Feds Approve Using Medicaid Money For Pence's HIP 2.0

Jan 28, 2015

Governor Mike Pence announces to a crowd at Indianapolis' St. Vincent hospital that HIP 2.0 has received approval from the federal government.
Credit Gretchen Frazee / Indiana Public Broadcasting

Ask Republican legislative leaders how they’re feeling after the governor announced that, after months of negotiations, Indiana would expand healthcare coverage for its working poor, you’ll get essentially the same answer:

"It’s a really big day for Indiana,” says House Speaker Brian Bosma (R-Indianapolis).

Senate President Pro Tem David Long (R-Fort Wayne) called it "a remarkable achievement for Indiana.” 

“Oh, very exciting; great day for Indiana,” says House Public Health Committee Chair Ed Clere (R-New Albany).

And Governor Pence’s reaction was no different.

“This is a great day for Indiana and it’s a great day for Hoosiers on the ladder of success,” Pence said Tuesday.

57-year old Shirley Hale is one of those Hoosiers for whom HIP 2.0 approval is a reason to celebrate.  Hale says she had healthcare coverage her whole life until she lost her job -- and her insurance.

“I haven’t had any insurance or been able to go to the doctor for almost ten months,” Hale says.

Several Different Plans

Federal officials approved essentially everything Governor Pence asked for.  The program includes HIP Basic, a default plan for poorer Hoosiers that doesn’t require them to pay into a health savings account but comes with fewer benefits and includes co-pays. 

There’s also HIP Plus, which requires participants to pay into a health savings account but also comes with vision and dental and for the most part doesn’t include any co-pays.  Pence says that notion of requiring enrollees to contribute, to “have skin in the game” when it comes to their healthcare, is a key part of ensuring HIP 2.0’s success.

“We were determined to only expand coverage if we could do so within the framework of the Healthy Indiana Plan," Pence says.  "This is a program that has been very successful for Hoosiers over the last seven years.”

Democrats Still Watchful

But Senate Minority Leader Tim Lanane (D-Anderson) says differentiating coverage for those who contribute and those who don’t is the biggest reason he’s reserving final judgment until the plan is fully rolled out.

“The thing that you worry about there is, will people be denied the benefits of the act?  I think that we’ve got to allow this to work and I think that, by and large, there’s going to be an overall benefit to the state here,” Lanane says.

When it comes to funding the program, the bulk of it comes from the federal government: Under the Affordable Care Act, the feds would pay for states to expand Medicaid, promising to pay 100-percent of the costs for the first three years and then reducing its contribution over a few years down to 90-percent. 

HIP 2.0 will work the same way, and Pence says the state funding portion will be a combination of cigarette tax revenue and money from Indiana hospitals.

“We wouldn’t be here today without a full partnership of hospitals all across the state of Indiana,” Pence says.

Hospitals See Financial Benefit To Partnership

The hospitals agreed to pay a greater assessment fee, a cost that makes up nearly 60 percent of what the state must contribute to HIP 2.0.  Indiana Hospital Association Vice President Brian Tabor says it’s something hospitals were happy to do, not just for healthcare reasons, but financial ones as well.

“When patients are coming into the hospital without coverage, hospitals are providing that care and it goes unreimbursed,” Tabor says.

Tabor says the Affordable Care Act cut some government payments to hospitals in order to help pay for the program.  But he says because the state hadn’t expanded coverage, hospitals hadn’t seen a decrease in unreimbursed care, creating a lack of balance…until now.

If federal officials had denied HIP, Indiana would have been without a plan.  Speaker Bosma admits he’s surprised the federal government essentially approved everything the governor wanted.  And he says he thinks that will get noticed outside of Indiana.

“I think this sets the mold for the rest of the conservative states around the country that chose not to expand Medicaid and might set the mold for some of those that did expand Medicaid and wish they hadn’t,” Bosma says.

Those earning less than 138-percent of the federal poverty level are eligible for the program – that’s about $33,000 a year for a family of four.  Hoosiers can start applying immediately; enrollment will begin Feb. 1.