It looks as if Indiana is about to join the list of red states signing up for Obamacare's Medicaid expansion.
Republican Gov. Mike Pence, after months of discussions with the Obama administration, is offering a new plan Thursday morning to expand coverage to low-income uninsured Hoosiers. As expected, he's doing it through an existing state insurance program for adults that's been championed by some conservatives.
About two dozen states still haven't joined the Affordable Care Act Medicaid expansion, which extends coverage to low-income adults earning up to 138 percent of the federal poverty level. Some states like Texas and Louisiana seem pretty entrenched in their opposition to major elements of Obamacare. Other red states, however, are still looking for alternative ways to accept hundreds of millions, and even billions, in federal dollars to expand coverage — all while trying to maintain some rhetorical and policy distance from the Medicaid expansion envisioned by the ACA.
The White House is pushing reluctant states to expand Medicaid to close an unintentional coverage gap created by the Supreme Court's 2012 decision on the health-care law. Among the states that haven't expanded, there are about 5 million poor adults who don't earn enough to qualify for federal subsidies on the Obamacare health insurance marketplaces.
Indiana's unique situation
First, some background on Indiana. Pence last year insisted that he would only expand coverage if he could do it through the Healthy Indiana Plan, a health savings account-type of program for about 45,000 adult Hoosiers who didn’t qualify for the traditional Medicaid program.
The Obama administration maintained that Indiana couldn’t expand Medicaid through HIP because the program had an enrollment cap, and some cost-sharing features may have been problematic. HIP's design has been praised by conservatives for requiring Medicaid beneficiaries to be more conscious consumers because they take more financial responsibility for their care.
It looked like HIP was at risk of expiring in 2013, but the federal Centers for Medicare and Medicaid Services and Indiana struck a deal last September to keep the program running through the end of this year. It gave both sides more time to negotiate on the Medicaid expansion, and it allowed people enrolled in HIP to keep their coverage in the meantime.
The Pence proposal
Pence will lift HIP enrollment caps, opening up the program to working-age adults earning less than 138 percent of the federal poverty level ($16,105 for an individual or $32,913 for a family of four). Between 334,000 and 598,000 people will be covered under the plan, according to Pence's office. Enrollment will open in 2015, with federal approval.
The existing HIP program, which only covered people under the federal poverty level, required enrollees to contribute to the first $1,100 of their care. Under the expanded program, there will be two levels of coverage.
- HIP Members under the poverty level have the option to make monthly contributions. If they don't, they'll be transferred to a more basic level of coverage without vision and dental benefits. The lower coverage level requires co-payments for services, instead of monthly premiums. There are no co-pays, though, for preventive care and family planning services.
- HIP members above the poverty level who don't pay a monthly contribution within 60 days are locked out of the program for six months. They can't opt into the basic coverage level.
Here's what those monthly contributions would be, which are all up slightly from the current program:
The HIP deductible is increasing from $1,100 to $2,500, but Indiana is covering those extra costs. By comparison, the average deductible for a mid-level "silver" plan under the ACA is slightly higher than HIP's, at $2,907, according to to HealthPocket. And while Obamacare opponents have criticized high-deductible individual plans under the health-care law, Pence says the HIP high-deductible plans are an intentional design feature.
"Exposure to and awareness of the cost of care are key components of the consumer-directed model that encourages price and quality transparency from providers," according to a document Pence's office. "The increased deductible aligns with private market high deductible health plans paired with a health savings account, providing members valuable experience with a private market plan design."
Starting in 2016, Indiana will offer a new employer-based option. Those eligible for HIP can choose to enroll in the state program, or they can opt for a state contribution to help with the cost of employer-sponsored insurance. The choice is theirs.
What happens now
Pence is seeking a five-year waiver from the feds to operate the program, with the state pitching in $1.5 billion from an existing cigarette tax and hospital fee. Indiana will have to hold public hearings and take public comment on the plan before submitting a final waiver proposal to CMS sometime in late June. From there, Indiana and the feds will negotiate on the plan's finer points.
“We are encouraged by Indiana and Governor Pence’s commitment to helping cover more of the state’s uninsured population through the Healthy Indiana program and look forward to seeing his proposal," said CMS spokeswoman Emma Sandoe in a statement.
Pence's proposal comes as CMS is weighing plans from two other Republican governors to cover low-income adults with Medicaid expansion dollars through alternative approaches. Pennsylvania Gov. Tom Corbett's plan has been met with skepticism from Democrats and Obamacare advocates, while Gov. Utah Gov. Gary Herbert continues to negotiate with CMS. His biggest challenge, however, may come from reluctant Republican state lawmakers back home.
Ultimately, the Obama administration wants all the states to expand their Medicaid programs. As Indiana's new plan shows, that's going to take some creative maneuvering in Republican states.