The state of Indiana decided a couple of years ago that it was paying too much for Medicaid, so they created to create a program called Healthy Indiana that provided vouchers for low income people to use to purchase private insurance. How has it worked out for them? About as you might expect, if you had any common sense.
First, many beneficiaries have to pay a lot more out of pocket than they would if they had traditional Medicaid coverage. Nonpayment has been the No. 1 reason for terminating beneficiaries from Healthy Indiana since the program began in 2008, with up to 35 percent of beneficiaries in certain income levels failing to make their first payment.
Second, providers serving Healthy Indiana beneficiaries have indeed been paid more than they would have if the beneficiaries had been covered under Medicaid. However, Healthy Indiana covers only about 44,000 Indiana residents, while more than 830,000 Indianans are uninsured. And in order to pay for the 44,000 Indianans in the Healthy Indiana Plan, the state took $50 million from funds that it uses to help reimburse hospitals for uncompensated care. In other words, 40 percent of the state’s uncompensated care funds were spent on only 5 percent of Indiana’s uninsured population.
But maybe this was still a much better deal for everyone. Maybe most of Indiana’s uninsured population doesn’t need health care, and those who do got a much better deal through the Healthy Indiana Plan than they would have if they’d been in traditional Medicaid.
Unfortunately, neither premise is correct. Healthy Indiana’s waiting list is longer than the number of enrollees it has. And uninsured Indianans, whether eligible for Healthy Indiana or not, continue to need health care. Meanwhile, for those actually in the program, the state paid $75 more per month in 2009 for the healthiest group of Healthy Indiana enrollees than it did for comparable adult Medicaid beneficiaries, even though Healthy Indiana beneficiaries are ineligible for many expensive services, such as maternity care, that Medicaid beneficiaries receive. That doesn’t include the cost that Healthy Indiana beneficiaries must pay out of their own pockets: up to $1,100 per year.
There is no evidence that Healthy Indiana beneficiaries are getting better care than Medicaid beneficiaries. However, the care they are receiving costs more, and leaves less for reimbursing uncompensated care for the remaining 95 percent of the uninsured.
But other than that, it worked great. This is the Republican way – make poor people pay more to get less so that Dan Patrick can get a property tax cut. The same basic ideas of vouchers for private insurance, in this case as a replacement for Medicare, is a cornerstone of Paul Ryan’s blueprint for cutting the national deficit. One must admit, simply not providing a needed service will allow governments to cut their expenditures. Too bad the need for those services doesn’t go away.
UPDATE: Corrected first sentence based on comments from Hope.
This isn’t exactly accurate. Healthy Indiana is for those 19-64 who are under 200% FPL but not otherwise Medicaid eligible (and don’t have access to employer-sponsored health insurance). They got an 1115 waiver in 2008 to expand Medicaid coverage to that group, using a high deductible/HSA model.
To clarify – your first sentence isn’t accurate, and the article implies that these people were eligible for regular Medicaid when in fact they were an expansion population specifically limited to those not eligible for regular IN Medicaid. HI isn’t an entitlement although regular Medicaid is for those who are eligible. There’s a cap on enrollment for budget certainty, but they were able to extend insurance coverage to some number who were previously uninsured.
Also – Indiana awarded joint contracts for its regular Medicaid managed care program (Hoosier Healthwise) and HI earlier this year. HMOs had to bid rates (within specified floors/ceilings) for the two programs separately, so it will be interesting to see the extent to which managed care pulls program costs for comparable populations between the two programs more in line. I’m curious why the author of the article didn’t explain *why* costs for HI enrollees are higher than for comparable Medicaid enrollees. That would be an important thing to know before you drew conclusions.
Hope – Thanks for the feedback, I’ve modified that first sentence. In the case of Texas, we’re not going to do anything to try to expand health coverage to those that currently don’t have it, so as far as that goes there won’t be that much to learn. However, in the context of the 2014 expansion of Medicaid eligibility, which is what the Zerwas study that is being bandied about by some as the road map for dropping the program was actually looking at, then Indiana’s experience will be worth keeping an eye on.
IN’s experience with HI is not exactly comparable to dropping Medicaid. I don’t know what the FMAP is for it, but since they do HI thru an 1115 waiver, they get federal Medicaid dollars for it. If we drop out of Medicaid, we give up the federal dollars altogether. They may prove me wrong in a few months, but I just don’t see the Lege dropping Medicaid. The financial and political implications are just too dire even for hard core ideologues to ignore.
Just to keep in mind – Medicaid pays providers less than private insurance. So any coverage scheme that bypasses the state’s purchasing power and sticks people in the private individual market (in which individual insurers have much less purchasing power to demand low provider rates) will almost certainly involve higher provider rates. That is not necessarily a bad thing from an access perspective, but it does mean that costs to whoever pays (insurer, consumer) will be higher than under Medicaid assuming a similar benefit package.