Indiana’s expansion plan is better than nothing

Wonkblog has a good explainer for what is being proposed by Indiana to expland its Medicaid program:

 Pence last year insisted that he would only expand coverage if he could do it through the Healthy Indiana Plan, a health savings account-type of program for about 45,000 adult Hoosiers who didn’t qualify for the traditional Medicaid program…

Pence will lift HIP enrollment caps, opening up the program to working-age adults earning less than 138 percent of the federal poverty level ($16,105 for an individual or $32,913 for a family of four). Between 334,000 and 598,000 people will be covered under the plan, according to Pence’s office. Enrollment will open in 2015, with federal approval…

  • HIP Members under the poverty level have the option to make monthly contributions. If they don’t, they’ll be transferred to a more basic level of coverage without vision and dental benefits. The lower coverage level requires co-payments for services, instead of monthly premiums. There are no co-pays, though, for preventive care and family planning services.
  • HIP members above the poverty level who don’t pay a monthly contribution within 60 days are locked out of the program for six months. They can’t opt into the basic coverage level.

The basic plan design is a high deductible health plan where people are responsible for the first $1,100 of costs initially with it potentially expanding to $2,500.  It is better than nothing, but it is a pretty shitty deal. 

I don’t like high deductible plans for most populations.  The one population where a high deductible plan has some value is not part of the Medicaid expansion population as a class:

 individuals and families who are reasonably young (age is a pre-exisiting condition) without any signifcant claims history.  The policies would not be automatically renewed until the most recent claims and medical history was reviewed.  Furthermore, the potential buyer pool would be limited to people who have the ability to absorb a one-time shock of several thousand dollars without it being a crisis.  This sub-population is fairly small, and can absorb the risk shifting that is inherent in a high deductible plan design.  Anyone with chronic conditions or recurring health maitenance problems should not be a plan designed like this if the goal is to effectively manage health…. 

There is plenty of evidence that cost sharing (co-pays, co-insurance, deductibles), even nominal cost sharing, deters people from getting needed and approrpiate care.    It also leads to worse health outcomes in general.  These problems are most apparent down the income scale.  As an example, a $10 copay for me is a mild annoyance; for someone making minimum wage and just getting by, it is their entire discretionary budget for a week if they are lucky. 

Overall, the HIE health-related findings are inconclusive but they do suggest that some individuals, especially lower income persons in poor health, may be harmed by the deterrent effects of cost-sharing.

 

The second problem is that the level of insurance is worse than what is available on the Exchange.  If I am an individual who makes between 100% FPL and 138% FPL, I will be far better off in the out years to go on the Exchange for a cost sharing assistance Silver plan as the total cost of my monthly premium is limited to 2% of income and the out of pocket is limited to $1,000 instead of $1,100 deductibles and 2.5% of income.  The acturial value cost-sharing Silver plans for people who are also Healthy Indiana eligible would be 94% to 96%.  The acturial value of the Medicaid expansion as proposed for Healthy Indiana is (eyeballing it) between 90% and 93%.  Regular Medicaid acturial value is between 97% to 100% depending on the state. 

This plan is better than nothing, but not much better.  I think the HHS response will be to reduce deductibles, reduce premium payments and take away the basic level where the essential health benefits of dental and vision services are restored.  As an opening line of negoatitions, this is promising that Indiana is willing to talk, but it should not get a waiver in its current form as it is a program that is still designed to place massive financial stress on a population of people who can’t handle additional financial or medical stress.

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32 replies
  1. 1
    Baud says:

    This sounds horrible. I hope HHS remembers that it holds all the cards.

  2. 2
    rikyrah says:

    see, this nonsense should not be approved by HHS

  3. 3
    c u n d gulag says:

    And FSM help us – Mike “The Dense” Pence is thinking of running for President.

    He’s sure stupid and ignorant enough to win at least a few Republican primaries.

    In the words of that great American philosopher, Foghorn Leghorn:
    “That boy’s about as sharp as a bowling ball!”

  4. 4
    scav says:

    Could be a state motto. Indiana: Slightly better than nothing. Or a campaign bumper sticker, especially as it might be oversell.

  5. 5
    kindness says:

    I hope the Feds tell Indiana’s Repubs to go take a flying…..

