$68 billion is up for grabs in Medicaid. Who wants it?

What would you do with $68 billion? That is the size of the decision Indiana is about to make.

The state recently launched a procurement so large it will determine who delivers health care to nearly 1.5 million Hoosiers. The companies that win will not be building highways or upgrading software systems. They will be responsible for caring for some of Indiana’s most vulnerable residents.

Earlier this year, Indiana Family and Social Services Administration Secretary Mitch Roob announced the $68 billion procurement for Indiana’s four Medicaid managed care programs.

Together, these programs account for roughly half of Indiana’s total Medicaid spending and serve very different populations:

• Healthy Indiana Plan (HIP) covers adults 19 to 64 and functions as Indiana’s primary adult Medicaid program.
• Hoosier Healthwise serves children and pregnant women with low incomes.
• Hoosier Care Connect covers blind or disabled adults under 65 who are not eligible for Medicare.
• Indiana PathWays for Aging serves Hoosiers age 60 and older who need long-term care, including nursing facility services.

There is a good chance you know someone who relies on one of these programs. This rebid is expected to affect nearly 1 out of 5 of our Hoosier neighbors.

So who gets to compete for a prize this large?

Today, Indiana contracts with five private Medicaid health plans to operate these programs. All are expected to be potential bidders.

Indiana has historically procured its major managed care programs separately. This time, the state intends to select one or more contractors to operate all four programs together. Roob has dubbed it the “Mother of All Procurements.”

That approach reflects a broader shift already underway across state government.

The Indiana Department of Administration, which oversees statewide purchasing, has begun using a strategy known as “category management.” In plain terms, the state has found that agencies often buy similar services from the same vendors at very different prices. By combining that purchasing power and negotiating as one customer, the state aims to reduce costs and eliminate inefficiencies.

Indiana to bid $68 billion in Medicaid contracts this summer

State officials say this approach is already showing promise. According to the Department of Administration, early and preliminary estimates indicate that applying category management across state purchasing could generate between $150 million and $200 million in savings within the first 12 months alone.

The $68 billion managed care rebid applies that same philosophy to Medicaid. Instead of negotiating four massive contracts independently, the state is attempting to use its full scale at once to improve value and better control long-term costs.

And that matters, because Medicaid is one of the fastest-growing areas of state spending.

In 2021, Medicaid accounted for about 15% of Indiana’s total budget. By 2023, that share had climbed to 18%. In the state’s most recent biennial budget, Medicaid now represents 22$ of total spending. Recent budget forecasts show Medicaid spending continues to grow faster than state revenue.

But placing $68 billion worth of care for Indiana’s most vulnerable residents into a single procurement does not come without risk. A system normally adjusted one program at a time could face disruptions, administrative challenges and potential gaps in care if the transition is not carefully managed. Those risks may affect health plans, state agencies and, most importantly, the Hoosiers who depend on these services.

Still, state leaders deserve credit for attempting something bold. If successful, the Mother of All Procurements could help slow a growth curve that threatens funding for other priorities such as K-12 education, public safety and higher education.

So, to the nation’s Medicaid health plans, sharpen your pencils. Indiana has launched the largest health care procurement in its history.

After all, it’s only $68 billion.