ARY, Ind. — To better understand what the future of Medicaid could look like, you might come to Indiana. Once you’re here, you might ask someone like Richard Ullrich Jr., who works in a bottling plant, what kind of plan he has through the state’s unique Medicaid expansion.
“I wish I knew,” Ullrich would say.
Ullrich’s uncertainty matters far beyond Indiana these days. The state’s Medicaid expansion under the Affordable Care Act was designed by Seema Verma, a consultant who has been nominated by President-elect Donald Trump to lead the US agency that oversees Medicare and Medicaid. And with congressional Republicans seeking to repeal and replace the ACA and make other changes to Medicaid, Indiana’s system could be seen as a template for a Medicaid overhaul in other states.
Ullrich’s experience speaks to both the benefits and the drawbacks of that system. On the one hand, Indiana has extended coverage to hundreds of thousands of new beneficiaries through the expansion. On the other, its rules and complicated structures have left many of those beneficiaries confused, forcing some to lose coverage and preventing others from either maximizing benefits or signing up altogether.
“It is a far inferior program to traditional Medicaid,” said Dr. Rob Stone, a palliative care physician and founder of Hoosiers for a Commonsense Health Plan. “It puts all these barriers up for people who are the most vulnerable. It’s got a lot of bureaucracy associated with it.”
A plan for a healthy Indiana
The Medicaid expansion has provided health insurance coverage to an estimated 11 million people nationwide. A 2012 Supreme Court ruling made the expansion optional, and 19 states have resisted. Some, like Indiana, applied for waivers to adapt the expansion with their own policies.
Indiana’s plan, as designed by Verma, is built on personal responsibility, a concept touted by Vice President-elect and Indiana Governor Mike Pence. Participants pay an income-based contribution into a savings account each month that’s akin to a premium. Failure to pay means losing benefits or coverage. There’s a penalty for using the emergency room for non-emergencies. Pence and Verma said the plan would make people act more responsibly in seeking health care.
Proponents call this putting “skin in the game.”
“There is something to be said for the dignity of empowering low-income Hoosiers to make their own decisions about their own health care,” Pence said earlier this year as the state marked one year of HIP 2.0, the name given to the expansion (the original Healthy Indiana Plan from 2008 covered about 40,000 adults not eligible for traditional Medicaid).
Ullrich, 55, who lives in Aurora with his wife and 12-year-old daughter, said he is happy to pay a premium and is grateful to have insurance at all, but that the process to sign up for Medicaid was so complicated it took months to figure out. And for him, the idea that people eligible for Medicaid are not already personally invested in their well-being is offensive.
“You’re out working all week and you don’t have enough money to take care of your family, and you don’t have skin in the game?” he said.
If confirmed, Verma could oversee a dramatic restructuring of Medicaid. Experts expect the new administration to give more leeway to states to experiment with their Medicaid programs like Indiana did. Congress could also convert its Medicaid funding to block grants or per-capita allotments for states to use as they choose. And a wholesale repeal of the ACA without a replacement would likely collapse expansion programs all over the country.
Medicaid was designed as a safety net for a few groups, such as children, pregnant women, and people with disabilities. The expansion was meant to help low-income adults, including many of the so-called working poor, get health insurance. Analysts say that adding the extra hurdles to coverage that Indiana did with HIP 2.0 detracts from that mission.
Laura Dague, a health economist at Texas A&M University, said that as premiums and lockouts are expected to become more common, it’s crucial to consider who is most likely going to be affected by those requirements.
“It’s really important to keep in mind, just what is the program goal?” she said. “Who are we trying to serve with Medicaid? What section of the population are we trying to reach?”
As in other states, the federal government covered the full cost of Indiana’s expansion initially and will pay for 90 percent going forward. Yet state officials rarely acknowledge that HIP 2.0 would not be possible without the ACA.
Thanks, but why so complicated?
Here in Indiana, many groups — patients, advocates, and hospitals among them — are grateful that the state expanded Medicaid in any form.
In its first year, HIP 2.0 enrolled more than 207,000 new participants, along with providing coverage to 140,000 others who were already eligible for Medicaid or other public programs.
For Adam Nicodemus, 28, HIP 2.0 provided a bridge when he was in graduate school. His monthly HIP 2.0 contribution was cheaper than the insurance available through school.
“It was low-cost, so it worked,” said Nicodemus, who now works as an athletic trainer at an Indianapolis hospital and has insurance through his employer.
