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Pence still angling to use Healthy Indiana Plan to expand Medicaid

February 23, 2013

Gov. Mike Pence got good news and bad news in the past week for his push to get the Obama administration to let Indiana use its Healthy Indiana Plan to expand Medicaid.

Florida Gov. Rick Scott became the fourth conservative Republican governor to support an expansion of Medicaid, joining the governors of Arizona, Ohio and Michigan in dropping his opposition to the plan.

Mike Pence Pence

Their decisions have raised the pressure on Pence and Republicans in the state Legislature to also expand eligibility for Medicaid in Indiana—even though many of them object to it as an imprudent expansion of government.

In Florida, Scott’s about-face occurred after Obama’s Department of Health Human Services granted Florida a waiver that will allow the state to use only privately-run health insurers to administer Medicaid benefits to new recipients.

Pence has also asked the Department of Health and Human Services for a waiver—although a more substantial one. Pence wants to use the Healthy Indiana Plan, which requires participants to use health savings accounts and make at least small contributions to them.

In a Feb. 13 letter to Kathleen Sebelius, Obama’s secretary of health and human services, Pence said the Healthy Indiana Plan would be more efficient than the traditional Medicaid plan.

“Medicaid is broken. It has a well-documented history of substantial waste, fraud and abuse. It has failed to keep pace with private market innovations that have created efficiencies, controlled costs and improved quality,” he wrote.

The Obama administration has not responded to Pence’s request, but it declined to grant a similar request made by Pence’s predecessor, Mitch Daniels.

Also on Feb. 13, Indiana’s Republican-led House and Senate each passed a bill out of committee that would use the Healthy Indiana Plan to expand Medicaid.

Obama’s 2010 Patient Protection and Affordable Care Act called for all states to expand Medicaid eligibility up to 138 percent of the federal poverty limit.

The U.S. Supreme Court declared in June that states could opt out of that expansion. And since then, Indiana leaders have figured they could use that “opt-out” possibility to exact flexibility from the administration.

But in the past two months, Obama’s team has been able to win over conservative Republican governors without offering much flexibility in return.

The governors were concerned that not expanding Medicaid could put some of their states’ rural hospitals out of business. Their support does not guarantee that those states’ legislators will, indeed, vote to expand Medicaid, but it certainly adds momentum to proponents of expansion.

Indiana now is surrounded on all sides by states that have indicated they are likely to expand Medicaid.

“That certainly puts a little bit of pressure on the governor,” said Ed Feigenbaum, publisher of the Indiana Legislative Insight newsletter. “And it gives a little more credibility to the Democrats [who are arguing that Medicaid expansion is] going to be the public policy of the country, and if we want to protect our people and protect our businesses, this is something we need to consider.”

The Healthy Indiana Plan, created in a bipartisan effort in 2007, expanded health insurance coverage to about 40,000 Hoosiers.

The plan’s requirement that participants contribute some money is the sticking point for the Obama administration, said Seema Verma, a health care consultant who has been the point person on health reform for the state of Indiana.

“It’s that we require people to make contributions. That really flies in the face of the entitlement thing,” Verma said during a luncheon speech Feb. 8 at a conference on health reform in Indianapolis.

What’s at stake in the decision is coverage for roughly 300,000 Hoosiers who have incomes below the federal poverty limit yet higher than the income threshold for Indiana’s Medicaid program.

The federal poverty limit is $11,170 for a single adult or $23,050 for a family of four. But Indiana Medicaid does not allow childless adults to enroll in Medicaid unless their incomes are just 25 percent of those limits.•

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