 million) or agriculture and economic development (more than $111 million).

Eight of the 31 states that have expanded Medicaid have received waivers to modify the terms of their expansion that can include a work requirement, small premiums or tobacco cessation provisions. 

Indiana also requires some cost-sharing in the form of small premiums based on a recipient’s income level. If a Medicaid recipient doesn’t pay their premiums after a 60-day grace period, they’re removed from the program and have to wait six months to re-enroll.

In 2017, Indiana received a waiver from the Trump administration for a work requirement program for Medicaid recipients that would require them to either work, attend job training or other schooling or volunteer. 

As part of their waiver, the Hoosier State also added a tobacco cessation program that requires participation for tobacco users on Medicaid. Those tobacco-using Medicaid recipients who don’t participate are hit with a premium surcharge.


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