Pence's ultimatum: It's Indiana's Medicaid plan or nothing

Pence, a Republican, set forth those two options Wednesday in a letter to Kathleen Sebelius, the secretary of the U.S. Department of Health and Human Services.

Instead of a traditional Medicaid program that he called a “broken” budget-buster rife with “waste, fraud and abuse,” Pence said he wants to use the health savings account-based plan that Indiana launched in 2008 to provide expanded access to government-funded insurance.

It’s a demand that federal officials have declined in the past, but Pence’s administration is holding out hope for a favorable ruling on an appeal as state lawmakers advance measures that would trigger the expansion only if Indiana gets what it wants.

“I believe that the Healthy Indiana Plan should serve as the starting point for all future discussions of health care reform in Indiana,” Pence wrote.

“While our administration has committed to fully funding Indiana’s current Medicaid forecast, we believe that expanding coverage absent significant reforms would not be in the best interest of Hoosiers.”

The move sets Indiana apart from neighboring states, all of which are moving toward implementing the Medicaid expansion that was a key part of President Barack Obama’s health care law.

And it differentiates Pence from the two Republican governors next door — Ohio’s John Kasich and Michigan’s Rick Snyder — who are doing so despite strenuous objections from conservatives who complain of the Medicaid expansion’s price tag.

The Indiana House and Senate public health committees advanced bills Wednesday that would set in motion the Medicaid expansion if the federal government allows the state to use its Healthy Indiana Plan as the vehicle.

The Senate’s bill, authored by Sen. Patricia Miller, R-Indianapolis, would also ask federal officials to hand the state Medicaid dollars in the form of a block grant — an unlikely option that would give Indiana far greater control over the program.

Members of those committees took hours of testimony on Wednesday, mostly from doctors and hospital officials who said providing coverage to a low-income portion of the population that can’t always pay for its services today would be a financial boon.

Though Democrats pointed to the Health and Human Services Department’s previous rejections of similar efforts, majority Republicans said they want to try to use the Healthy Indiana Plan.

That plan currently covers 39,000 Hoosiers, and has a waiting list that includes 46,000 more. It uses health savings accounts of $1,100 per year — with those who participate contributing a minimum of $160 per year and a maximum of 5 percent of their earnings to those accounts, and the state chipping in the rest.

Coverage for health care costs beyond that and the $1,100 deductible are covered through a traditional insurance program, with a cap on coverage at $300,000 per year and $1 million for a lifetime.

“There are many questions that haven’t been answered, but I would like Indiana to have the opportunity to pursue a plan that I think is better for Hoosiers,” Miller said.

Pence’s administration petitioned the federal government Wednesday for a three-year extension of the waiver first granted in 2007 to fund some of the plan’s care through Medicaid — but did not address whether the program should grow to cover the 400,000 Hoosiers who Obama’s law envisioned adding to Medicaid rolls.

The fiscal impact of a Medicaid expansion is the key point that lawmakers are debating.

According to a study by Milliman, Inc., the actuary for the Indiana Family and Social Services Administration, the law would cost the state as much as $2.6 billion more through 2020 due to new Medicaid enrollments and higher rates paid to doctors who treat those patients.

But a report released by the Indiana Hospital Association on Monday found that an expanded Medicaid program would pump $10 billion into the state’s economy and create 30,000 jobs — while also generating new tax revenue that would more than cover the cost.

Sen. Mark Stoops, D-Bloomington, ticked off a list of seven Republican governors who have agreed to expand Medicaid.

Stoops said only Hoosier adults who earn less than $11 per day qualify for Medicaid now, and there is a waiting list for the Healthy Indiana Plan.

He called the deal — with the federal government funding the full expansion in its first three years and 90 percent of the costs in 2020 and beyond — “too good to pass up.”