Pence health plan bid brings hope for some, fear for others
By Christin Nance Lazerus firstname.lastname@example.org June 17, 2014 10:22PM
Governor Mike Pence talks about Healthy Indiana Plan 2.0 at IUN on May 29, 2014. | Jim Karczewski/Sun-Times Media
Updated: July 19, 2014 6:08AM
Gov. Mike Pence hopes his Healthy Indiana Plan 2.0 proposal will expand Medicaid to an estimated 350,000 Indiana residents, but certain aspects of the plan may hit a snag with officials from the federal government and hospitals.
The HIP 2.0 framework would impact all nondisabled residents enrolled in Medicaid as well as expand coverage to those making between 100 percent and 138 percent of the federal poverty line — up to about $16,000 for individuals or $30,000 for a family of four.
Pence is no fan of traditional Medicaid, and has advocated since he was elected in 2012 that HIP, which currently covers 44,000 residents, should serve as the vehicle for expansion.
HIPLink would set up a system of premium supports, so workers can buy coverage through their employer. HIPPlus would provide medical, dental and vision benefits, but require a monthly contribution of anywhere from $3 to $25. If enrollees aren’t able to make contributions, they would be shifted to HIPBasic, a more modest package of only medical benefits.
The state is accepting public comments on the plan, and it will submit the HIP 2.0 waiver along with a contingency waiver to extend the current HIP program by the end of June.
Joan Alker, the executive director of the Center for Children and Families at Georgetown University, has analyzed aspects Medicaid waiver requests for Indiana and other states. She said it’s “in the ballpark” for approval, but a few aspects may require additional negotiation with the Centers for Medicare and Medicaid Services.
“There still are some sticking points, such as the provision that if you don’t pay, you’ll be locked out (of HIPPlus) for six months — which is a pretty harsh provision — but that’s a relatively minor part of the plan and could be negotiated on,” Alker said.
Once the waiver is submitted, the federal government will hold a 30-day comment period and continue to negotiate with the state. Alker said the Obama administration is trying to move on these waivers fairly quickly, so Indiana could receive a decision by September.
Alker said Indiana’s plan bears some similarities to Iowa’s successful Medicaid waiver, which permitted premiums limited at 2 percent of income for those who earn between 100 percent and 138 percent of the federal poverty line. Iowa enrollees’ premiums can be reduced if they engage in healthy behavior activities.
State Rep. Charlie Brown, D-Gary, said early feedback has been strong at several public comment sessions, which he hopes will help the waiver.
“With bipartisan support, we are committed to covering working families to improve their health,” said Brown, who authored the original HIP legislation. “The governor has taken a gigantic step forward (with this plan).”
Impact on hospitals
HIP 2.0 will be paid for largely by an estimated $17 billion in federal funds over the next decade. But state cigarette tax revenues and an increase in the hospital assessment fee will be included starting in 2017 as the federal matching rate lowers to 95 percent, then settles at 90 percent in 2020.
Methodist Hospitals has expressed trepidation about the fee increase, as a safety net hospital that provided $57 million in charity care last year.
“It is critical that the unique role of safety net hospitals is recognized in the details of the plan, such as exempting safety net hospitals from any hospital assessment fees that are associated with the plan or protecting them from further reduction of net reimbursement,” Methodist Chief Financial Officer Matt Doyle said in a statement.
Brian Tabor, vice president of government relations at the Indiana Hospital Association, said he understands the concerns, but he thinks the increased fees, which don’t start until 2017, won’t hurt hospitals.
“Right now, safety net hospitals have favorable treatment under the fee structure, and I don’t contemplate that it would change much,” Tabor said.
Tabor said the Affordable Care Act changed the way hospitals receive Medicare and Medicaid funding and the amount they receive.
“Though it’s been pushed back several times, Medicare DSH (disproportionate share hospitals) reimbursement is expected to be cut by 15 percent, so for some hospitals it feels like the rug is being pulled out from under them,” he said.
Tabor said hospitals are faced with economic uncertainty, but the prospect of increasing coverage to hundreds of thousands of Indiana residents will be a long-term benefit.
“Coverage expansion is really absolutely critical,” he said. “Without this piece, there’s really nothing that would work and you would see hospitals close in the state.”