    Maybe it can be used to elect Democrats this year.

  6. 6
    Iowa Old Lady says:

    Iowa did something unnecessarily complicated like that too rather than give in to the blah guy and take Medicaid, which doctors all knew how to deal with. I was glad they took the money but I get tired of stubborn stupidity.

  7. 7
    flukebucket says:

    @c u n d gulag: This is so true. Mike Pence is one of the dumbest politicians out there and that is a mighty high bar to clear nowadays. I will never forget the look on Obama’s face when Pence called the tax cuts in the stimulus plan “boutique”. If looks could kill Pence would be dead and then Obama says, “C’mon Mike”. That made it even better.

  8. 8
    jl says:

    Thanks for post, and for nice link on benefit design. I downloaded the whole presentation.

    My quibble i that I think the link and block quote underplay the risks of high deductibles for sick poor people. I think there is tendency to soft-peddle some of the more unpleasant results of the Rand Health Insurance Experiment for sick low income people on plans with high deductibles. Here is what the principal investigator, Joseph Newhouse wrote in 2004:

    “…hypertension was less well controlled among that group, sufficiently so that the annual likelihood of death in that group rose approximately 10 percent. This adverse effect occurred in spite of the reduced cost sharing for low-income families, a feature generally not found in today’s plans. ”

    JP Newhouse, Consumer-Directed Health Plans And The RAND Health Insurance Experiment, Health Affairs, 23, no.6 (2004):107-113

    Newhouse wrote a book on the Rand HIE, (Free for All?: Lessons from the RAND Health Insurance Experiment) where he lists the conditions with the strength of the findings where high deductibles and resulting underutilization of care can do real harm to health. Problem is that some of these conditions, like hypertension, developing diabetes, high cholesterol, can do damage before any clinical diagnosis, so it is difficult to say how sick a given population is unless you have a good estimate of these kinds of undiagnosed chronic conditions.

    The findings were strong enough for Newhouse to devote quite a bit of effort in research what kinds of focused free preventive care, deductible and cost sharing designs, and importantly (since these people often do not know that they have a dangerous condition) how well they understand and act on different benefit designs.

    My concern is that for poor people, these high deductible plans need to be very carefully scrutinized. Also, that the marketing and administration deserves very careful scrutiny too, since if utilization is inconvenient, or difficult, or delayed, or people do not have a good understanding of what preventive care is free, then harm will likely result. (Edit: and networks as well, since for poor, travel and time costs as well as money costs can be very important in decision to see a doc or NP).

  9. 9
    Glocksman says:

    As a Hoosier, let me apologize for Mike Pence.
    That said, his 2012 opponent was so forgettable and ran such an incompetent campaign that I can’t even remember his name (Greg something, IIRC).

    Also don’t underestimate the influence of the social conservatives in this state.
    Pence won on the backs of the Right to Life people doing his GOTV and the wallets of the Koch-lites filling the airwaves with ads.

    I never thought I’d envy Kentucky, but Pence makes Steve Beshear look like Henry Wallace.

  10. 10
    c u n d gulag says:

    @flukebucket:
    HA!
    Thank you for reminding me of that moment – I ROTFLMAO!!!

  11. 11
    JGabriel says:

    @scav:

    Could be a state motto. Indiana: Slightly better than nothing.

    It would be better if it carries a footnote:

    *In some respects, not all.

  12. 12
    Belafon says:

    There is plenty of evidence that cost sharing (co-pays, co-insurance, deductibles), even nominal cost sharing, deters people from getting needed and approrpiate care. It also leads to worse health outcomes in general.

    I believe all of this is considered a feature by Republicans, not a bug.

  13. 13
    JoyfulA says:

    Worse than the Corbett plan.

  14. 14
    Richard Mayhew says:

    @JoyfulA: significantly worse than the Corbett plan

  15. 15
    JGabriel says:

    @jl:

    I think there is tendency to soft-peddle some of the more unpleasant results of the Rand Health Insurance Experiment for sick low income people on plans with high deductibles. Here is what the principal investigator, Joseph Newhouse wrote in 2004:

    “…hypertension was less well controlled among that group, sufficiently so that the annual likelihood of death in that group rose approximately 10 percent. …

    I called the Rand Health Insurance customer service department. They said that’s a feature, not a bug. Then they giggled and hung up.

