On Tuesday, the state of Indiana submitted its proposal for the Healthy Indiana Plan 2.0 to the U.S. Department of Health and Human Services.
If approved, the Healthy Indiana Plan 2.0 would replace traditional Medicaid for low-income able-bodied Hoosier adults. Unlike traditional Medicaid, which is government-driven, HIP 2.0 is consumer-driven. It allows participants to take greater control over their own health care decisions through POWER accounts, which are essentially health savings accounts.
I have been encouraged by the positive responses I have heard from people across Indiana since we announced HIP 2.0. As national leaders in health care innovation, Hoosiers understand that empowering people to take greater ownership of their health care choices is better than government-driven health care.
HIP 2.0 builds upon the success of our current Healthy Indiana Plan, which provides about 45,000 low-income Hoosiers with consumer-driven health care. The program has cut costs and increased health care outcomes for people whose previous health care options were either traditional Medicaid or living uninsured.
Medicaid is not only broke, it’s broken. I have consistently opposed expanding traditional Medicaid because I believe doing so would condemn more Hoosiers to substandard health care and threaten the fiscal health of our state. A study last year in Oregon showed increased emergency room use among the Medicaid population and health outcomes that were no better than among the uninsured population. Other studies have found similar outcomes.
Medicaid is not a program we need to expand. It is a program we need to change.
The Healthy Indiana Plan is the change Medicaid needs. Seven percent fewer HIP participants use the emergency room than people in traditional Medicaid. HIP participants choose generic drugs at a higher rate than people covered by other private insurance plans, and 93 percent make contributions to their POWER accounts on time. One-third regularly ask their health care providers about the cost of services.
Given what research has shown about how health savings accounts reduce health care spending, we can expect that HIP 2.0 will create savings for Indiana taxpayers over time.
While important, cost control is but one benefit of HIP. Even more important is the way HIP has improved the quality of health care for participants. Sixty percent obtain preventive services such as annual physicals and flu shots, a rate similar to that of the general commercial marketplace, and 98 percent say they would enroll in HIP again.
Because of these positive results, my administration has worked diligently to preserve HIP’s framework in the HIP 2.0 proposal submitted to the federal government. In fact, we have strengthened the consumer-driven elements of the program to provide Hoosiers with a better set of choices.
HIP 2.0 introduces a new plan that helps low-income working Hoosiers purchase coverage through their employers. HIP 2.0 also offers two benefit plans with varying degrees of coverage. POWER account contributions are required for all HIP members based on income level. Those with incomes above the federal poverty level risk losing their coverage if they do not make contributions. Those below, should they stop making contributions, must make copays and receive fewer benefits until they resume contributing to their accounts. In many cases, the copays would be more expensive than making contributions, providing an incentive to make contributions and retain better coverage.
It is critically important that we preserve our consumer-driven framework in HIP 2.0 as an alternative to traditional Medicaid. I will not sacrifice the proven success of the Healthy Indiana Plan to efforts by federal officials to expand traditional Medicaid in our state. If the federal government tries to force us to eliminate the consumer-driven aspects of HIP 2.0 or water down our proposal in any way, we will walk away.
I have long advocated for the repeal of Obamacare, but any sensible repeal must be accompanied by market-based reforms and a flexible block grant program for states to administer Medicaid as they see fit. HIP 2.0 is the closest thing America has seen to a Medicaid block grant program that works and will serve as a model for the nation in future debates about health care reform. As we submit this waiver, I remain hopeful that Indiana will be given the opportunity to show how Medicaid can be reformed to provide the best health care access possible to low-income Hoosiers.