HIP 2.0 has two main plans: HIP Basic and HIP Plus, which includes dental and vision benefits. Enrollees pay the contribution for the plus version.
People with incomes below the poverty level fall into the basic version, and have to start paying copayments for care and prescriptions, if they do not keep up with their premiums. But participants who have incomes between 100 percent and 138 percent of the poverty level and do not pay their monthly contributions can be kicked out of the program for six months.
The federal Centers for Medicare and Medicaid Services had never before let a state lock out Medicaid beneficiaries from coverage before, even temporarily. Since then, other states have looked to Indiana, and in some cases hired Verma, as they’ve considered changes to their plans.
A July report from the Lewin Group, a health consultancy, found that 21,500 beneficiaries below the poverty level were dropped from HIP Plus to HIP Basic because they didn’t pay their contributions and 2,677 people had been bumped from HIP 2.0 for six months because they weren’t contributing to their accounts.
In the Lewin Group survey, 30 percent of members who were dropped from HIP Plus to HIP Basic said they hadn’t known they needed to pay or didn’t know how to pay, while another 26 percent said they were confused about their plans and so didn’t pay. Only 16 percent said it was a matter of affording the contribution.
Researchers have found that premiums and complicated rules amount to a barrier to coverage. A study by Dague, the Texas A&M health economist, found that a premium requirement made people in Wisconsin more likely to leave its Medicaid program. It wasn’t so much the exact cost of the premium, but the presence of a new requirement alone might act as a disincentive — perhaps because it was “just another hoop to jump through,” she said.
Kosali Simon, a health economist at Indiana University, said there is a rationale for cost sharing leading to people making smarter decisions about health care. But the question remains if that applies across all socioeconomic classes.
“What people are wondering is how much you can bring this to low-income people,” Simon said, referring to that rationale.
Is it working?
HIP 2.0 has been in place for less than two years, so attempts to assess it are preliminary at best. CMS plans to evaluate the program, given that other states have applied for similar Medicaid reforms. The Indiana program is a three-year trial running through January 2018.
The Lewin Group report found that 80 percent of participants were satisfied with their coverage and that the large majority of HIP Plus members were paying their contributions. Those who did also reduced their emergency department visits.
Verma has written that HIP 2.0 embraces the concepts of private health insurance, with members “comparing cost and quality of health care services” because they are contributing to their plans. People who know her say she will likely bring that philosophy to CMS.
“Seema’s very fair-minded that all the rules should be applied to everyone,” said Susan Jo Thomas, the executive director of Covering Kids & Families of Indiana, which supported expanding Medicaid. “If you have a commercial product that’s a managed care product, there are rules about staying in network and things like that. And she’s taking those things and applying them to public programs.”
As part of HIP 2.0, Indiana boosted its Medicaid reimbursement rates by an average of more than 20 percent to get clinicians and hospitals on board and to ensure that there would be enough physicians to see the newly covered patients. That has made the program costlier, but since HIP 2.0 went into effect, more than 6,700 additional providers are seeing Medicaid patients, state officials say.
“We’ve had pockets [in Indiana] where you couldn’t find a physician for a Medicaid recipient, and now we’re able to do much better,” said Dr. Stephen Tharp, an internal medicine physician in Frankfort and a former president of the Indiana State Medical Association.
At Methodist Hospitals, a network of safety-net hospitals and clinics in and around Gary, administrators have seen a 50 percent reduction in uninsured patients since HIP 2.0 went into effect, said Matt Doyle, the chief financial officer.
But these hospitals haven’t seen a drop in emergency department use, Doyle said, because it is still ingrained in the community to keep using emergency services for primary care.
“We’re working hard to improve the situation, which means helping people understand what their coverage means,” he said. “And that’s a tough hill to climb. I would say we’re still in that first third of climbing that hill. If we revert back [to no Medicaid expansion], we would go back all the way down the hill.”
Carl Wiggins, 61, is one of the newly insured people here thanks to the expansion. Wiggins said he hadn’t had health insurance for at least two years before he enrolled in HIP 2.0 a few months ago, and he’s still too young for Medicare. He pays about $2 a month and is looking forward to using his dental and vision coverage.
“I haven’t had glasses in a couple of years,” Wiggins said. “I’m sitting here with my face half swollen. I need to go to the dentist and get these bad teeth out of my mouth. So hopefully this will work out.”