    Bastards.

  16. 16
    Capri says:

    The health of Indiana residents is sliding down the list of states, it’s dropped several position in the last few years. The infant mortality rate is on the raise. Folks are concerned and it’s generating a fair amount of ink. So Pence has to appear to do something, but nothing that would compromise his precious conservative principles. Expanding Healthy Indiana fits that bill.

    Indiana’s only saving grace is that the republican majority legislature has put the brakes on some of Pence’s more reckless fiscal initiatives – like getting rid of the rainy day fund and eliminating business taxes. To make up they’re trying to make outlawing same-sex marriage a part of the Indiana constitution.

  17. 17
    Steve M. says:

    For what it’s worth, Michelle Malkin is already accusing Gov. Pence of collaboration with the enemy:

    https://twitter.com/michellemalkin/status/467016909381464065

  18. 18

    @Richard Mayhew: And they certainly shouldn’t approve Corbett’s plan!

  19. 19
    jl says:

    I didn’t know Michael Pence got himself elected governor of Indiana. God Lord! He is still allowed to be in charge of anything?
    Good luck, Indianians.

  20. 20
    dp says:

    Anything that requires the poor to come up with $1100 sucks and will not work. Period.

  21. 21
    The Republic of Stupidity says:

    It is better than nothing, but it is a pretty shitty deal.

    And that pretty much sums up the GOP’s current philosophy in one sound bite…

  22. 22
    RaflW says:

    It is better than nothing, but it is a pretty shitty deal.

    I hope you are right that HHS will not accept as-is. But I think we are seeing the beginnings of reality setting in for governors who said no to Medicaid expansion and “the dreaded Obamacare.”

  23. 23
    seabe says:

    Maybe this is privileged of me saying so, but how can poor people afford this? Why even bother expanding? I would not grant a waiver for this one if I were HHS. It’s pure money for insurance that can’t even be used.

  24. 24
    jl says:

    @seabe: Pence not ept enough to rig something that passed the laugh test.

  25. 25
    karen says:

    In other words, red states will expand Medcaid but only in a way where poor people will never be able to qualify for.

  26. 26
    Woodrowfan says:

    I went to school with Pence. He’s always been a self-righteous jerk who loves to proclaim Jesus but is totally untrustworthy. He thinks he’s brilliant but is dumb as a box of academically-challenged hammers. The thought of him in charge of anything should make you queasy.

  27. 27
    jharp says:

    So how many more Hoosiers do they anticipate will gain coverage?

    I think that 598,000 number includes folks already covered by Healthy Indiana Plan.

  28. 28
    Ruckus says:

    @The Republic of Stupidity:
    But is it better than nothing? Because their entire policy concept is shitty.
    So in my mind no, it isn’t better than nothing. They are making things worse on health care, voting rights, religious idiocy, women’s reproductive health. That’s the short list. Doing nothing would actually be an improvement.

  29. 29
    mclaren says:

    Being a slave is also better than being sent to a death camp.

    If this is Richard Mayhew’s idea of liberalism, he needs to cut his losses and take poison.

  30. 30
    Richard Mayhew says:

    @mclaren:

    It is not my idea of liberalism — it is my idea of making the best of a shitty situation as I would prefer getting several hundred thousand people mediocre coverage instead of no coverage. I prefer that even knowing that for some people the coverage will still fuck them over if they get sick/hurt/old. The alternative, holding out for a pony that was shot and brought to the glue factory by the Supreme Court two years ago, guarantees that all of the people who otherwise would have gotten mediocre coverage have no coverage and that even more people are fucked when they get sick/hurt/old.

    But yes, you’ve proven that you are leftier than me — do you want a cookie with that.

  31. 31

    The new Republican motto: “Health care you can’t use, at a price you can’t afford.”

  32. 32
    A.J. says:

    Total bunk.

    And Health Savings Accounts are nothing more that a dodge for wealthy people – who can stroke a check for any medical care – to avoid paying taxes. And you know Rethuglicans will never do a damn thing if it involves a penny more in taxes; i.e., a $10 cut in spending in exchage for $1 in new revenue (taxes) – DOA.

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