Medicaid still short on cash as new budget year begins
INDIANAPOLIS (WISH) — The state’s top money managers on Tuesday said they’re still working under the assumption the Medicaid fund is low but the numbers could change.
Indiana’s 2024 budget year ended on June 30. Tuesday’s report contains the final numbers for the state’s coffers at the end of that period. The Office of Management and Budget and State Comptroller Elise Nieshalla reported a budget reserve of a little more than $2.5 billion, of which a little more than $1 billion was in the state’s emergency fund.
Budget officials said the 2024 closeout report is noteworthy because they believe it marks a return to pre-pandemic revenue and expense levels. They said their calculations contain no significant pandemic-related impacts such as stimulus spending or changes in sales taxes due to online shopping for durable goods. Moreover, they said their original revenue estimate came within 0.1% of the final total for the second year in a row and the state kept to its goal of having reserves equal to roughly 11-12% of the total budget.
“What I want to convey from our seats is confidence that fiscal responsibility is paramount to the state of Indiana and not only (state budget officials) but the governor and the General Assembly take this seriously,” OMB Director Cris Johnston said.
That means fewer revenue variables for lawmakers still grappling with the state’s Medicaid funding shortfall. OMB officials said they are still operating under the assumption the state’s Medicaid system will be short nearly $458 million for the 2025 budget year, which began on July 1 and runs through June 30 of next year.
The shortfall notably led the Family and Social Services Administration to discontinue eligibility for the attendant care program for parents of roughly 1,600 children with serious disabilities and medical complications to make up the difference. Budget officials said their estimate is based on the revenue forecast from last December and does not take into account this or other cost-saving measures by FSSA.
“We do not do what budget people call dynamic scoring to anticipate the results of any corrective actions,” Johnston said. “Now, this December’s forecast, they will take into consideration some of the actions that FSSA has taken and factor that into both their forecasts. And so I imagine that 457 is going to be a different number.”
Acting State Budget Agency Director Joe Habig said he expects another Medicaid update in about a month, which could adjust the $255 million shortfall his team logged for the 2024 budget year. He and Johnston said the state will release one more revenue forecast as well as another Medicaid fund forecast around the middle of December. Those numbers will drive state lawmakers’ budget negotiations when they convene in January.
Leading budget writers from both parties praised the numbers released Tuesday while signaling Medicaid will figure prominently in budget negotiations. Senate Appropriations Committee Chair Ryan Mishler, R-Mishawaka, who played a central role in this year’s negotiations relating to Medicaid, said in a statement:
“I remain cautious about state expenditure increases as the state returns to lower and more historic levels of revenue growth, particularly in regard to the Medicaid program, as the current rate of growth in Indiana’s Medicaid spending is not sustainable and could adversely affect other aspects of our state’s budget. The Medicaid Oversight Committee, which I supported reinstating in the last budget session, will continue to monitor the Medicaid program this summer.”
Sen. Ryan Mishler, R-Mishawaka
Rep. Greg Porter, D-Indianapolis, the top-ranking Democrat on the House Ways and Means Committee, said:
“Thankfully, we met our expectations for the 2024 state budget closeout and have a $2.5 billion combined surplus including $102 million in reversions. I look forward to creating the 2025 budget with fiscal responsibility and respect for safety nets like Medicaid and the public schools that educate over 90% of Hoosier kids.”
Rep. Greg Porter, D-Indianapolis