Pence unveils alternative to Medicaid expansion

2014-05-15T14:00:00Z 2014-05-16T13:15:14Z Pence unveils alternative to Medicaid expansionDan Carden, (317) 637-9078

INDIANAPOLIS | Hoosier Republicans, Democrats and hospitals are pleased Gov. Mike Pence now will accept health funds provided through the Affordable Care Act. But it remains to be seen whether federal officials will approve the governor's innovative terms and conditions.

Pence on Thursday unveiled Healthy Indiana Plan 2.0, his proposal to create a high-deductible, consumer-led health program for low-income Hoosiers as an alternative to expanding Medicaid eligibility under the Affordable Care Act, sometimes called Obamacare.

Under the Pence plan, an estimated 450,000 able-bodied Hoosiers ages 19 to 64 who earn less than 138 percent of the federal poverty level — that's $16,105 for an individual or $32,913 for a family of four — will be eligible for the HIP Plus plan.

Those participants, who otherwise would have been able to enroll in no-cost Medicaid, instead will be required to contribute between $3 and $25 a month, based on their incomes, to a health savings account the program will bring up to $2,500.

A member's annual health care costs, including vision, dental and prescription drug services, initially would be paid from that account, with the program covering all expenses beyond $2,500.

But if an enrollee fails to make their health savings account contribution, he or she will be dropped to HIP Basic, which offers reduced benefits and requires co-payments for all services. Depending on income, some delinquent participants will lose their HIP coverage altogether.

A third tier of the program, HIP Link, allows HIP-eligible working Hoosiers to use their health savings accounts to pay their share of costs associated with an employer-provided health plan.

Taken together, Pence said HIP 2.0 is "a better way to a better future for working Hoosiers and working families."

"Our plan's three-legged stool — HIP Link, HIP Plus and HIP Basic — would utilize private insurance options and consumer behavior to increase access to quality health care and to manage costs and health outcomes in the long run," he said.

The majority of health care costs for HIP 2.0 participants would be paid by the federal government, using Medicaid expansion funds from the Affordable Care Act.

However, accessing that money requires federal health officials to approve Pence's HIP 2.0 alternative.

The Republican governor expects to submit a waiver request by June 30 detailing his proposal to federal officials. There is no deadline for federal action on Pence's application.

The Obama administration generally has been reluctant to allow the 24 states that refused to expand Medicaid eligibility, including Indiana, to devise alternatives.

The state has lost out on more than $1 billion in federal health funds this year by not expanding Medicaid, with Hoosier hospitals bearing the brunt of those losses.

Participants, hospitals to pay more

While Pence said he still wants the Affordable Care Act repealed, he said HIP 2.0 gets closest to his preference that Medicaid be reformed by turning the program into a federal block grant that states could spend as they wish.

"I believe there are only two futures for health care in this country – government-directed health care or consumer-driven health care," Pence said.

"HIP 2.0 takes consumer-driven Medicaid reform to the next level by replacing traditional Medicaid in Indiana for all non-disabled adults and offering instead a health care culture in our state built on healthy, cost-conscious decision making."

The Indiana Hospital Association, whose members absorb costs of nearly $3 billion a year providing health services to the uninsured, endorsed Pence's plan as a way to reduce the state's uninsured population, even though hospitals could pay higher fees to the state starting in 2017 to cover Indiana's share of the program.

"We're confident that the HIP 2.0 plan proposed by the governor is the right solution to the health-care crisis facing Hoosier hospitals and patients," said Doug Leonard, president of the hospital association. "We’re more hopeful than ever we will soon bring greater health care coverage to those who need it most."

Matt Doyle, vice president and chief financial officer at Methodist Hospitals in Gary, was less enthusiastic. He said safety-net hospitals, like Methodist, should not be asked to pay any higher fees in recognition of the charity care services they provide

State Rep. Charlie Brown, D-Gary, who sponsored the 2007 Healthy Indiana Plan law that currently provides health coverage for about 40,000 people, said he's satisfied more Hoosiers will get their health needs met if the governor's plan is approved — though he thinks Pence should admit he's expanding Medicaid.

House Democratic Leader Scott Pelath, D-Michigan City, said it doesn't matter what the plan is called, so long as the focus remains on meeting the state's health care needs instead of political grandstanding.

“We have asked the governor to offer affordable health care to all uninsured Hoosiers. And we have always said if his way works, we will not dicker over the details," Pelath said. "If the Obama administration and Gov. Pence can agree on a plan, everyone should applaud."

Senate President David Long, R-Fort Wayne, lauded Pence for leading the way on consumer-driven health care with HIP 2.0.

"This can be a national, state-driven model that shows how to work with the private sector and our current health care system to affordably and effectively provide health care to the uninsured in our country," Long said.

Copyright 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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