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Pence objects to new federal review of HIP program

December 3, 2015

Gov. Mike Pence fired off a letter to the Obama administration on Thursday asking it to cancel its contract with what he described as biased contractors recently hired to evaluate the Healthy Indiana Plan.

Pence said an evaluation of the health insurance program for low-income Hoosiers is already being conducted by a firm hired by the state, and that a second opinion is not necessary.

He also bristled at the organizations hired this fall by the federal government, especially the left-leaning Urban Institute, saying its previous criticism of the HIP program shows it cannot be “fair and impartial.”

“I am concerned that two evaluations being conducted at the same time has the potential to create contentious outcomes which can impede fair, impartial, and empirical analysis of demonstration projects,” Pence wrote in a letter to Sylvia Burwell, the U.S. secretary of health and human services.

He added, “I do not believe HIP will be objectively assessed by the chosen contractors. I ask that you intervene in this matter immediately to terminate the second federal evaluation.”

The Pence administration was required to hire an independent firm to evaluate the Healthy Indiana Plan as part of a January agreement with the Obama administration, which allowed the Healthy Indiana Plan to rapidly expand using extra Medicaid funding approved as part of the Obamacare health reform law.

The Healthy Indiana Plan, known as HIP or HIP 2.0, has grown since then to include 355,000 Hoosiers. It offers health coverage to all non-disabled adults ages 19-64 who earn between 23 percent and 138 percent of the federal poverty level. That means a maximum income of no more than about $16,000 annually for an individual and $33,000 for a family of four.

To get the best coverage, participants must pay between $1 and $25 per month, based on their incomes. If they fail to make those payments, beneficiaries are switched to a slimmed-down benefits plan that does not include dental and vision coverage and requires higher co-pays for medical care.

The Pence administration on June 1 hired the Virginia-based Lewin Group, which has conducted analyses of health policy for four decades. However, the Lewin Group is viewed with suspicion by some policymakers because it is owned by Minnesota-based UnitedHealth Group Inc., the largest health insurer in the nation.

The approval of HIP as an alternative to expanding the traditional Medicaid program has been controversial from the start. Conservatives have criticized Pence for capitulating to an expansion of government programs, while liberals object to using Medicaid money for a program that requires its beneficiaries to pay into accounts that are similar to health savings accounts, or HSAs.

Some of that criticism has come from the Urban Institute.

“In Indiana, there is a six-month lockout period [if beneficiaries above the poverty line don’t pay their contributions to the plan], noted Urban Institute researchers in a May 2015 report. “The use of premiums at very low income levels that may have serious effects on enrollment outcomes seems inconsistent with the purposes of the Medicaid program and the goal of the ACA, which is to expand enrollment.”

The Urban Institute is actually working as a subcontractor on the HIP evaluation for Maryland-based Social & Scientific  Systems Inc., which was hired in September. The Pence administration also faulted that firm, noting that one of its economists wrote an article in 2014 that found higher premiums charged by state governments to Medicaid recipients resulted in a drop in participation in those programs.

The paper, whose lead author is Salam Abdus, was published in the August 2014 issue of the well-regarded academic journal Health Affairs.

The Urban Institute’s May 2015 report cited the Abdus’ paper in part of its critique of Indiana’s HIP program.

“Based on the statements made in this article,” Pence wrote, “it is clear that the contractors selected by CMS have a demonstrated bias against the HIP program, and will not be able to conduct a fair and impartial evaluation of the program.”

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