Indiana was one of the states planning to opt out of the Medicaid expansion included as part of federal health care reform. Now, the state may be looking at a middle way. Last week, state Senators pushed a new bill that would allow for something similar to the Medicaid expansion but through the state’s other program – Healthy Indiana Plan (HIP).
HIP is basically a state subsidized insurance plan that offers a very basic level of coverage at a lower premium, but also requires policyholders to maintain a health savings account. The creation of the plan was big win for Mitch Daniels administration. Daniels is now considered one of the key people in Republican politics, and his name was floated during the last election cycle as a possible contender – HIP was one of the selling points.Under the Senate plan, the state wouldn’t necessarily expand Medicaid. Instead it would put resources behind an expansion of HIP, effectively maintaining more state control of low cost insurance programs.
Supporters of this route say that too many local health care providers have opted out of Medicaid, making an expansion of the program worthless. With HIP, they say, patients would have more choices. Medicaid is arguably one of the most cost efficient subsidized health care plans in the United States. However, critics argue that the seemingly all-or-nothing approach Medicaid takes to ensure cost efficiency pushes too many health care providers out of the program making it too difficult for patients to find care.
Through the proposed HIP expansion, 400,000 uninsured Indiana residents would now qualify for coverage. Although, expanding through a program other than Medicaid may not jive with federal health care reform requirements. The Department of Health and Human Services (HHS), has indicated that it will be as flexible as it can with states in an effort to achieve broad based compliance, but expanding a completely separate and different program may run a bit far afield.
Governor Mike Pence argues that an expansion of HIP could be a model for a national overhaul of the Medicaid program given its focus on health care savings accounts and preventative medicine. However, the ability of individuals who qualify for these plans to afford savings accounts on top of insurance premiums – even subsidized – is an open question.
A 2011 report from state actuary State actuary Milliman Incorporated shows that expanding HIP would cost 3% less than expanding the Medicaid plan in Indiana, which the company puts at $2 billion. Under the terms of the health care reform law, the federal government will cover the costs of Medicaid increases for the first three years, although federal funding to the states for any program, hasn’t always been reliable. The state has to approve its budget for the next two years by the end of April, which means state lawmakers will need quick approval from HHS to go forward on this plan over a Medicaid expansion.