What happens if Pence, Sebelius can’t make a deal?

February 20, 2014
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Gov. Mike Pence is scheduled to meet face-to-face this weekend in Washington, D.C., with Kathleen Sebelius, President Obama’s secretary of health and human services.

Pence’s goal is to hammer out a deal allowing him to use the Healthy Indiana Plan to expand health insurance coverage to low-income Hoosiers, rather than use the traditional Medicaid program, as Obama called for in his Affordable Care Act.

This meeting may not be for all the marbles. Even if Pence and Sebelius can’t come to terms, they could keep talking further.

But what if talks completely break down? What will happen then?

Pence has set up the choice as HIP or nothing.

Sebelius has said the basic elements of HIP cannot be allowed below the poverty limit. Sebelius, for example, would not allow the state of Iowa to require citizens below the poverty limit to contribute to private insurance, even though such payments are required of those with incomes above the poverty limit.

It would seem that either somebody gives or somebody doesn’t. But, actually, I don’t think it’s that simple.

First of all, there are ways Indiana could continue HIP’s requirement of consumer contributions to health coverage and yet assuage Sebelius’ concerns.

Some ideas were floated this year by Rep. Ed Clere, a Republican from New Albany, in a bill he authored. House Bill 1309 went nowhere in the legislature, which already decided in 2011 to let the governor negotiate a deal on Medicaid expansion.

But Clere’s bill is interesting, because it sheds light on some options Pence could propose to Sebelius.

HB 1309 calls for a deal with the Obama administration that allowed either consumer co-pays for their medical care or contributions to a health spending account, which is what the HIP program requires now.

HIP calls for participants to pay at least 2 percent of their incomes initially into a POWER account—which functions like a health savings account—from which they pay for routine medical care.

But if HIP participants fail to make two straight monthly payments, they are kicked out of the program. And that has alarmed the Obama administration.

But Clere’s bill would allow any missed payments to be deducted from the participant’s income tax refund or earned income tax credit—over multiple years if necessary to make up the shortfall. That would preserve consumer contributions and yet make it nearly impossible for a participant to be kicked off the program.

Clere’s bill also includes an automatic termination provision, which would be triggered if the federal government ever reduces the amount of funding it promised in the Affordable Care Act.

That could help settle the concerns of Pence and state lawmakers that the cost of the Obamacare Medicaid expansion could run amok if future Congress’ decide to reduce funding levels.

If Pence comes up empty in his dealmaking with Sebelius, there’s at least some chance either he or state lawmakers might fall back on ideas already put forward in legislature.

Those ideas could come from Clere. Or they could come from other legislators. Or they could come from other states.

A fascinating thing that happened this year was that liberal Democrat legislators in Indiana submitted bills that would replicate the Medicaid expansion deals struck by some of the most conservative Republican governors in other states.

Sen. Karen Tallian, D-Portage, submitted Senate Bill 370, which would expand insurance coverage to  Hoosiers by using Obamacare’s extra Medicaid funding to give subsidies to low-income Hoosiers to buy private insurance in the Obamacare exchanges.

That’s the kind of deal that the states of Florida, Arkansas and Iowa struck with Sebelius.

I don't know Karen Tallian, but I'm going to go out on a limb here and say she shares few political views with Rick Scott, Mike Beebe or Terry Branstad--the respective governors of those states.

But Indiana Democrats want some kind of insurance expansion, in whatever form it takes.

That was clear when Cover Indiana, an organization advocating for a health insurance coverage expansion in Indiana, came to Pence's office on Wednesday to present a letter signed by 10,000 Hoosiers.

"We want you to know," the letter to Pence stated, "that there are many citizens of Indiana who hope to see Medicaid by any name expanded to as many of our friends, relatives and fellow Hoosiers as possible."

I think many Republicans could find some of those options acceptable, too.

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  • Medicaid Expansion Is Best Solution Despite Gov Recalcitrant Stance
    JK - I just watched a Chuck Todd interview with Pence this morning on MSNBC. Pence did not sound very willing to compromise. I am glad to see a few legislators looking for a real solution to the inadequate health care coverage og Hoosiers but Clere's bill, which includes offsetting tax refunds to pay for delinquent premiums, sounds unrealistic. First, people who are in need of coverage aren't likely to make enough to have much of a refund and, second, I assume that Clere is talking about a state refund, which is likely to be small or nonexistent. Moreover, Clere's bill is rather complicated. The simple and best solution is expanded Medicaid. Pence claims that the program is rife with fraud and abuse but I would assert that the program does a good job of negotiating low reimbursement rates--rates much lower than those under private insurance.
    • To Jim F.
      I agree that Pence hasn't sounded ready to compromise. But we don't know how much of that is public posturing--it certainly wouldn't be good negotiating to signal you're ready to scale back your demands BEFORE you get in the room and talk. Also, one note on Medicaid: It doesn't negotiate rates with providers; it dictates them. And since those reimbursement rates have been quite low for years, relatively few providers see Medicaid patients. Any expansion, whether via HIP or traditional Medicaid, would probably require a sharp increase in Medicaid reimbursement to attract sufficient providers to see the extra patients.
    • Good Points JK
      JK - Thanks for the response. I agree that Pence could be publically posturing but I am not sure what that accomplishes given the HHS experience with Iowa and others. Your point about Medicaid rates is well taken. I have not seen any information about Healthy Indiana Plan reimbursement rates and how they compare to Medicaid, which could be revealing. It is still unclear how Pence hopes to expand the Indiana plan to provide coverage to the thousands of uninsured Hoosiers.
    • HIP & Tallian plan
      HIP does pay providers at the Medicare rate, which is one of the attractive parts of the program. For services that are covered by Medicaid but not Medicare, HIP pays 130% of the Medicaid rate. I agree with J.K. Wall in hoping that the Governor and the Secretary can make a deal. If HIP is not the solution, Sen. Tallian offers a ready made Indiana version of the "Arkansas / Iowa" plan - which also makes good sense.
    • I like bill 1309
      "Adds Medicaid rehabilitation option services, chiropractic services, and optometric services" I'm quiet surprised faith healer, witchdoctor, snake handler, blood letter were left out. These people need basic medical care, even if they file taxes what they get back won't be enough for anything. Pence picked this fight and the people who'll pay, are the ones who can afford it the least. So run off to new remodeled cabin in Shangri-La Gov Pence enjoy.
    • No News on Pence/Sebelius Meeting??
      I did not see anything in the news about the Pence/Sebelius meeting. Did I miss something JK?
    • Pence release
      On Gov Pence site he has this news release which says nothing: Indianapolis, IN—Today, Governor Mike Pence met with Secretary of Health and Human Services, Kathleen Sebelius in Washington, D.C. to discuss how the state’s innovative, consumer-driven Healthy Indiana Plan could be used to bring health coverage to more Hoosiers. “I am grateful for Secretary Sebelius’s openness to working with the State of Indiana to find a way to provide more Hoosiers with greater access to quality healthcare through the Healthy Indiana Plan,” said Governor Pence. “Our administration remains committed to using the Healthy Indiana Plan’s consumer-driven design, and appreciates the Secretary’s willingness to identify areas of common ground that will allow us to use an Indiana solution to meet our shared goal of providing more healthcare options to Hoosiers in a fiscally responsible manner.”
    • Pence Remains Recalcitrant
      Thanks Don. As usual Pence says nothing and continues his hyperbole about a "consumer driven" plan. What BS that is! After reading Maureen Groppe's article in the Star today (Monday) I don't believe Pence will be successful; he continues to be steeped in ideology rather than practical solutions.

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