Pence insists any expansion of Medicaid use Healthy Indiana Plan

But the two-year, $29 billion budget he has proposed does not include funding for an expansion of Medicaid. The state's new governor said, though, he would consider doing so through the health savings account-based program that Indiana launched in 2007.

"Any expansion of Medicaid would have to be fiscally responsible, and it would also have to permit Indiana to expand it in a way that reflected recent innovation in health care — namely, our Healthy Indiana Plan," Pence said.

His comments came as the General Assembly starts a four-month session, and several lawmakers say they are hesitant to turn down the federal funding that would come with the health care law's Medicaid expansion.

"Hospitals are sometimes in small communities the largest employer, economic driver," said Rep. Tim Brown, R-Crawfordsville, who chairs the budget-writing House Ways and Means Committee. "So we have to be committed and concerned to that."

State Senate Democrats are proposing a measure that would have Indiana accept the health care law's expansion of the traditional Medicaid program.

"With so much at stake, this is a discussion the Indiana General Assembly must have," said Sen. Jean Breaux, D-Indianapolis.

"It's not only fiscally sound to do this, but I believe it's fiscally irresponsible to not do it," said Sen. Karen Tallian, D-Portage.

Pence said he's willing to listen to lawmakers.

"Certainly anything the General Assembly wants to consider, this administration would be open to discussing," Pence said Wednesday.

"But for me to accept any Medicaid expansion, it would have to be fiscally responsible, and it would have to bring with it the ability to continue to provide the kind of innovation in health care that Indiana's been able to advance."

Indiana is waiting on the U.S. Department of Health and Human Services to rule on the state's appeal to use the Healthy Indiana Plan.

President Barack Obama's health care law sought to expand Medicaid to include individuals who earn up to 138 percent of the poverty line — about $33,000 a year for a family of four.

That would expand coverage eligibility to more than 400,000 Hoosiers, since Indiana's Medicaid program provides wide coverage to children and pregnant mothers but allows in only adults who earn 25 percent of the poverty line, or about $5,800 per year.

However, the U.S. Supreme Court ruled that states, which pay about one-third of current Medicaid costs and would pay 10 percent of the cost of the expansion, can opt out of it altogether.

Since then, former Gov. Mitch Daniels and Indiana's human services agency have pressed federal officials to allow the state to use its Healthy Indiana Plan to cover those included in the Medicaid expansion.

That plan was launched in 2007 to cover adults who earn up to $46,100 annually for a family of four and have been uninsured for more than six months.

It includes health savings accounts for low-income Hoosiers. The state contributes $1,100 each year, and participants add between 2 and 5 percent of their income. Those accounts are used to cover the program's $1,500 deductible, and insurers cover health care beyond that mark and also cover all preventive care up to $300,000.

Advocates of the Healthy Indiana Plan say its costs are lower and its participants are smarter health care shoppers, and Pence has repeatedly pointed to the program as a more appropriate vehicle for expanded coverage than traditional Medicaid.

Opponents point out that its lifetime limits, its required contributions and its lack of dental, vision and maternity benefits are out of step with current Medicaid requirements — and that once those changes are made, the program is more costly than traditional Medicaid.

Pence said beyond his insistence that the Healthy Indiana Plan be used for any expanded coverage, the decision is up to lawmakers.

"The debate over whether or not Medicaid is expanded will perhaps take place in the General Assembly," he said. "That'll be a decision that they make."