The Obama administration's decision to approve Indiana's conservative Medicaid expansion proposal opens the door for other Republican-led states to offer similar plans that lock low-income residents out of coverage or reduce their benefits if they don't pay their premiums. Still, provider groups see the agreement as a victory because it may create renewed momentum for expanding coverage.
The three-year deal last week between Republican Gov. Mike Pence and HHS made Indiana the 28th state to expand Medicaid to adults with incomes up to 138% of the federal poverty level. As many as 350,000 Hoosiers could gain coverage, and they can enroll starting Feb. 1.
Indiana provider groups lauded the deal because it will reduce their uncompensated-care costs. But they expressed reservations about some of the plan's provisions. Hospitals will pick up a share of the state's administrative costs for the expansion through a hospital assessment fee.
Pence's proposal, known as the Healthy Indiana Plan, or HIP 2.0, provides different levels of coverage for residents living above and below the poverty line. Those below the federal poverty level can get basic coverage, with the option of paying $3 to $15 a month, depending on their income, for enhanced coverage. If they don't pay the premium, they will not receive dental or vision benefits, and will face copayments for care.
Those above the poverty level will be required to make a monthly contribution of 2% of their income, up to $25 a month, into a health-savings account. They will be locked out of coverage for six months if they miss their payments for two straight months, unless they qualify for narrow hardship exemptions. Pence said the plan will give people “the dignity to pay for their own health insurance.”
Arkansas and Iowa are the only other states that have received federal approval to allow cost sharing for Medicaid beneficiaries below the poverty level.