By Mike Pence
Rather than grow Medicaid, we’re expanding Indiana’s consumer-driven plan.
From the beginning of my tenure as governor in 2013, we have been saying no to ObamaCare in Indiana. We refused to set up a state-based exchange, and we have said we will not expand traditional Medicaid. We have a better alternative in a program that offers Indiana’s working poor the chance to get insurance and control their own health care.
Medicaid is not a program we need to expand. It is a program we need to change. Nobly created 50 years ago to help the poor and those with disabilities get quality health care, Medicaid has morphed into a bureaucratic and fiscal monstrosity that does less to help low-income people than its advocates claim. As a study in Oregon showed last year, the 2008 expansion of Medicaid to 10,000 more people increased emergency-room use and produced health outcomes that were no better than for those who remained uninsured. Other studies have shown similar results.
Yet there are still some 350,000 low-income working people in Indiana who lack access to the quality health insurance that better-off Hoosiers enjoy. We want to change Medicaid based on what we know improves health and lowers costs. So six years ago Indiana became the first state to successfully create a consumer-driven health plan to expand coverage to members of this uninsured population.
The Healthy Indiana Plan (HIP) now provides health-savings accounts, or HSAs, to nearly 40,000 people and empowers them as health-care consumers. According to a Milliman analysis of HIP and traditional Medicaid claims, 7% fewer HIP members used the emergency room in 2012 compared to traditional Medicaid enrollees.
Another Milliman study showed that 60% of HIP enrollees in 2012 obtained preventive-care services such as annual physicals and flu shots—a rate similar to that of the general commercial marketplace. HIP enrollees choose generic drugs at a much higher rate than people covered by other private insurance plans. A five-year Employee Benefit Research Institute study published in 2013 showed that consumer-driven health plans can decrease health-care spending by 25%, and we are beginning to see this downward trend in health-care costs with HIP.
HIP enrollees also have a good record of managing their own health-care decisions. Analysis by the Indiana Office of Medicaid Policy and Planning shows that 93% of HIP enrollees make contributions to their health-savings accounts on time. A 2013 survey of HIP members by Mathematica found that a third regularly ask their health-care providers about the cost of services, and 98% said they would enroll in HIP again if given the choice.
Because of this success, my administration will submit a waiver to the Centers for Medicare and Medicaid Services to replace traditional Medicaid in Indiana for all able-bodied adults ages 19-64. Instead we will provide an expanded version of the Healthy Indiana Plan for those with income up to 138% of the federal poverty level, or about $33,000 for a family of four. These are Indiana’s working poor.
The plan would offer three options: a premium assistance plan that helps low-income working Hoosiers get employer coverage, and two health-savings account plans with varying degrees of coverage. The premium assistance program helps people who cannot afford their employer’s health plan or do not have access to a plan. They could receive an HSA to use for premiums, copayments or deductibles to get their employer’s plan. Plan members would be responsible for making monthly HSA contributions on a sliding income scale.
Contributions also are required for all HIP members who choose one of the HSA plans. Those earning above 100% of the federal poverty level risk losing their coverage if they do not make contributions, and those below 100% of that level, should they stop making contributions, must make copays and receive fewer benefits until they contribute to their accounts again. The contribution amounts are reasonable and fair by income level. As we have found, low-income residents of our state make contributions consistently.
HIP also includes a work-referral element that offers enrollees the chance to gain new skills and learn about work opportunities so they can move out of the program. HIP is not intended to be a long-term entitlement program. It is a safety net that aligns incentives with human aspirations.
I have long advocated for the repeal of ObamaCare. Yet Republicans have been talking for even more years about reforming Medicaid. That’s what we are doing in Indiana. If and when we elect a president and Congress willing to give Medicaid back to the states as a flexible block-grant, I’m confident that states will craft programs—like the Healthy Indiana Plan—that empower low-income Americans to take control of their own health-care choices and provide them access to quality care.
Mr. Pence, a Republican, is the governor of Indiana.