Stanley Feld M.D.,FACP,MACE
In light of the recent alleged IRS scandel targeting certain groups, I am reminded of the Medicaid incident in Indiana. I believe the incident is resolved now with the Obama administration granting a waiver to Indiana after two years of bureaucratic haggling.
In 2007 Governor Mitch Daniels (R.) was successful in getting the Indiana state legislature to pass a Medicaid reform plan called the Healthy Indiana Plan. It is an expansion of Medicaid. It uses a consumer-driven health plan to encourage low-income beneficiaries to take control of their health and healthcare dollars.
This healthcare plan is a variant of my ideal medical saving account.
The Healthy Indiana Plan has been very successful.
Healthy Indiana Plan has been the most innovative and successful reform of Medicaid in the history of the Medicaid program.
The federal government’s waiver for the plan was given in 2007 and set to expire on December 31, 2012. Indiana applied for an extension of the Medicaid wavier in early 2011. In November 2011 the Obama Administration rejected the state’s request to extend its federal waiver.
Over 45,000 poor Hoosiers on Medicaid were scheduled to lose this innovative Medicaid coverage in 2013.
Medicaid is theoretically run by the states in cooperation with the federal government. In reality, any time a state wants to make the tiniest changes in its Medicaid program, it has to go hat-in-hand to the U.S. Department of Health and Human Services with a formal request for a waiver and these waivers are usually denied.
This federal control has been part of the disagreement states have with the federal government over health insurance exchanges. The central government wants to shift the financial burden on the states while controlling the states’ decisions.
Indiana succeeded in gaining a waiver in 2007 because it was seeking to expand Medicaid to a group of people who weren’t then eligible for the program and because the state’s effort required no additional outlays from the federal government. Governor Mitch Daniels paid for the Medicaid expansion by increasing the state’s cigarette tax by 44 cents. It made sense to everyone except the people that smoked.
Patients had skin in the game because they had to pay 2 -5% of their income for their insurance coverage. The plan provided financial as well as wellness incentives.
“We did a lot of reading on criticism of health savings accounts,” says Seema Verma, who was the architect of the Indiana program. “One of the criticisms was that people didn’t have enough money to pay for preventive care. So we took preventive care out, made that first-dollar coverage.
“ Also, people said that people didn’t have enough for the deductible, so we fully funded it. Then, you have to make your contribution every month, with a 60-day grace period. If you don’t make the contribution, you’re out of the program for 12 months. It’s a strong personal responsibility mechanism.”
Medicaid beneficiaries have no cost-sharing requirements (co-pays, deductibles, etc.) except for non-urgent use of emergency rooms.
The money remaining in the Medicaid patients’ POWER accounts at the end of the year can be applied to the following year’s contribution only if they obtain the required free preventive disease services.
“The program has been, by many measures, a smashing success. “What we’re finding out is that, first of all, low-income people are just as capable as anybody else of making wise decisions when it’s their own money that they’re spending,” Mitch Daniels explains in a Heritage Foundation video.”
“And they’re also acting more like good consumers. They’re visiting emergency rooms less, they’re using more generic drugs, they’re asking for second opinions. And some real money is starting to accumulate in their [health savings] accounts.”
The program has been very popular. Ninety (90) percent of enrollees are making their required monthly contributions. Employers didn’t dump their workers onto the program, crowding others out, because you needed to be uninsured for six months in order to be eligible for it.
“The program’s level of satisfaction is at an unheard-of 98 percent approval rating,” Verma told Kenneth Artz.
Lower income families are not too stupid to be wise healthcare consumers despite popular belief.
A 2010 study by Mathematica Policy Research found that in the program
71 percent met the preventive care requirement and were able to roll the balances over to the following year. Only 39% obtained preventive care in the first six months. It proves financial incentives work.
The lack of physician access is the biggest reason why health outcomes for Medicaid patients lag far behind those of individuals with private insurance.
Healthy Indiana pays better than traditional Medicaid. The physician access trend has been reversed. Preventive care participation rates are higher than the privately-insured population.
Why would the Obama administration, which controls the states’ Medicaid programs, refuse to grant a waiver for Indiana’s successful program?
The first excuse HHS used was “ HSS hadn’t written the regulations for Obamacare yet.”
Before his term expired Gov. Daniels had written to HHS Secretary Kathleen Sebelius asking her for permission to use the Healthy Indiana Plan to handle Obamacare’s mandatory expansion of Medicaid. He had not heard back.
The Obama Administration claims to be on the side of the poor. Why would it not approve a waiver of a popular program for the poor that provides the poor with superior health care?
Whatever the reason, tens of thousands of people will be needlessly harmed.
Regulatory burdens and “poison pills” have been thrown at the Indiana health plan. One such poison pill is not allowing the state to include the $1100 Power account given to Medicaid patients to make wise medical care choices.
Yet the government pays the healthcare insurance industry for help desks and rent for buildings where there are help desks as direct patient care instead of expenses.
It is not only bewildering, it is obscene.
The controversy continued throughout 2012 past the expiration date of the 2007 waiver into 2013.
Mike Pence, the new governor, kept fighting off bureaucratic rules but got nowhere through March of 2013.
The subtext of all of this is the Obama administration wants a top down centrally controlled Medicaid system with the financial burden on the states and Indiana wants to control its own destiny with its successful plan.
Stuff like the following has been going on. Diane Gerrits, CMS' director of state demonstrations and waivers, wrote in a Feb. 25 letter that the state will have to resubmit its application because it had not yet held two public hearings required by law.
CMS said as a result of the failure to comply with the transparency portion of the proposal, the state must begin a 30-day state public comment and notice period. The state must follow with an additional 30-day federal public comment.
This has been going on since 2011
"The Feb. 25, 2013, letter from HHS does not indicate in any way that the waiver application process has been jeopardized," he wrote Thursday. "It does, however, speak to the flawed bureaucratic process that has impeded progress on our successful Healthy Indiana Plan."
The Obama administration is trying to destroy all health savings accounts both public and private. This is probably the reason for these artificial delays.
Suddenly, in mid April, under public pressure and possibly the impending IRS scandal Indiana’s waiver request was approved.
This is a happy ending to the Indiana saga and perhaps a model to get all the Medicaid programs out of the deep ditch they are in.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone
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