Protecting the Fiscal Health of the Healthy Indiana Plan

It’s been called one of the greatest success stories in Indiana, granting more than 250,000 Hoosiers access to health care coverage. However, the long-term fiscal health of the Healthy Indiana Plan (HIP) could be at risk. As federal support for the program decreases over time, fees that hospitals pay to fund the program will continue to rise.

Statewide, fees under the Hospital Assessment Fee (HAF) program are projected to increase in 2019 by 24 percent, exceeding $1 billion in total. While higher reimbursement rates will accompany the fees and bring more net dollars to the program overall, the growing shift in the assessment to outpatient activity has caused a larger increase in fees for some smaller, rural facilities, who could see increases by as much as 60 percent.

Relief is needed for these hospitals, who face significant risk of being able to maintain and provide the necessary care to the communities and patients they serve.


Outside of the state government, hospitals are the only group who financially support HIP. The program is funded through a combination of Indiana’s cigarette tax revenue and HAF fees. These funds are then used to leverage federal matching dollars available to states if they chose to expand access to health care for non-traditional Medicaid populations. Cigarette tax revenue has declined in recent years, and that’s a good thing as it mostly means fewer smokers. But federal dollars for coverage expansion also have gradually tapered off, and recent proposals in Washington, D.C., threatened the long-term stability of HIP and other state coverage programs with dramatic cuts.

One solution? Raising the cigarette tax.

Indiana is one of the unhealthiest states in the nation, ranking 38th worst in overall health and 41st worst in percentage of smokers. Our cigarette tax is lower than all our surrounding states and hasn’t been raised since 2007.

Raising the cigarette tax is a key opportunity to improve Hoosier health and augment state HIP program funding. This could help offset hospital fees on an ongoing basis and provide needed relief to hospitals.


Join us in conversations with elected officials to share the need to protect the fiscal health of HIP. Here are a few ways your hospital can get involved:

  • Communicate with lawmakers the need to act in the 2019 session to raise the cigarette tax
  • Share how HAF fee increases are impacting your hospital
  • Invite lawmakers to tour your facility to show the quality care your hospital provides
  • Highlight your hospital’s efforts around tobacco cessation and prevention

If you have any questions or would like assistance reaching out to your lawmakers, please contact Laura McCaffrey, director of legislative relations, at