Like a number of other Republican plans to extend coverage, this doesn’t follow the traditional Medicaid expansion outlined under Obamacare. Pence, speaking from a local hospital Tuesday, said he believes his plan will become a model for other states considering expansion funds.
“As the debates in Washington about the Affordable Care Act and Medicaid expansion continue, I’m proud of everyone in this state involved in this effort when I say here in Indiana, we’re reforming Medicaid,” said Pence, who said he continues to support Obamacare repeal.
Pence’s plan leverages an existing state Medicaid waiver program that covered about 52,000 adults — a population not traditionally covered through the health care program jointly financed by the states and the federal government. The existing Healthy Indiana Program launched in 2008 required enrollees to pay a $1,100 deductible before coverage kicked in, and they had to pay modest amounts into a health savings account at the risk of losing coverage if they stopped contributing. The plan design, modeled on health savings accounts (HSAs), was praised by conservatives who said it encouraged people to take greater responsibility for their health care.
But most of the HIP enrollees would have been eligible for the Medicaid expansion starting in 2014, and the Obama administration was eager to see some elements of the HIP plan to expire, namely its enrollment caps. The plan announced today, the result of more than a year of negotiations between the Obama administration and Pence, comes with some notable changes.
The plan allows monthly contributions from poor adults below the poverty line, but they don’t face the risk of losing coverage for not contributing to their health savings account — anywhere between $1 and $20 per month, depending on income. Instead, they’ll be placed into a “basic” coverage program that comes with co-payments for health-care services, but their contribution is capped at 5 percent of family income, according to the federal Centers for Medicare and Medicaid Services. The basic plan also includes coverage all benefits required by the ACA, but only enrollees paying monthly into their accounts receive vision and dental coverage.
Enrollees earning above the federal poverty line can be locked out from the program for six months if they don’t pay monthly contributions, ranging from $20 to $27. Individuals will also face co-pays for unnecessary use of the emergency room ($8 for the first trip and $25 for each time after). The plan also links enrollees to job search and training programs.
The Pence plan, since it was announced in May, was subject of criticism from some on the right, who say that the new HIP design abandons the conservative DNA of the original plan, which originated under previous Indiana Gov. Mitch Daniels. “Say it ain’t so, Mike,” wrote the Washington Examiner’s Philip Klein on today’s announcement.
“Pence argues that his expansion of Medicaid is actually a victory for market-based principles because of concessions he won from the Obama administration providing the state more flexibility over the implementation of the program,” writes Klein, the conservative paper’s commentary editor. “But this is merely window dressing.”
Pence’s plan has also faced criticism from Obamacare advocates, who say it’s needlessly complex to administer.
The expansion is fully funded by the federal government through the end of next year, and the state’s funding responsibility gradually ratchets up to no more than 10 percent within a few years. Indiana hospitals, who pushed for the expansion, will fund the state’s contribution.
“This means HIP 2.0 will require no new state spending and no new taxes,” Pence said.
Should Pence decide to run for the 2016 Republican nomination, he could join other rumored hopefuls Chris Christie of New Jersey and John Kasich of Ohio as governors who bucked party orthodoxy to accept Obamacare Medicaid expansion funding.