Feds OK Indiana's Medicaid expansion
INDIANAPOLIS — After months of wrangling between Gov. Mike Pence and the Obama administration, Indiana won approval to expand its own brand of Medicaid that injects personal responsibility into the health care program for the poor.
About 350,000 low-income Indiana residents who lack insurance could benefit from the program, whose approved expansion was announced Tuesday, the day enrollment began. Coverage could start as early as Feb. 1.
Pence said the Healthy Indiana Plan 2.0, a revamped version of a program started by then-Gov. Mitch Daniels, goes beyond standard Medicaid expansion by requiring that participants contribute to the cost of their care.
"I believe Medicaid is not a program we should expand. It's a program that we should reform – and that's exactly what we're accomplishing," Pence said Tuesday at a speech announcing the plan's approval.
With the approval, Indiana becomes the 28th state to expand Medicaid, along with the District of Columbia, and the fifth to receive a waiver. While Pence touts HIP 2.0 as a unique program, both Iowa and Michigan require some form of a monthly contribution, although how they do so differs.
But none of these other states' programs has gone quite as far as Indiana when it comes to pushing the personal responsibility piece, experts say.
That could make Indiana a model for other states that have dragged their heels thus far.
"What other states will probably look at is how far is the federal government willing to go now," said Kosali Simon, a professor at the School of Public and Environmental Affairs at Indiana University Bloomington. "Indiana will be a key state to watch; they are the ones that the federal government had pushed the envelope the farthest."
The Affordable Care Act, also known as Obamacare, offered states incentives to expand traditional Medicaid programs to those with incomes 138 percent and below of the federal poverty level, about $2,743 a month or less for a family of four.
But many states, including Indiana, opted not to do that.
Everyone on the Healthy Indiana Plan will be required to make a contribution ranging from $1 to about $27 per month, depending on income. This money, which amounts to about 2 percent of family income, funds a $2,500 personal wellness and responsibility, or POWER, account, which functions like a Health Savings Account.
Some have criticized the program for forcing low-income people to chip in for their care and have suggested that the Obama administration may have given Indiana too much leeway.
Those who are eligible for the plan already live at the poverty level, said Timothy Jost, a law professor at Washington and Lee University and a health care reform expert. People who by definition are already having trouble covering basic costs such as food and rent will struggle to make an addition payment. Instead, they may opt not to participate in the program or avoid getting care.
"The question is how far is CMS willing to go in accommodating governors or states that want to work their own policy agenda into the Medicaid program," Jost said. "This is pretty much pushing the limits of how far they should go if it's not beyond it."
Throughout the months of back and forth with federal health officials, Pence had said he was not willing to compromise on the personal responsibility piece.
Granting Indiana a waiver shows the Obama administration's willingness to be flexible, said Joan Alker, an expert on Medicaid waivers at the Georgetown Center for Children and Families, "because they want states to get to 'yes.'"
The waiver comes with federal funding to pay for nearly all of the cost. The state plans to offset its $1.6 billion share with revenue from the cigarette tax and a hospital assessment fee. The expansion also includes a 25 percent increase in reimbursement for current Medicaid providers to near Medicare rates in an attempt to improve access.