Indiana's plan to expand its Medicaid program could end up costing the state billions more than expected and have a long-term negative effect on its economy, Naomi Lopez Bauman, director of health policy at the Illinois Policy Institute, writes in an opinion piece published by The Indianapolis Star.
Indiana Gov. Mike Pence (R) is seeking federal approval of a proposal to implement an alternative to Medicaid expansion. Gov. Pence's proposal involves expanding the Healthy Indiana Plan, a state-sponsored health insurance program administered by private health insurers and currently available to adults ages 19 to 64 with incomes less than 100 percent of the federal poverty level who are not covered by Medicaid or other essential health coverage. HIP 2.0 would extend eligibility to those earning as much as 138 percent of the federal poverty level and would be fully funded through Indiana's existing cigarette tax revenue, hospital assessment fee program and federal Medicaid funding. Members with incomes greater than 100 percent of the poverty level would have to contribute to a Personal Wellness and Responsibility Account (similar to a health savings account) to help pay for their deductible.
The plan is expected to cost $18 billion — of which the state will pay $1.5 billion — through 2020. An analysis by Federalism in Action (an organization that advocates for keeping government local) states the expansion will cost $2.9 billion more than expected. Additionally, Ms. Lopez Bauman writes expanding coverage for low-income Indiana residents would discourage able-bodied adults from working, since additional income above 138 percent of the poverty level would make them ineligible for coverage.
Indiana stands to lose $17.3 billion in federal Medicaid funding by 2022 if it doesn't expand coverage for low-income residents, according to an Urban Institute Study.