Blocked in 2015 from compelling people on Medicaid to hold or prepare for jobs, Indiana officials created a voluntary "Gateway to Work" as part of their expansion of Medicaid under the Affordable Care Act. The state has been referring people working fewer than 20 hours a week to programs that could help them train or search for jobs.
In the summer, with a conservative new administration in Washington, the state altered a federal application submitted to renew its experiment, known as the Healthy Indiana Plan 2.0. The amended version said the voluntary method "has not been successful in connecting individuals with sustained employment" and revived the request for a work requirement.
This time, the federal Centers for Medicare and Medicaid Services was supportive.
Alex Azar, who was sworn in Monday as health and human services secretary, traveled to Indianapolis on his first trip in office to announce the approval alongside Gov. Eric Holcomb (R).
"Today's announcement is just one step in a long legacy of innovation" in the state's health care, Azar said at a public hospital where nearly half the patients rely on Medicaidand almost one in five is uninsured. He said the change "recognizes that Medicaid can be a pathway out of poverty."
HHS is now discussing similar requests for a work requirement with officials in 11 other states, Azar noted, saying, "it seems to be getting a great deal of excitement to deal with the social determinants of health."
Holcomb called his state's approach to Medicaid "the gold standard for the nation."
CMS officials approved the Indiana waiver less than three weeks after they gave Kentucky permission for the nation's first Medicaid work requirement. Each plan reflects a profound rightward shift in the federal government's stance on the relationship among access to health care, government entitlements and economic self-reliance.
Democrats have long held that Medicaid, a program originating in the Great Society era of the mid-1960s and expanded over the decades, is a right for anyone who is eligible, and that affordable health care is integral to poor people improving their lives. Republicans maintain that the first priority for poor people is finding jobs to wean them off dependence on government programs and end poverty.
CMS Administrator Seema Verma is a leading proponent of the conservative view. Before joining the Trump administration, she was an Indiana-based health-care consultant and the main architect of Indiana's first attempt, while Vice President Pence was the governor, to include work and other forms of "community engagement" within its plan.
Verma said she would recuse herself from consideration of Indiana's renewal application.
When the earlier parts of the state's plan were approved, Obama administration officials made a trade-off: They allowed the farthest-reaching requirements of Medicaid beneficiaries at the time in exchange for Indiana expanding the program.
Under those requirements, people in the program already must pay monthly insurance premiums into Personal Wellness and Responsibility (POWER) accounts intended as incentives for them to stay healthy and use cost-effective care — or risk losing eligibility or certain benefits. People who fail to keep up their premium payments are being locked out of the program if their incomes are above the poverty line — or bumped down to a level of coverage with fewer medical benefits if they are in poverty.
The requirements will continue, although the way premiums will be set is changing.
According to Indiana's application, an estimated 130,000 residents on Medicaid — roughly 30 percent of those covered by HIP 2.0, as the state experiment is called — will need to come into compliance with the new rules because they do not work enough hours and will not qualify for any exemption.
The broad contours of the work requirements, which will begin in 2019 and last three years, are similar to those Kentucky will impose starting in July. Both states will exempt Medicaid beneficiaries who are a primary caretaker, pregnant, disabled, a former foster child or someone who gets welfare cash assistance or food stamps and meets either program's work requirements.
Yet Kentucky will immediately require people to fulfill at least 80 hours per month of work, job-preparation or other community engagement. In Indiana, the required hours will be phased in over 1½ years, eventually reaching 20 per week.
Indiana will exempt people over 60 and those who are chronically homeless or recently incarcerated. Its rules will likely be tougher on parents, excluding only main caregivers of children below required school age — 6 years old in that state. Kentucky says one adult in a household may avoid the requirements if they have a minor child, which officials there say they expect to apply up to age 18.
Indiana asked to use federal Medicaid funds to support the new requirements, requesting $90 monthly per beneficiary to assess their skills, train them, help them search for work and track how they perform. CMS denied the request. Outside Medicaid experts expected that outcome, saying the section of Medicaid law that defines federal aid for the program is separate from rules that can be waived.
Jennifer Walthall, secretary of Indiana's Family and Social Services Administration, said the federal approval will expand access to substance abuse treatment, including for opioid addiction.
Azar, a former top executive at the Indianapolis-based Eli Lilly, used his first public appearance as secretary to try to tamp down concern raised by Democrats at his recent confirmation hearings that he would be disinclined to work on curbing drug prices because of his past in the pharmaceutical industry. "The president and I are working on an aggressive agenda" to lower drug prices, he said.
The approval of Indiana's waiver drew swift denunciations Friday from congressional Democrats and other ACA proponents. "In his first major act since joining the administration, Secretary Azar has given Indiana the greenlight to discriminate against low-income Americans who are just trying to stay healthy and get ahead," Sen. Ron Wyden (D-Ore.) said in a statement.
Frederick Isasi, executive director of the liberal consumer health lobby, Families USA, said in a statement: "This waiver continues a profound and deeply saddening departure from our nation's commitment to the health of our families."