Indiana Gov. Mike Pence, who has been talked about as a potential 2016 presidential candidate, has rankled conservatives by unveiling a plan to expand Medicaid through President Obama's health care law.

An overlooked element of the story is how the Pence administration worked behind the scenes with hospital lobbyists on crafting the plan, which would allow hospitals to benefit from federal dollars flowing into the state.

The Medicaid issue has been presented as one in which Republican governors are torn between the conservative base and the broader electorate when it comes to deciding whether to expand the program, a decision left to states as a result of the 2012 U.S. Supreme Court ruling. But the role of hospitals hasn't received as much attention as it should.

Last year, I interviewed the chief lobbyist of the Cleveland Clinic, who explained that following the Supreme Court decision, the hospital's team got to work on convincing Republican Ohio Gov. John Kasich to embrace the expansion, which he did. Hospitals have played a role wherever Republicans have jumped on the Medicaid expansion bandwagon.

Expanding Medicaid by millions of individuals translates into more revenue for hospitals. This is an especially sensitive issue because Obamacare imposed cuts on Disproportionate Share Hospital payments, which are sent to hospitals that serve a large number of low-income patients. The theory behind the cuts was that the expansion of Medicaid would reduce hospitals' uncompensated care costs. In states that don't expand Medicaid, however, hospitals will have to absorb those cuts, and they won't have the offsetting benefit of more federal money.

An article in the Indianapolis Business Journal on Pence's Medicaid plan recounted:

Leaders from the Indiana Hospital Association showed up at the Statehouse on May 9 at 7:30 a.m. to hash out the terms of the key funding mechanism for Gov. Mike Pence’s health insurance expansion.

Not until 10:30 that night did hospital association president Doug Leonard and Pence’s budget director, Chris Atkins, sign on the dotted line.

That marathon session, which involved Pence health care advisers Brian Neale and Seema Verma, appears to have generated a deal that both sides like.

Though hospitals will be asked to start making contributions to help finance the Pence plan after two years, the article explains, “hospitals as a whole will receive more benefits than they’ll incur in costs” under the plan.

“Is this overall, the totality of this, is this still a good deal? Yeah,” said Brian Tabor, a lobbyist who led the hospitals' negotiations, according to the article.

Just last month, I described Pence as a “proto-Tea Partier,” noting that he was one of the few Republican members of the House of Representatives to uphold small-government principles by voting against President George W. Bush's big-government agenda. But his Medicaid expansion plan has given the Federalist's Ben Domenech cause to question whether Pence was evolving into a Bush, by using past conservative stances to justify present deviations from conservatism.

Though Pence has tried to pitch his approach as a consumer-driven alternative, there's no getting around the fact that it's a massive expansion of government that would place a larger burden on federal taxpayers and eventually, Hoosiers as well. It takes an existing health care program, the Healthy Indiana Plan, that has a capped enrollment, and opens the floodgates to hundreds of thousands of new government beneficiaries. At the same time, the plan severely weakens elements of HIP that were intended to discourage excessive health care use by asking beneficiaries to contribute more toward their care -- rendering such cost-sharing provisions virtually meaningless.

But what’s disappointing news to conservatives is a big win for hospital lobbyists.