Indiana becomes 28th state to expand Medicaid

State scored major concession on premiums, payment enforcement

The federal government on Tuesday approved Indiana's alternate Medicaid expansion plan, known as Healthy Indiana Plan (HIP) 2.0. The move makes Indiana the 28th state—and the 10th with a Republican governor—to expand Medicaid through the Affordable Care Act (ACA).

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Gov. Mike Pence (R) in May 2014 unveiled a plan to expand the Healthy Indiana Plan (HIP), an insurance program for low-income residents, as an alternative to expanding the Medicaid program. Indiana launched HIP in 2008 with a five-year federal waiver, billing it as the nation's first consumer-directed health plan for low-income residents. The program has been distributing Medicaid funds to eligible residents, each of whom gets $1,100 in an HSA-like account.

Details of the plan

In the announcement, Pence said the plan—which extends coverage to up to 350,000 uninsured residents—will provide two levels of coverage:

  • People living below 100% of the federal poverty level (FPL) will be able to contain basic health coverage and have the choice of paying a monthly contribution of $3 to $15, depending on income, to obtain dental or vision coverage.
  • People living between 100% and 138% of the FPL will be required to contribute about $25 per month for their coverage.

In a major concession, federal authorities will allow Indiana to lock residents out of the program for six months if they fail to pay premiums.

The federal government will cover the costs associated with the plan over the next year and then its share will steadily decline to 90% over the next five years. The state is expected to spend $1.5 billion on the plan by 2020, which will be paid for via cigarette tax revenue and money from the hospital assessment fee program.

In total, 650,000 Indian residents are eligible for HIP 2.0 and coverage will begin Feb. 1 (Radnofsky, Wall Street Journal, 1/27; Niquette, Bloomberg, 1/27; Dickson, Modern Healthcare, 1/27 [subscription required]; Heinz, ABC 6, 1/27).


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