Given yesterday’s news about the
waiver fancy exception Arkansas had approved to allow for their Medicaid expansion, my thoughts have turned to my own home state. I taped a TV program this morning talking about the potential Medicaid expansion in Indiana. It’s hard to read the tea leaves here, but it seems that Governor Pence will only approve it if he’s allowed to use something like the Healthy Indiana Program (HIP) as the vehicle to get it done. Here’s how HIP works:
Indiana’s plan provides coverage to uninsured parents and adults without children who are not eligible for Medicaid and who have incomes below 200 percent of the poverty line ($34,340 a year for a family of three in 2007). In Indiana, parents are eligible for Medicaid only if their income is less than 22 percent of the poverty line — just $3,777 a year for a family of three — and they have resources of less than $1,000.
Participants in the Healthy Indiana Plan (HIP) will have to contribute each month toward a “POWER” account, similar to a health savings account. Individuals’ required contributions will vary based on their income, ranging from 2 percent of income for those with incomes below the poverty line to 5 percent of income for some participants with incomes between 150 and 200 percent of the poverty line. The state will also contribute to the account to bring it up to a $1,100 annual total, which individuals will then use to pay for health care expenses other than basic preventive care.
Once the POWER account is used up, most participants in the Healthy Indiana Plan will receive coverage through a private health plan. Certain participants with a history of chronic illnesses (such as cancer and HIV/AIDS) and those who have had organ transplants will instead receive coverage through an “Enhanced Services Plan” administered by the entity that operates Indiana’s high-risk health insurance pool.
There are a few problems here. First, the HIP has both an annual and a lifetime cap. That will be unacceptable under the ACA. Second, it has no dental, vision, or even maternity benefits. That will be unacceptable as well. Fixing both of these issues will make the HIP more expensive than it was before. It also requires premium contributions from everyone, which Medicaid does not.
And here’s an additional problem: it is already more expensive than Medicaid on a per-person basis.
Using HIP for the Medicaid expansion will cost 44% more than just the traditional Medicaid expansion, according to the state’s own actuary. That’s because they’d need to expand benefits, drop the cap, and accept the higher administrative costs of HIP over traditional Medicaid. It will be more expensive.*
As I was baffled by Arkansas wanting to spend more, I’m baffled by Indiana. Please don’t misunderstand me. If someone wants to make the argument that they think HIP is a better quality outcome, or physicians will be more accepting, and they are willing to spend more to get those results – that I understand. But the same people who are arguing, quite loudly, that Indiana cannot possibly afford the traditional Medicaid expansion are arguing that they want to spend more through HIP, not less. A lot more.
*Please don’t tell me that the new study shows that HIP will save money in the expansion. It’s not a new study. It’s an interpretation of the fact that HIP has come under the federal cap for the waiver per-capita spending. That doesn’t mean that HIP – as it stands – is cheaper than traditional Medicaid. It’s not.
UPDATE: Sarah Kliff pointed out Arkansas didn’t technically get a “waiver”. She’s right.