As an alternative to traditional eligibility expansion, one Republican hopes to bring consumer-directed insurance to Medicaid while also bridging a gap in the lower end of the group insurance market.
Indiana Governor Mike Pence has opened up for public comment a proposal to expand the existing Healthy Indiana Plan, a program started in 2008 that offers low-income parents and childless adults coverage with a $1,100-deductible and health savings account jointly funded by the state and beneficiaries on a sliding scale.
Termed 'HIP 2.0,' the plan "takes consumer-driven Medicaid reform to the next level by replacing traditional Medicaid for many in Indiana with a plan that empowers participants to take charge of their health and to be cost-conscious consumers," Pence said. "There are two futures in healthcare: government-directed health care or consumer-driven health care."
The HIP program currently covers about 45,000 Hoosiers and was extended on a federal waiver through the end of this year while the Pence Administration explored the possibility of expanding it.
Pence now thinks the Centers for Medicare & Medicaid Services will be open to the idea, premiums and cost-sharing included, for all non-disabled residents eligible for Medicaid -- as many as 600,000. He's seeking a five-year waiver and proposing that the state contribute $1.5 billion from a tobacco tax fund and hospital assessment fees.
The HSA approach
HIP 2.0 would continue using and increase the HSA-style POWER accounts that both the state and beneficiaries contribute to based on income levels, to match a $2,500 deductible, and it would be expanded to allow families to be covered.
The Pence Administration is proposing three different tiers of plans, all offering free preventive services and some level of beneficiary decision-making -- and one that may boost employer-sponsored insurance in low-income sectors.
The HIP Basic, for those earning below 100 percent of the poverty level, would have a $2,500 account completely funded by the state along with more limited prescription drug benefits (but no cost-sharing for pregnancy services). Preventive care would be free, outpatient care would require a $4 copay, inpatient care $75, non-emergent ER use up to $25, preferred drugs $4 and nonpreferred $8.
The HIP Plus would cover those up to 138 percent of federal poverty level and be optional for those below 100 percent FPL, with contributions based on a sliding scale from $3 to $25 per month -- but no copays -- for comprehensive drug benefits, as well as vision and dental.
The third option is the HIP Employer Benefit Link. It would let Medicaid-eligible, working beneficiaries decide between enrolling in their job's group plan, if one is available, or staying in HIP. The state and employers would split the cost of the premiums, and those eligible would have access to counseling to figure out whether HIP or their job's plan is more affordable and well-suited to their health needs.
"The modified design of HIP 2.0 maintains emphasis on the principles of personal responsibility and represents our continuing efforts in Indiana to find innovative, fiscally responsible ways to get people the care they need," said Debra Minott, Secretary of the Indiana Family and Social Services Administration.
The HIP program would also reimburse providers at 100 percent of Medicare rates, something that could help alleviate the shortage of physicians willing to accept Medicaid patients.
The Pence Administration is proposing to start the program in 2015, with the employer plan slated for 2016, and hopes to submit the waiver to CMS by summer.
A market-based alternative
Indiana's waiver proposal follows other states who gotten federal approval for more market-based approaches to Medicaid. Michigan's Medicaid expansion plans, approved in December, is introducing a sliding scale fee for non-emergency ER visits, with free or discounted preventative services -- something now made possible by a CMS rule that will allow value-based cost-sharing designs in Medicaid.
Arkansas and Iowa, meanwhile, have gotten permission to cover new Medicaid beneficiaries through subsidized exchange plans, an idea Pennsylvania Governor Tom Corbett is hoping to implement.
Indiana already claims a fair amount of success from the existing HIP program.
Over the past five years, rates of ER use among HIP beneficiaries fallen and nonpayment rates have been relatively limited, between 3 to 10 percent, said Seema Verma, an independent consultant who helped design the original plan and is now working with the Pence Administration.
Verma also said the program has spurred more comparison shopping; according to surveys, as many as 30 percent of beneficiaries will typically ask a provider about cost before making a decision.