Indiana Gov. Mike Pence asked the federal government Wednesday to approve a three-year extension of the Healthy Indiana Plan health savings accounts in lieu of an expansion of a federal Medicaid system he called "broken."
Pence wrote a fiery letter to Health and Human Services Secretary Kathleen Sebelius, saying Medicaid is fraught with "waste, fraud and abuse," while also seeking approval for the HIP extension.
"Medicaid is broken. It has a well-documented history of substantial waste, fraud and abuse. It has failed to keep pace with private market innovations that have created efficiencies, controlled costs and improved quality," he wrote.
The Indiana Family and Social Services Administration requested a waiver from the Centers for Medicare and Medicaid Services, seeking to enroll residents who earn up to 138 percent of the federal poverty line in the HIP program — a move that would effectively cover roughly 400,000 residents through health savings accounts instead of traditional Medicaid.
It was not immediately clear Wednesday evening whether the waiver would qualify the state for the roughly $10.5 billion in federal aid that would come with a traditional Medicaid expansion. The determination would hinge on who is defined as "newly eligible" under the law — a measure that could encompass everyone above the level the state currently provides for, or just above the federal poverty level.
House Minority Leader Scott Pelath, D-Michigan City, said Pence's move puts thousands of jobs at risks by playing politics with the expansion. Pelath and other supporters of the expansion have called it — and the federal money that would come along with it — a "jobs measure" more than anything else.
"I fear that two words keep getting in the way of doing what's necessary: Barack Obama," he said of Indiana Republicans' rejection of the Medicaid expansion.
It's unclear whether the federal agency in charge of Medicaid will sign off on a longer extension and expansion of the Indiana program. The agency approved a one-year extension last month but ruled out minimum payments. Former Gov. Mitch Daniels sought a three-year extension of the program in 2011, but was rejected.
An HHS spokesman said he was reviewing Pence's letter and waiver request.
The state filed its application Wednesday as state lawmakers sought a similar work-around to approving an all-out expansion.
The Senate's health committee approved Wednesday afternoon a measure that would expand Medicaid through the Indiana program while asking the federal government to deliver the additional aid to the state as a block grant. A House panel unanimously approved a similar measure Wednesday evening.
Throughout the debate lawmakers have argued over the price of a Medicaid expansion. The actuary hired by the state has delivered a worst-case scenario that assumes Indiana would pay out $2 billion for the expansion. The Indiana Hospital Association released a study this week showing the state would pay out $503 million over that same period and pull in roughly $10.5 billion in federal aid.
The difference between the two rests in part on whether doctors are paid back at 80 percent of the Medicare rate, as the state actuary assumes, or 60 percent, as the hospital group estimates.
But the cost to the state of expanding through the HIP program is still unknown.
"How do you know the fiscal impact of an expansion, but you don't know the fiscal impact of a HIP expansion?" asked Sen. Greg Taylor, D-Indianapolis.
Senate Health Chairwoman Pat Miller, R-Indianapolis, responded: "Sen. Taylor I can't predict the future. What I can tell you is, I think Indiana has a better way to address this issue. I would like to try this as an alternative."