Update - Jan. 28, 2015, 7:38 a.m.
Gov. Mike Pence announced Tuesday the federal government has approved the state's proposed health care expansion, known as HIP 2.0.
Pence unveiled the plan in May as an expansion of the Healthy Indiana Plan and an alternative to traditional Medicaid expansion under the Affordable Care Act, but it was met with months of delays at the federal level because it does not meet all the requirements of Medicaid.
This is how the plan works:
- There are three different options for the program: HIP Basic, HIP Plus and HIP Link.
- HIP Basic is a default plan for poorer Hoosiers that does not require participants to pay into a health savings account but comes with fewer benefits and includes co-pays.
- HIP Plus requires participants to pay into a health savings account but also comes with vision and dental and, for the most part, does not include co-pays.
- HIP Link gives low-income residents an option to receive assistance in purchasing private insurance through their employers.
And here's who's affected:
- Around 650,000 Hoosiers will now be eligible for enrollment in HIP 2.0. The bulk of that is 350,000 uninsured Hoosiers.
- Those earning less than 138 percent of the federal poverty level are eligible for the program - that's between $22,000 and $33,000 a year for a family of four.
- Members of the current Healthy Indiana Plan will be automatically transitioned to the new plan without any breaks in coverage.
- Hoosiers who already purchased health care on the federal marketplace will be told to apply for HIP 2.0 instead of continuing coverage on the exchange.
Enrollment in the expansion begins Feb. 1, and residents can begin applying to the program immediately.
Pence calls HIP 2.0 a first-in-the-nation reform effort that covers the working poor. He touts the program's commitment to "personal responsibility," which comes in the form of health savings accounts participants pay into.
"HIP 2.0 is not intended to be a long-term entitlement program," Pence said. "It's intended to be a safety net that aligns incentives with human aspirations and gives Hoosiers access to the kind of coverage that will help improve their lives and also improve their opportunities for success."
And Pence says one of the most important aspects is how the state is paying for it.
"HIP 2.0 will be funded by a combination of federal funds and an agreement with Indiana's hospitals who have partnered with us to improve access to health care coverage here in Indiana," Pence said. "This means HIP 2.0 will require no new state spending and no new taxes.
Under the Affordable Care Act, the federal government would pay for states to expand Medicaid up to 138 percent of the federal poverty level. The federal government promised to pay 100 percent of the costs for the first three years and then reduce its contribution to 90 percent by 2022.
The same will be true for HIP 2.0, but the remaining 10 percent will be covered through Indiana's hospitals and revenue from the state's cigarette tax.
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 said.
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.
HIP 2.0 also connects those who complete the application to state-offered job training and job search programs.
In an e-mailed statement, Sen. Dan Coats, R-Indiana, praised the approval of HIP 2.0.
"The approval of HIP 2.0 is good news for thousands of low-income Hoosiers and a testament to the effectiveness of the Healthy Indiana Plan," Coats said. "Indiana is leading the way nationally by creating state-based, innovative ideas for governing."
Rep. Todd Young, R-Indiana, also applauded the expansion.
"For those of us who have long argued for block-granting Medicaid to allow states to deliver services tailored to the needs of their citizens, HIP 2.0 is now an important proof-of-concept that Medicaid can be more efficient than a one-size-fits-all approach," Young said in a statement.
But Senate Minority Leader Tim Lanane 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 said.
House Speaker Brian Bosma said he is surprised the federal government essentially approved everything the governor wanted, and he thinks that will get noticed outside of Indiana.
"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 said.
Pence also expressed hope that Indiana's plan can be a model for other states looking to expand health coverage. More than once during his announcement, the governor said Indiana was "reforming Medicaid."
Alexander McCall and Gretchen Frazee contributed to this report.
