Pence, Republican leaders place all bets on Healthy Indiana Plan

Last week, Pence sent a letter to the U.S. Department of Health and Human Services, stating his position on the Medicaid expansion.

“Our administration will not pursue an expansion of traditional Medicaid as permitted under the Affordable Care Act,” he wrote. “To do so, in my view, would be to expand a highly flawed program in Indiana and place an enormous burden on Hoosier taxpayers. The people of our state deserve better.”

The Pence administration believes that expanding Medicaid to anyone who makes 133 percent of the poverty line is unsustainable and will come with a price: more than $2 billion in the next seven years.

Pence requested that HHS allow HIP to run through 2016, the maximum allowed by HHS. He added that HIP should be the model of reform for the entire Medicaid program.

The plan works like a savings account, requiring enrollees to contribute $160 annually to a savings account. There are about 40,000 signed up to the program to date.

It’s the contribution, according to Senate President Pro Tem David Long, R-Fort Wayne, that makes the program successful.

“They’re paying for some of the services that they receive,” Long said. “When you don’t receive it for free then you have to think twice about whether to utilize it.”

“Right now, I think it’s prudent to stand on the sidelines and see what’s happening out there. See if the government will relent and agree to allow a much more flexible approach on this, a state-driven approach.”

But there’s no guarantee that the federal government will allow Indiana to use the plan, and the question that’s left unanswered is whether Republicans and the Pence administration are willing to leave 400,000 people uninsured?

Medicaid as a backup plan

Considering a recent study conducted by the University of Nebraska Medical Center’s Center for Health Policy, commissioned by Indiana Hospital Association, the estimated cost of Medicaid would be about $503 million through 2020. By expanding, however, the state will see $10.45 billion from the federal government in that same time frame. The study also estimates $2.4 billion to $3.4 billion in new economic activity in Indiana from 2014 to 2020. That could finance more than 30,000 jobs.

With those added benefits, Senate Minority Leader Tim Lanane, D-Anderson, wonders why Republicans don’t consider using Medicaid as a HIP replacement.

“If we don’t have a plan B, we put ourselves in a position of losing funding for a year,” Lanane said. “While all the surrounding states have opted in a prudent way (for the) the rollout of the Affordable Care Act.”

“We need to have a plan B, just in case plan A, the expansion of the HIP program, doesn’t work.”

Hospitals want something

If nothing’s done, the hospitals providing care could lose out. As part of the Affordable Care Act, Medicare payments designed to compensate hospitals for the uninsured, known as disproportionate share hospital payments, will begin to phase out over 10 years, starting in 2014. That money totals more than $214 million for Indiana each year.

How do hospitals feel about this? Health officials feel the Pence administration is establishing their position for negotiations, rather than just accepting the Medicaid rollout.

For Doug Leonard, president of the Indiana Hospital Association, the fact the discussion is happening on both sides of the aisle is a good sign.

“I think that’s a starting point for negotiations,” Leonard said, “As we talk to legislative leaders, I think they’re remaining open on the HIP program that they are rightfully proud of. That’s why they’ve spoken pretty strongly about that.”

Signs have also shown that the HHS and the Centers for Medicare & Medicaid Services are willing to be flexible.

“They may be a little more open-minded to allow what’s important to each state. I think CMS is going to have a different plan for each state depending on their needs.”

The Legislature’s House Committee on Public Health passed a bill to set up an Affordable Care Act study committee includes bipartisan authors — Charlie Brown, D-Gary; Tim Brown, R-Crawfordsville; Ed Clere, R-New Albany; and Matt Lehman R-Berne.

For Philip Morphew, chief executive officer for the Indiana Primary Health Care Association, said he’s not as concerned about the process, as long as there are results.

“We understand that when legislation is made,” Morphew said, “a lot of things are said and done before you get to the final result. We don’t get real stressed out while things are moving. What we look at is the greater goal.”