Mitch Roob, who leads Indiana's Medicaid program, has warned that the state must overhaul its widely used low-income health insurance plan, known as the Healthy Indiana Plan, as federal funding for a key hospital assessment fee is phased down over the next five years, Indiana Capital Chronicle reported.
The hospital assessment fee is a state-levied tax designed to secure a higher federal reimbursement rate for individual medical facilities. A portion of this fee is retained by Indiana to cover its share of expenses for the Healthy Indiana Plan. This program provides coverage to an “expansion” population, which includes hundreds of thousands of working-age adults whose incomes are slightly too high for traditional Medicaid, alongside pregnant women and low-income caretakers.
Starting late next year, the “One Big Beautiful Bill Act” will systematically reduce the 6% assessment fee annually, ultimately reaching 3.5% by late 2031. This federal policy shift is part of an effort by the administration of President Donald Trump to transfer more health costs onto individual states. The Act also mandates increased state contributions for other Medicaid components and for food aid programs.
In the last fiscal year, which concluded in June, Indiana generated more than $2 billion from the 6% fee and intergovernmental transfers. Were the fee already at the reduced rate of 3.5%, the state would have seen a decline of approximately $900 million in collections, representing a 40% reduction. Mitch Roob, Secretary of the Family and Social Services Administration (FSSA), which oversees Indiana Medicaid, described this as the “purchasing power decline” that the state anticipates by 2032.
At a quarterly financial meeting held on Tuesday, Secretary Roob presented early financial projections developed with consultant Deloitte. He indicated that these projections would be further refined before being formally presented to lawmakers in an upcoming budget session. Roob warned that although the changes to the hospital assessment fee would have a significant budget impact, they would not be catastrophic initially, yet the numbers are “more dire than I would like them to be,” as he told Indiana Capital Chronicle.
Roob emphasized the necessity of proactive planning during the current budget cycle to prevent a “catastrophic situation in 2032.” He stressed that officials must begin preparing for this financial impact to avoid circumstances that might necessitate reducing benefit rates or tightening eligibility criteria for the Healthy Indiana Plan.
Secretary Roob expressed skepticism about the state's ability to reduce expenses sufficiently, suggesting that a different approach is needed. He highlighted the necessity to discover methods for delivering care more affordably in the future than is currently possible, and to develop improved care models to tackle the funding challenge effectively.
