INDIANAPOLIS (AP) — A new report provides grist for a health policy political debate Monday: Indiana fares better than most states when it comes to employer-provided health insurance, but the percentage of Hoosiers who are covered is dropping.

Health plans through work covered 70.5 percent of Indiana's under-65 population last year, said the Economic Policy Institute, a nonpartisan think tank focused on improving conditions for workers. That was among the highest rates in the nation, but a significant drop from the 75.7 percent covered in 2001.

The news was worse for Indiana children under 18: While nearly three-quarter were insured in 2001, that fell to less than two-thirds last year, the Washington, D.C.-based institute said in the report released last week.

In hard numbers, nearly 25,000 fewer people had employer-provided health insurance last year than in 2001, and among children, it was nearly 30,000 fewer, according to the report based on a March survey by the Census Bureau.

"It doesn't take long for things to go south," said David Roos, director of Covering Kids & Families of Indiana, which advocates for expanded public health insurance coverage.

The decline likely will be on the mind of representatives for Republican Gov. Mitch Daniels and Democratic challenger Jill Long Thompson, as well as Libertarian Andy Horning, when they debate health care and health policy at a forum in Indianapolis on Monday.

The report by institute economist Elise Gould said coverage from employer-sponsored health insurance has fallen each year since 2000 and has reduced to 62.9 the percentage of Americans under 65 covered last year.

"The health care problem has reached a critical level," Gould said.

She noted that public programs such as Medicaid and the State Children's Health Insurance Program, or SCHIP, have expanded to fill part of the gap left by the loss of employer-provided coverage.

In Indiana, thousands of additional children became eligible for SCHIP on Oct. 1 when the state, with federal approval, expanded eligibility to children up to age 19 in households earning up to 2½ times the federal poverty level. That's $53,000 for families of four.

However, those newly eligible households will pay $42 to $70 per month to get the coverage.

Family and Social Services Administration Secretary Mitch Roob said the new report highlights what has long been known by state officials: Employer-sponsored health care has declined in Indiana, especially since the recession of 2002-03, when the state lost many manufacturing jobs.

"It is primarily an issue for people below 200 percent of poverty (level)," Roob said.

Roob sought federal approval this year for the SCHIP expansion to 250 percent of the poverty level only after lawmakers prodded him to do so. He resisted urging by state Sen. Vi Simpson, D-Ellettsville, to seek to further expand coverage to three times the poverty level. The Bush administration has told him it will not approve SCHIP expansions beyond 250 percent.

"It seems to me pointless," Roob said.

In Indiana, the SCHIP program is part of Hoosier Healthwise along with Medicaid, which provides care to the neediest children. Together they enroll about 75,000 children.

This year, the Daniels administration also has targeted Indiana adults below 200 percent of the poverty level with the Healthy Indiana Plan, or HIP, a health savings account that as of Monday had enrolled 27,609 people, about a third of whom earn so little that they don't contribute any money out of their own pockets.

"The HIP program is designed to deal specifically with this population, the people who are systemically uninsured," Roob said. "They are working, but they don't have employer-sponsored health care."

Roob also noted an August census report that showed the uninsured population in Indiana fell from 2005 to 2007, from 13.7 percent to 11.6 percent, or about 766,000 people.

"Indiana is fighting the national trend," Roob said.

Long Thompson, the Democratic nominee for Governor, has proposed creating a health insurance purchasing pool to lower costs for small businesses and individuals. She would use three cents of the state's per-pack cigarette tax to provide financial incentives to begin offering insurance. She also wants to borrow an idea from Massachusetts and create an information exchange for employers and workers to comparison shop for health insurance.

Roos, the South Bend-based state director for Covering Kids & Families, said last week's report indicates pressure will grow on public health care programs to do one of two things: either expand, as SCHIP has done in Indiana and other states, or find creative ways for employers to buy into government-sponsored programs.

The Healthy Indiana Plan has such a feature. Employers who do not currently offer any health plans of their own can pay up to 50 percent of the premiums for their employees who enroll in HIP. So far, only 48 employers statewide have chosen to do so.

"Employers seem to be interested in it," Roos said, but the state could be doing more to promote their participation. "They really need to ask the employers, why don't you buy into HIP?"

Economic Policy Institute: www.epi.org

State Medicaid Programs: www.in.gov/fssa/ompp/