CMS approves one year extension of Indiana HIP plan

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Last week I wrote about Michigan moving forward on expanding Medicaid under the Affordable Care Act, and subsequently asked about my home state’s intentions. In short, Indiana Governor Mike Pence (R) has shown no interest in accepting the expansion unless it’s through the state’s existing Healthy Indiana Plan — a pilot program using Medicaid funds to provide low-income health insurance coverage through high-deductible plans paired with health savings accounts.

Today the state received permission from a separate request to extend HIP’s waiver from the Centers for Medicare and Medicaid Services (CMS) for another year. From the press release:

INDIANAPOLIS—Governor Mike Pence announced today that the administration has negotiated an agreement with the federal government to continue the Healthy Indiana Plan (HIP) through December 31, 2014.

“Securing a waiver to continue the Healthy Indiana Plan is a victory for Hoosiers enrolled in this innovative program and will ensure that Indiana remains at the forefront of consumer-driven healthcare in the United States,” said Governor Pence.

Under the one-year Medicaid waiver, HIP will retain its consumer-driven model and health savings accounts. In addition, the Centers for Medicare and Medicaid Services (CMS) provided the state with additional tools to manage enrollment so Indiana can maintain the program’s fiscal sustainability.

So this merely extends the program’s existing scope for another year, with one key exception, which currently serves around 37,000 state residents. Which is to say, this isn’t explicitly a policy response to whether Indiana will or will not expand traditional Medicaid under the new law. However, if you read the actual letter (PDF) from CMS it implicitly recognizes that Indiana has no plans to expand, and thus the extension of HIP will come with two, well, asterisks:

As agreed, in light of the coverage options that will be available to residents of Indiana beginning in January 2014, as of that date the demonstration [HIP] will be limited to certain adults with incomes under 100 percent of the federal poverty level, and the state will develop a transition plan to facilitate a seamless transfer of coverage for those currently enrolled in the demonstration with incomes above that level.

This is, to state the obvious, quite interesting. So individuals making over $11,490 or families (of 3) making over $19,530 will be directed towards the state-based exchanges established under the ACA. The state will be required to “facilitate” the move for those who currently use HIP above that line, but not necessarily help those who are first entering the system. This will obviously make it more expensive for the federal government — because exchange subsidies will cost more than Medicaid — but cost the state less, one would presume. Now the question is whether this will influence the more pragmatic state Republican Party to continue exploring a traditional expansion or, like Pence, be content to settle for the sort of victory receiving a HIP extension represents.

***Update***
It only belatedly occurred to me to check how many people would be affected by the conditional lowering of coverage to below 100 percent FPL. According to a Mathematica issue brief (PDF — the most recent analysis I could find) the vast majority of HIP enrollees were beneath the 100 percent FPL threshold in 2010. Here’s the chart from the brief:

20130903-185747.jpg
Of course this picture is different today, but assuming similar proportions the new maximum income eligibility would exclude roughly 31 percent of current HIP enrollees. They would, as the CMS letter indicates, now be moved to the federally administered health insurance exchange — where presumably they’ll be receiving much more comprehensive coverage.

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