How GOP Governors Can Make Peace With Obamacare’s Medicaid Expansion

Hint: Don’t call it Medicaid expansion. Or Obamacare.

House Republican Conference Chairman Mike Pence looks out over the crowd as US President Barack Obama answers a question at the Republican GOP House Issues Conference in Baltimore, Maryland, January 29, 2010. AFP PHOTO / Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
National Journal
Sophie Novack
May 19, 2014, 9:43 a.m.

Re­pub­lic­an In­di­ana Gov. Mike Pence wants to re­peal Obama­care. But in the mean­time, he’ll ac­cept fed­er­al funds for the health law’s Medi­caid ex­pan­sion.

Pence an­nounced in a turn­around last week that he would take the ex­pan­sion money to grow the state’s own pro­gram — the Healthy In­di­ana Plan — to cov­er low-in­come in­di­vidu­als who would qual­i­fy for tra­di­tion­al Medi­caid un­der the Af­ford­able Care Act’s Medi­caid ex­pan­sion.

But he wants to make his op­pos­i­tion to the health law — and com­mit­ment to re­peal — very clear.

“Obama­care needs to be re­pealed for many reas­ons, in­clud­ing that it is push­ing a massive, flawed Medi­caid pro­gram onto states,” Pence said at an Amer­ic­an En­ter­prise In­sti­tute event Monday. Once Obama­care is re­pealed, [In­di­ana’s] con­sumer-driv­en plan will serve as a mod­el for what block-gran­ted Medi­caid pro­grams can be in states across the coun­try.”

Obama­care calls for the ex­pan­sion of Medi­caid cov­er­age to all in­di­vidu­als be­low 138 per­cent of the fed­er­al poverty level, but the Su­preme Court left the de­cision to the states. Twenty-six states plus D.C. have op­ted in­to ex­pan­sion, but a hand­ful of red states have re­frained, in protest against the en­ti­tle­ment pro­gram and the health care law.

Re­pub­lic­an gov­ernors have found them­selves in sticky ter­rit­ory — want­ing to avoid a cov­er­age gap in their state, but more vehe­mently want­ing to avoid giv­ing their im­pli­cit stamp of ap­prov­al to Obama­care.

Some, like Pence, have tried to find work­arounds that would take the fed­er­al fund­ing and ex­pand cov­er­age to low-in­come res­id­ents, but through a private, mar­ket-based ap­proach that is more pal­at­able to Re­pub­lic­ans. Arkan­sas led the way with its “private op­tion” plan, and oth­ers, such as Pennsylvania and In­di­ana, have fol­lowed suit.

The In­di­ana al­tern­at­ive — HIP 2.0 — would ex­pand on the ex­ist­ing state pro­gram, and in­clude three dif­fer­ent plan op­tions: HIP Link, HIP Plus, and HIP Ba­sic. All in­clude a Per­son­al Well­ness and Re­spons­ib­il­ity, or POWER, ac­count that is in­ten­ded to func­tion like a Health Sav­ings Ac­count; re­quire a con­tri­bu­tion from the pa­tient; and em­phas­ize pre­ven­tion, with a pen­alty for un­ne­ces­sary emer­gency-room use. They are in­ten­ded to be tem­por­ary plans, un­til con­sumers are able to work their way up to trans­ition in­to the private in­sur­ance mar­ket­place, Pence says.

HIP Link is a premi­um as­sist­ance pro­gram for people with ac­cess to em­ploy­er-based cov­er­age but who may not be able to af­ford the plans. HIP Plus is for in­di­vidu­als be­low 138 per­cent of the fed­er­al poverty level who make their POWER con­tri­bu­tions, while HIP Ba­sic is for those be­low 100 per­cent FPL who do not make their re­quired con­tri­bu­tions. HIP ba­sic in­cludes a less com­pre­hens­ive be­ne­fits pack­age and pre­scrip­tion-drug be­ne­fit. Those above 100 per­cent FPL risk los­ing their cov­er­age en­tirely if they don’t make their con­tri­bu­tion; those be­low 100 per­cent must make co-pays and re­ceive few­er be­ne­fits un­til they are able to con­trib­ute again.

Pence in­sists that his pro­posed ex­pan­sion of the Healthy In­di­ana Plan is not Medi­caid ex­pan­sion, and is not Obama­care. But he is seek­ing to pay for the pro­gram us­ing Obama­care dol­lars, even as he con­tin­ues to call for the law’s re­peal.

Of course, if Obama­care were re­pealed, Pence would not have the fund­ing he seeks to im­ple­ment HIP 2.0.

The In­di­ana pro­pos­al is cur­rently in the com­ment peri­od, and Pence plans to sub­mit the waiver ap­plic­a­tion to CMS some­time next month. The fed­er­al gov­ern­ment will need to ap­prove the re­quest in or­der for the plan to move for­ward.

“We haven’t shaken hands on this deal yet,” Pence said. “But I’m hope­ful.”

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