House pursues 'Arkansas model' on health coverage

April 1, 2013

Indiana could expand health insurance coverage for low-income Hoosiers entirely through private health insurance plans under an amendment adopted by a House committee on Monday.

The approach, known as the Arkansas model, would divert federal and state funds originally earmarked for a Medicaid expansion to instead give subsidies—or “premium assistance”—to help low-income Hoosiers buy health insurance via a federally run online marketplace known as an excahnge.

But the Republican-sponsored amendment brought immediate criticism from other Republicans, including representatives of Gov. Mike Pence’s administration.

President Obama’s administration approved the Arkansas model in February and, since then, several other states have expressed interest in it. Those states include Florida, Ohio, Tennessee and Texas.

The amendment to Senate Bill 551, adopted by the House Public Health Committee on Monday, would open a second avenue by which Indiana could expand coverage to Hoosiers with incomes below the federal poverty limit.

Until now, Pence and the Republican-dominated Legislature have insisted on expanding Medicaid only by using the Health Indiana Plan. That plan relies on health savings accounts and some patient contributions to offer health insurance coverage to about 40,000 working Hoosiers with low incomes.

Pence, a Republican, wants to use the HIP program, or something very similar to it, to expand coverage to more than 400,000 Hoosiers with incomes up to 138 percent of the federal poverty limit, which is about $32,000 for a family of four.

Senate Bill 551 gives the Pence administration the green light to do just that. But so far the Obama administration has been cool to that idea, which has caused some Democratic lawmakers to accuse Pence of jeopardizing more than $10 billion in new federal funding.

In response, House lawmakers decided to add the Arkansas model as one more option for an Indiana expansion of health insurance to low-income Hoosiers. The amended bill passed by a vote of 8-5, with a mix of Republicans and Democrats on both sides of the tally.

“This would also be additional flexibility to add a premium support model,” said Rep. Ed Clere, R-New Albany, chairman of the House Public Health Committee, in describing the amendment.

But that’s not how Sen. Pat Miller, R-Indianapolis, the author of Senate Bill 551, saw the amendment.

“I have a number of reservations about the amendment and at this point, do not support it,” Miller said Monday morning. Speaking of the Indiana Family and Social Services Administration, the state agency that oversees the Medicaid program, she added, “My concern is that this amendment has limited some of our negotiating ability” with the federal government.

Also, Pat Casanova, director of Indiana's Office of Medicaid Policy & Planning, criticized the amendment for limiting Indiana’s ability to negotiate with and potentially withdraw from a Medicaid expansion deal with the Obama administration. She said the Pence administration already has the authority to negotiate a deal on Medicaid expansion with the federal government, yet the porvisions of the amendment may place new limits on that power.

“We do have concerns with this amendment and how it limits our ability to withdraw from a waiver or whatever program we would negotiate with the federal government, based only on the federal government’s ability to fund it, rather than whatever other requirements they would place on us,” Casanova said.

Clere disagreed that the amendment would limit the state’s negotiating options with the federal government.

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