The Herald Bulletin

Morning Update

Nation & World

May 16, 2014

Pence seeking altered Medicaid expansion

INDIANAPOLIS — Indiana could become the latest state to expand health coverage for low-income residents if the federal government signs off on a proposal rolled out by Gov. Mike Pence Thursday that alters a state-run plan to meet requirements under President Barack Obama's health reform law.

Pence's "HIP 2.0" could cover upward of 350,000 uninsured residents earning up to 138 percent of the federal poverty level. The proposal is an altered version of the state's Healthy Indiana Plan, which currently provides health savings accounts to about 40,000 people. Indiana has been seeking federal approval to use the program, which was established in 2008 under former Gov. Mitch Daniels, as its vehicle to cover more uninsured residents.

Pence sought to distance his proposal from Medicaid, while Democrats praised him for accepting an expansion of Medicaid. In reality, the proposal blends features of the Healthy Indiana Plan, but includes some key features of Medicaid.

Pence has long objected to an expansion of Medicaid, which he calls "broken" and a "fiscal monstrosity." Indiana has been seeking a waiver from Obama's health reform law to use the Healthy Indiana Plan instead, but federal officials have objected to some of the program's requirements, including a provision that recipients contribute the first $1,100 toward their care. A one-year extension of the Healthy Indiana Plan expires Dec. 31.

The revised proposal, which Pence unveiled at Indiana University Health's Methodist Hospital in Indianapolis, would offer two tiers of coverage. The first would provide very limited coverage at little or no cost to those below 100 percent of the federal poverty level. A higher level dubbed HIP Plus would include dental and vision coverage, a comprehensive drug program and maternity services. Participants would pay $3 to $25 per month, based on income.

A third option would give workers who can't afford their employers' health care can help with their premiums from the state.

The proposal would use federal funds and expand the state's hospital assessment fee to cover the cost.

Pence said the expansion of the Healthy Indiana Plan would help low-income residents be personally responsible for their health, unlike traditional Medicaid. The plan also includes a program that will connect HIP recipients with state-sponsored job training and job search programs.

"HIP is not intended to be an entitlement. It is a safety net program that aligns incentives with human aspirations," Pence said.

He described his visits with patients around the state, including a woman named Diana who had held off going to the hospital for treatment because she lacked health care before.

"I think Diana is like a lot of Hoosiers who don't want a handout; they want a hand up," he said.

The proposal needs approval from the Centers for Medicare and Medicaid Services, which administers the federal health reform law. Pence said Indiana will submit its plan by the end of June.

Indiana Democrats, who have been asking Pence to expand Medicaid for well more than a year, gave the proposal a tepid response Thursday.

"I respect that this plan aligns with his personal beliefs, but I have serious concerns that it is an untested proposal that will still fail to provide critical health coverage to thousands of Hoosiers," said U.S. Rep. Andre Carson, D-Indianapolis, in a statement.

Members of the Indiana Hospital Association, which have long pushed for a Medicaid expansion because of the money it would bring in, worked with Pence's administration in crafting a proposal.

"For many years, hospitals have struggled to keep up with the staggering cost of uncompensated care - as much as $3 billion in one year alone," said Mike Packnett, chairman of the IHA board of directors, in a statement.

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