Pence asks to meet with Sebelius over HIP expansion

November 19, 2013

Gov. Mike Pence has requested a meeting with U.S. Health and Human Services Secretary Kathleen Sebelius “to work through any outstanding issues that stand in the way” of Indiana expanding Medicaid coverage via its Healthy Indiana Plan.

Pence requested the meeting in a letter dated Nov. 15, which was made public by Pence’s office on Tuesday.

Pence has so far declined to expand eligibility for the Medicaid health program for the poor, as called for in President Obama’s health reform law. That law, known as the Affordable Care Act, called for all states to make Medicaid available to all adults making up to 138 percent of the federal poverty limit—but the U.S. Supreme Court ruled that states can decline to expand Medicaid coverage.

Such an increase is projected to add 182,000 Hoosiers to the Medicaid program, according to the California-based Kaiser Family Foundation.

Instead, Pence wants to expand Medicaid coverage using some form of the Healthy Indiana Plan, which currently provides insurance to about 40,000 Hoosiers who agree to make monthly contributions to health savings accounts.

Pence acknowledged that the monthly contributions have been an issue in discussions with Sebelius’ agency, but he insisted on some form of consumer responsibility in any expansion of coverage in Indiana.

“However, in order to expand the Healthy Indiana Plan, it is essential that the State be able to maintain the consumer-driven model on which the program is predicated,” Pence wrote.

The Obama administration did agree to keep the consumer contributions in the Healthy Indiana Plan when it renewed the plan in August. Indiana was also allowed to keep a cap on enrollment, based on available funding.

Both features are different than the traditional Medicaid program, which covers all of a patient’s expenses and has no limit on enrollment. But those features have driven the cost of Medicaid steadily higher for Indiana, with the state projecting it will grow rapidly even without an expansion of the program.

The state is currently spending $2.7 billion, or about 18 percent of its annual budget, to cover about 1 million Medicaid participants. According to 2012 estimates by the actuarial firm Milliman Inc., the state’s Medicaid expenses will grow by another $1 billion per year by 2020—even without an expansion.

The Obama administration has “challenged” the Pence administration to come up with new ideas for solving those two issues before agreeing to expand the program, said Deb Minott, Pence’s secretary of the Indiana Family and Social Services Agency, which administers Medicaid in Indiana.

“They’re really trying to challenge us to come up with other ways of doing that,” Minott said in a Nov. 1 interview. And so, she added, state officials are “brainstorming” ways of preserving HIP’s principals of individual and fiscal responsibility, while satisfying the concerns of the Obama administration.

But in his letter, Pence again defended those key provisions of the Healthy Indiana Plan.

“Unlike traditional Medicaid, the Healthy Indiana Plan gives its members ‘skin in the game’ with regard to their healthcare and lifestyle decisions,” Pence wrote. “As a result, Healthy Indiana Plan members utilize preventive care services more often and the emergency room less often than traditional Medicaid members. … Our actuaries predict that, over time, healthcare costs are lower under this model.”

The Healthy Indiana Plan was created by Gov. Mitch Daniels in 2007 and passed with bipartisan support in the state Legislature. It is funded by a tax on cigarettes.


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