Hospital officials praised Indiana's medical savings accounts but some consumer advocates panned them Wednesday during a public hearing as Gov. Mike Pence seeks federal approval to use the Healthy Indiana Plan to expand Medicaid in this state.

The Indiana Hospital Association and representatives of hospitals in Indianapolis, Lake County and rural Rush County testified HIP would achieve the Medicaid expansion under the federal health care overhaul and reduce the amount of indigent care they must provide to uninsured patients.

But critics noted HIP isn't available to everyone and even when it is, it can prove too costly for some low-income Indiana residents needing medical care.

"I do not believe it will do what we need to do to cover people," said Rep. Sue Errington, D-Muncie.

Pence has proposed using HIP to complete a Medicaid expansion for Indiana residents earning up to 138 percent of the federal poverty level. That's a sliding scale that includes $15,856 for a single individual or $32,499 for a household of four.

If the Centers for Medicaid and Medicare Services approves Pence's proposal, it could provide coverage for as many as 400,000 low-income residents. If CMS rejects it, it could end coverage for about 40,000 residents already enrolled in HIP. A decision must to be made by June, six months before the state's current waiver expires. Also, Pence has said he might not sign off on the expansion using HIP even if CMS approves it.

Ian McFadden, president and CEO of Methodist Hospitals in Gary and Merrillville, backs the HIP expansion because the federal Disproportionate Share Hospital funding they now receive for treating uninsured patients might be cut as much as 50 percent beginning next year under the health care overhaul.

"The DSH funding cuts represent a great concern for our hospital and all the safety net hospitals around the state," McFadden said. "We cannot afford to wait. We must be prepared to begin enrolling individuals."

Doug Leonard, president of the Indiana Hospital Association, read a letter it sent to Health and human Services Secretary Katherine Sebelius urging here to grant the HIP renewal and use it for Medicaid expansion because it promotes personal responsibility among health care consumers.

"The IHA believes HIP has been a success and should be continued," he said.

Jennifer Phelps of Indianapolis, representing the Indiana chapter of the March of Dimes, said an expanded HIP would enroll women from households earning no more than 138 percent of the poverty level but Medicaid now provides prenatal care for pregnant women earning up to twice the poverty level.

Rep. Sheila Klinker, D-Lafayette, said some people who have lost health care coverage through divorce haven't been able to enroll immediately in HIP.

"They are not able to get HIP. ... They are not able to get the health care that they need," Klinker said.

The second hearing is scheduled Friday. Pence spokeswoman Christy Denault has said Indiana's application to renew and expand the Healthy Indiana Plan is expected to be submitted to CMS by April 11.