Medicaid and Government Health Care and Health Care & Life Sciences and Health Care & Insurance

Deal raises hopes for Healthy Indiana Plan expansion

March 25, 2013

Gov. Mike Pence’s strategy for expanding Medicaid in Indiana is to convince or cajole the Obama administration to let him use the Healthy Indiana Plan to do it. A recent deal in Arkansas seems to make it more likely that the Obama team will give Pence what he wants.

At least that’s the way supporters of the Medicaid expansion read the situation.

On Feb, 27, Arkansas Gov. Mike Beebe, a Democrat, received the go-ahead from the U.S. Department of Health and Human Services to use federal monies designed to expand Medicaid to instead subsidize the purchase of private health insurance.

Those subsidies would be paid out via the health insurance exchanges that are the other key mechanism of Obama’s 2010 health reform law for expanding health insurance coverage.

Now Ohio is negotiating with Kathleen Sebelius, Obama’s secretary of health and human services, about doing the same thing as Arkansas. And Republican governors in four other states have reportedly expressed interest in the same kind of deal.

Pence is not asking, at least so far, for an Arkansas-style deal. But to Brian Tabor, the lobbyist for the Indiana Hospital Association, the Arkansas deal suggests the Obama administration is willing to agree to deals that are quite a bit different from the original health reform law in order to get expanded coverage.

"It's a game changer," Tabor said of the Arkansas deal. He added, "It seems like a bigger leap than to use a program like HIP that is already well understood by the federal government."

The Healthy Indiana Plan was created by Republican Gov. Mitch Daniels and the state Legislature in 2007.

If Tabor is correct, then the situation for Pence looks significantly different than in January and February, when conservative governors in Arizona, Ohio and Florida agreed to expand their Medicaid programs with few concessions from the Obama administration. That appeared to steal negotiating leverage from Pence and Republican legislators who have pushed HIP as the vehicle for a Medicaid expansion.

HIP uses health savings accounts and private insurers to provide coverage for low-income working adults. It enrolls about 40,000 Hoosiers, most of whom pay at least a small amount into their health savings accounts.

The law was initially written to require individual contributions to the accounts, but the Obama administration struck down that requirement when it renewed the HIP program last year.

The contribution requirement as well as provisions that bar Hoosiers from receiving coverage if they miss payments have been concerns for the Obama administration as it has considered Indiana’s request to use the program to expand Medicaid.

At issue is health insurance coverage for more than 400,000 additional low-income Hoosiers. The 2010 Patient Protection and Affordable Care Act required states to expand Medicaid eligibility up to 138 percent of the federal poverty limit, or about $32,499 for a household of four.

The U.S. Supreme Court struck down that requirement in June, but the Affordable Care Act still includes significant new federal funds to help states expand their Medicaid programs. Now the Obama adminsitration has been negotiating state by state to convince them to expand their Medicaid.

"The lesson here seems to be," Tabor said of the Obama administration, "that they are open to allowing states to chart their own course, within certain parameters, to meet the goal of expanding coverage."

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