How the HIV outbreak in Indiana under Mike Pence would have impacted Indiana under Per-Capita Caps

penceIn 2014 and 2015 Indiana suffered a preventable outbreak of HIV as a result of the opioid epidemic in the state. During a one year period 181 people were diagnosed with HIV in Scott County, Indiana alone and nearly 90 percent were the result of intravenous drug usage. A defining moment in Vice President’s Gubernatorial career, Pence is most known for implementing a needle exchange program despite his opposition to such policy. Yet, less well known is the role that Medicaid played and continues to play in the HIV outbreak and how the current per-capita cap and block grant proposals would have impacted Indiana if they had been in place at that time.

Medicaid plays a vital role in the treatment and testing of HIV patients, throughout the history of the program. An estimated 40 percent of HIV patients are covered by Medicaid, making it the largest insurer for HIV patients. Medicaid costs are increasing as patients are able to live longer and the cost of drugs and other care continues to increase. Overall, Medicaid is the second largest federal funder of HIV care and HIV patients account for 1 percent of those enrolled in Medicaid and account for approximately $9.4 billion of state and federal costs or a little less than 2% of total Medicaid costs.

The average HIV patient costs Medicaid about five times those of Medicaid beneficiaries overall averaging over $26,000 a year in 2011 for an HIV patient compared to approximately $6,000 a year in 2011 for other Medicaid beneficiaries. Part of this is because many of those enrolled in Medicaid are children who are relatively inexpensive to treat. As mentioned previously, the cost of drugs for HIV patients continues to increase, as was notable with the 5,000 percent (then lowered to a 2,500 percent and a mere 874 percent for Medicaid patients) increase in the price of the drug Daraprim by Martin Shkreli’s Turing pharmaceuticals.

Back of the envelope calculations indicate that Indiana could have been accountable for over $1.9 million in unexpected Medicaid costs in one year alone. This number is very variable based on how many of the newly diagnosed patients are low-income and eligible for Medicaid and how much the average cost for Medicaid HIV has increased since 2011, prior to the dramatic increase in drug costs. The number is expected to be much larger because of the relative wealth of Scott County, Indiana indicates a greater portion of those infected are likely to be Medicaid eligible and the cost for treatment has increased.

Regardless of the exact costs incurred, the spike in HIV infections in Indiana due to the opioid epidemic lead to increased costs to Medicaid.

How would this be different under the current Medicaid funding structure compared to the per-capita cap system? Under the current financing structure, the federal government would reimburse the state for over 65.5% of the cost of these new Medicaid costs, requiring the state to find the remaining portion. Had the per-capita cap program been implemented prior to this epidemic, Indiana would have had to bear the entire cost for this unexpected increase in funding. Because many states are not able to run deficits, the increase in costs would result the state either providing in fewer services or raising taxes.

How would Mike Pence have responded? His record as governor indicates that he would likely decide to reduce services. However, he learned from the response to the epidemic that small investments in public health programs (that often bear the brunt of these cuts) were able to effectively reduce the spread of disease. Additionally, he did recently promise that no one would “fall through the cracks” in Medicaid through the Republican’s health bill.

Mike Pence depended on federal funding when his state failed to prevent an epidemic. Per-capita caps would have been devastating for Indiana. Why would Pence push a policy that he would have likely opposed only a year ago?

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