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

UPDATE: Pence unveils Healthy Indiana Plan expansion

May 15, 2014

Indiana's effort to cover uninsured residents through a state-run health program instead of an expansion of Medicaid took another step forward Thursday when Gov. Mike Pence unveiled a proposal that he said would cover 350,000 residents if approved by the federal government.

Pence's "HIP 2.0" proposal is an altered version of the state's Healthy Indiana Plan, which currently provides health savings accounts to about 40,000 people. Indiana has been seeking federal approval to use the program, which was established in 2008 under former Gov. Mitch Daniels, as its vehicle to cover more uninsured residents.

Pence has long objected to an expansion of Medicaid, which he calls "broken" and a "fiscal monstrosity." Indiana has been seeking a waiver from President Barack Obama's health reform law to use the Healthy Indiana Plan instead, but federal officials have objected to some of the program's requirements, including a provision that recipients contribute the first $1,100 toward their care. A one-year extension of the Healthy Indiana Plan expires Dec. 31.

"Medicaid is not a program we need to expand," Pence said. "It is a program we need to change. Nobly created 50 years ago to help the poor and those with disabilities access quality health care, Medicaid has morphed into a bureaucratic and fiscal monstrosity that does less to help low-income people than its advocates claim."

The revised proposal, which Pence unveiled at Indiana University Health's Methodist Hospital in Indianapolis, would offer two tiers of coverage. The first would provide very limited coverage at little or no cost to those below 100 percent of the federal poverty level. A higher level dubbed HIP Plus would include dental and vision coverage, a comprehensive drug program and maternity services. Participants would pay $3 to $25 per month, based on income.

A third option would give workers who can't afford their employers' health care can help with their premiums from the state.

The proposal would use federal funds and expand the state's hospital assessment fee to cover the cost.

Pence said the expansion of the Healthy Indiana Plan would help low-income residents be personally responsible for their health, unlike traditional Medicaid. The plan also includes a program that will connect HIP recipients with state-sponsored job training and job search programs.

"HIP is not intended to be an entitlement. It is a safety net program that aligns incentives with human aspirations," Pence said.

He described his visits with patients around the state, including a woman named Diana who had held off going to the hospital for treatment because she lacked health care before.

"I think Diana is like a lot of Hoosiers who don't want a handout; they want a hand up," he said.

The proposal needs approval from the Centers for Medicare and Medicaid Services, which administers the federal health reform law. Pence said Indiana will submit its plan by the end of June.

Indiana Democrats, who have been asking Pence to expand Medicaid for well more than a year, gave the proposal a tepid response Thursday.

"I respect that this plan aligns with his personal beliefs, but I have serious concerns that it is an untested proposal that will still fail to provide critical health coverage to thousands of Hoosiers," said U.S. Rep. Andre Carson, D-Indianapolis, in a prepared statement.

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