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

Lawmakers pass Medicaid ball back to Pence

April 29, 2013

After a four-month debate, the Indiana General Assembly ended pretty much where it started on a potential expansion of Medicaid: Lawmakers are letting Gov. Pence go one-on-one with President Obama to see what kind of deal he can strike.

The Indiana General Assembly passed no new language regarding a potential Medicaid expansion in its session, which ended April 27. That decision essentially lets stand the Legislature’s directive in 2011, which gave the governor the authority to alter the Healthy Indiana Plan to “allow Indiana to use the plan to cover individuals eligible for Medicaid resulting from passage of the Federal Patient Protection and Affordable Care Act.”

That 2010 act, better known as Obamacare, called for all states to expand eligibility of their Medicaid programs up to 138 percent of the federal poverty limit, or about $31,800 for a family of four. Such an expansion would allow an extra 400,000 Hoosiers to qualify for Medicaid.

Opponents of Pence’s refusal to use anything but the Healthy Indiana Plan to expand Medicaid criticized both his and the Legislature’s lack of action.

“Simply by expanding affordable health care in Indiana, we could have put an estimated 30,000 Hoosiers to work and provided less costly health care options for 400,000 more Hoosiers,” said Scott Pelath, D-Michigan City, in a prepared statement. Yet, he added, “Statehouse power-brokers turned their backs on affordable care to pursue an uncertain expansion of a risky statewide program. If their way does not work, there is no Plan B for Indiana to help Hoosiers avoid the emergency room as their primary health care option.”

The General Assembly did set aside $250 million to prepare for the Pence administration's and the Obama administration's coming to terms on a Medicaid expansion using the Healthy Indiana Plan.

The Healthy Indiana Plan, created in 2007, uses health savings accounts to help about 40,000 working adults pay for care and provides insurance coverage for larger bills.

An expansion of HIP could also rely on existing cigarette tax revenue that funds the program now, as well as an HIP reserve fund. That gives the state government $600 million to work with to get a Medicaid expansion going in the next two years.

“We’ve known since the Affordable Care Act was passed that in Indiana the main route to an expansion would be through the Healthy Indiana Plan,” said Brian Tabor, a lobbyist for the Indiana Hospital Association. “I don’t think there’s disappointment.”

Timing is of the essence for the negotiations between the Pence administration and Obama’s Department of Health and Human Services.

At the moment, the Healthy Indiana Plan is scheduled to end on Dec. 31. On top of that, federal matching funds that would pay 100 percent of the costs of expanded Medicaid coverage start on Jan. 1, 2014.

But even if Pence and Obama don’t reach a deal in time for Indiana to expand Medicaid on Jan. 1, that doesn’t mean Hoosiers have to wait until 2015. An expansion could start anytime in 2014 and still qualify for the federal matching funds, Tabor said.

“I don’t think there’s any limitation on when an expansion can start,” Tabor said, although he added that the hospital association is still pushing for a Jan. 1 start date, because Obamacare’s cuts to hospital funding start then. “If something could be worked out over the next few months, that leaves ample time for an expansion by Jan. 1,” he said.

While hospitals are naturally eager to see expanded coverage under the Healthy Indiana Plan, Tabor also noted that many businesses should want to see it, too.

Beginning in 2014, employers will be at risk for fines if they do not offer health insurance to at least 95 percent of their workers who work more than 30 hours per week. If they fail to do so and one of those workers buys private health insurance through new online exchanges crated by Obamacare, the employer will face fines of $2,000 for all but 30 of its full-time workers.

For companies with lots of low-wage workers, expanded Medicaid coverage would help cover many low-income households, making it less likely employers would face fines.

Tabor pointed to a 2012 study by the California-based Kaiser Family Foundation that breaks down the number of uninsured adult workers with incomes of 138 percent of the federal poverty limit or below.

There were more than 198,000 such Hoosiers in 2010—or roughly 45 percent of those who would be newly eligible for Medicaid coverage under an expansion.

Of that total, 62 percent were in agriculture or service jobs. Another 14 percent were in education, health care or social services jobs, and there were 12 percent in both the professional services and public administration sector, as well as manufacturing and infrastructure businesses.

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