Report provides glimpse into liberal concerns about Pence’s HIP 2.0

When Gov. Mike Pence proposed his HIP 2.0 plan to use Obamacare money to expand Medicaid, it was conservatives who voiced the quickest and loudest criticism.

But it is the concerns of the left that matter more, since it is the predominantly left-leaning folks in the Obama administration who will give Pence’s plan a thumbs up or down.

That’s why my attention perked up Friday when the Center on Budget and Policy Priorities, a liberal-leaning D.C. think tank, issued a report on HIP 2.0 that said Pence’s plan “needs significant revision.”

We can’t be sure if Obama’s health secretary, Sylvia Mathews Burwell, has the same concerns as the think tank, often called CBPP. But the report jibes substantially with Burwell’s comment earlier this month about her discussions with Pence about HIP 2.0.

“There are some core parameters that are both statutory and policy in terms of what Medicaid needs to provide," Burwell said, according to the Indianapolis Star. "That's where we're having the space in the conversation.”

HIP 2.0 would expand the Healthy Indiana Plan to about 350,000 Hoosiers (up from about 40,000 now) by offering health savings accounts with a high-deductible insurance plan. Enrollees would be asked to make monthly contributions ranging from $3 to $25 depending on their income.

If they did not make the contributions, Hoosiers would be rolled over to a plan that would require them to make co-pays for medical services and no longer offer dental or vision coverage.

CBPP finds two main faults with HIP 2.0:

1. It requires those with incomes of 100 percent to 150 percent of the federal poverty limit to pay “premiums” for coverage, which CBPP says Medicaid statutes forbid.

2. It would force Hoosiers in poverty who do not make payments for their coverage to wait two months for coverage to start; Medicaid, by contrast, requires coverage to start retroactively—three months before they enroll.

“For people with very low wages who face a constant struggle to make ends meets and can face various financial crises—such as the need to pay for a major car repair so they can continue to get to work and avoid losing their job—this is harsh punishment,” CBPP authors Jessica Schubel and Jesse Cross-Call wrote.

Such features, they concluded, “would create barriers to coverage for low-income individuals and cause substantial numbers of people to remain uninsured.”

Not only that, but Schubel and Cross-Call argue that such features aren’t allowed under Obamacare’s expansion of Medicaid.

The CBPP report also cites research from several states, including Indiana, showing Medicaid enrollment declined when enrollees were asked to contribute to their health coverage.

Pence spokeswoman Christy Denault said the CBPP report gets several facts wrong about HIP 2.0 and Indiana’s experience with the original Healthy Indiana Plan.

“HIP 2.0 is based on a proven program that is operating today and is backed by data that shows its success,” Denault wrote in an e-mail. “We believe HIP 2.0 is the best path forward for providing health coverage to low-income Hoosiers in a way that will empower them to become more engaged, responsible, health-conscious consumers of care.”

The Pence team does not believe the contributions that HIP 2.0 requires are premiums, because the premiums go into an account each participant would own (even after leaving the HIP program). The accounts would go toward paying for health care services. Premiums, by contrast, are paid once and not refunded—whether or not a person actually uses the health coverage those premiums purchased.

Also, the Pence administration thinks that HIP 2.0's omission of retroactive health coverage would fix a significant problem with Medicaid—namely, that many folks don’t sign up until they get sick, because they know the coverage will be retroactive to before the time they got sick.

Enrollment in Indiana Medicaid went up by about 50,000 this year, an increase at least partly caused by the uninsured signing up for coverage so they would not incur Obamacare’s new tax for going without coverage.

Instead, the Pence team thinks it would be better to encourage all low-income Hoosiers to sign up for coverage, so they can start getting the primary and preventive care that hopefully would forestall major illnesses.

So it doesn’t sound like Pence and his staff have any intention of making significant revisions to HIP 2.0. “Gov. Pence and his administration stand solidly behind the program we have proposed,” Denault wrote.

We’ll have to see which side blinks in this clash of philosophies.

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.