COMMENTARY: A big month for Indiana FSSA has real life consequences

Many of their services — from medical coverage to childcare and food assistance — are the difference between life and death for struggling Hoosiers.

The behemoth agency is the second-largest in terms of employees, with 4,305 (behind only the Department of Correction with 5,219) and serves literally millions of men, women and children on Medicaid and other programs.

And it’s going to be a busy July 1 for FSSA. They have not one, but three significant changes rolling out. All of the changes have an important factor in common — money.

Spending on health and human services in Indiana is $26 billion in the 2024-25 fiscal year. That includes both state and federal dollars and equals 51% of all appropriations. By comparison, education is 29% of spending at $14.8 billion in state and federal tax dollars.

Of the Health and Human Services category, about 78% is the Medicaid program.

So, when a forecasting error found a nearly $1 billion shortfall in the Medicaid program last year, it sent shockwaves through state government. I want to be clear — no money was lost or misplaced. Experts predicted Medicaid costs would be $1 billion less than they actually were. Kind of like when you think your electric bill is going to be lower, and you are shocked when it arrives in the mail.

The shortfall was covered immediately through use of a Medicaid reserve account and tapping Indiana’s substantial surplus.

Preparing for the future

But lawmakers and state officials are now wrestling with the long-term problem of how to keep those costs from eating up more of the state budget than it already does. That has led to a number of changes:

• The first is a proposed $300 million in cuts to Medicaid. While there are several changes occurring, the cut that has gotten the most attention is a shift in how they pay parents of medically complex disabled children to provide attendant care. The change to structured family caregiving is set to go into effect July 1 despite families reporting that numerous issues remain unresolved. Other changes include halting expected reimbursement rate increases for providers.
• Another major change is transitioning its current long-term supports and services offerings to managed care, meaning the state will pay Managed Care Entities (MCEs) a flat rate to cover member health benefits rather than individually paying for claims. This means that an estimated 130,000 Hoosiers over the age of 60 using Medicaid will now have an MCE coordinate their health coverage under the state’s Pathways for Aging program. The change, which also goes into effect July 1, impacts services such as home health aides and nursing home care. The move is expected to save the state money and make future costs more predictable, though it is unclear how much savings the state will see.
• The last major change is that the state will start charging premiums again to some Medicaid beneficiaries. The state waived the cost-sharing requirement, otherwise known as POWER Accounts, in early 2020 during the COVID-19 pandemic. But on July 1, Medicaid beneficiaries in the Healthy Indiana Plan (HIP), Children’s Health Insurance Program (CHIP) and MedWorks will get a bill — many of them for the first time, if they enrolled during or after the pandemic. A late Thursday court ruling was still being digested on this matter.

Some of these changes are painful but necessary, and I hope the transitions go well. But I equally hope FSSA will be open to delays if Hoosiers are getting lost in the shuffle of the cost-saving measures.