There are many downsides to adding even more people into an expensive, over-regulated Medicaid program, but that doesn’t mean Georgia shouldn’t try to propose a better option. This is an opportunity to create a less expensive, more effective plan.
Goals of Expanded Access:
Called “the most innovative and successful reform of Medicaid in the history of the program” by Forbes magazine’s Avik Roy, Indiana’s expansion of health insurance to low-income citizens is a good model to analyze.
The Hoosier State’s Healthy Indiana Plan (HIP), created in 2008, applied the principles of personal responsibility, consumer-driven health plans, and Health Savings Accounts in its expansion of coverage to low-income populations. Initiated as part of a Medicaid demonstration waiver, the program requires individuals to make contributions to a Personal Wellness and Responsibility (POWER) account. No beneficiary pays more than 5 percent of their income, and the state supplements individual contributions so that all participants will have $1,100 in their accounts to pay for routine expenses.
Healthy Indiana promotes personal responsibility in several ways. First, the required beneficiary contributions to the POWER account ensure that all participants have an incentive to take greater responsibility for their own health and health spending. Second, the program promotes preventive care by providing an additional $500 to fund important preventive screenings. Moreover, only those beneficiaries who participate in a series of annual screenings may roll over unused POWER account funds from year to year. Third, Healthy Indiana assesses co-payments for non-urgent visits to the emergency room, attempting to reverse a trend of high ER usage by Medicaid beneficiaries prevalent nationwide.
Overall, Healthy Indiana has achieved many of its policy goals. Despite the modest incomes of beneficiaries enrolled in the program – all of whom must have incomes below 200 percent of the federal poverty level, or about $31,000 for a couple in 2013 – nearly four in five contributed to their POWER account. Nine in ten participants have at least one physician visit in their first year of enrollment, demonstrating that the HIP deductible does not hinder patients from obtaining needed care. And an analysis by the consulting firm Milliman found that parents in Healthy Indiana “seek preventive care more frequently than comparable commercial populations.”
Healthy Indiana has not only proved successful – it’s been popular as well. Only about one-quarter of participants ever enrolled in the program during its first two years left the program, “a retention rate much higher than the rate for adults in Indiana’s regular Medicaid managed care program.” Approximately 70 percent of beneficiaries considered the required POWER account contributions just the right amount, and 94 percent of members report being satisfied or highly satisfied with their coverage.
A 2011 policy brief by Mathematica Policy Research commented on the program’s successes:
HIP has successfully expanded coverage for the uninsured, while giving enrolled members an important financial stake in the cost of their health care and incentives for value-based decision making. Early implementation suggests that members value HIP benefits and that at least some low-income, uninsured adults are willing and able to contribute toward the cost of their care.
Just as important, the program’s increase in preventive care, and decrease in emergency room usage, have achieved measurable savings. Milliman reports that HIP exceeded its targets for budget neutrality, spending nearly $1 billion less than its original spending cap in its first five years.
Legislators in Florida have proposed an alternative to Medicaid expansion that is similar in many ways to the Healthy Indiana plan, but would be funded entirely by the state. Chris Jacobs, writing for the Galen Institute, provides a good overview of the successful Medicaid expansion in Indiana and a proposed alternative in Florida:
[Florida] state legislators are offering state-based alternatives to Obamacare’s costly Medicaid expansion. House Speaker Will Weatherford introduced legislation – the Florida Health Choices Plus bill – with Rep. Richard Corcoran, chairman of the House Health and Human Services Committee, to provide incentives for low-income individuals to obtain health insurance. Under the proposal, individuals with incomes below the federal poverty line would receive $2,000, deposited into a CARE (Contribution Amount for Reasonable Expenses) account. Beneficiaries would be required to deposit $25 per month, or $300 per year, into the account, and employers could contribute additional amounts as well. The money could be used to purchase affordable health coverage in the Florida Health Choices insurance clearinghouse, or used directly for health expenses.
Because more than two in three uninsured Americans are without coverage for periods of less than a year, Florida Health Choices Plus would provide bridge funding to the majority of citizens who suffer only short spells without health insurance. It does so without providing incentives for individuals to drop private health insurance and enroll in a government program – a problem that has plagued past state coverage initiatives. The proposal includes a personal responsibility component, coupled with incentives for beneficiaries to serve as wise consumers of health care. And it accomplishes these objectives without relying on Obamacare’s massive new gusher of federal spending.
Arkansas has won permission to allow its low-income population to buy subsidized private insurance on the state exchange as an alternative to expanding traditional Medicaid. Although the “Private Option” does have some advantages, it retains many of the burdensome regulations and requirements of the traditional Medicaid program. The U.S. Centers for Medicare and Medicaid Services has clearly stated, “Under all these arrangements, beneficiaries remain Medicaid beneficiaries.”
The following publications provide a good background on Medicaid reform efforts:
 “Nine Reasons to Question Medicaid Expansion,” Georgia Public Policy Foundation, February 2014, http://www.georgiapolicy.org/nine-reasons-to-question-medicaid-expansion/
 “21st Century Health Care Options for the States,” Galen Institute, April 2013, http://www.galen.org/assets/21stCenturyHealthCareOptionsfortheStatesJacobs.pdf
 “The Empty Promises of Arkansas’ Medicaid Private Option,” January 2014, http://www.floridafga.org/2014/01/empty-promises-of-arkansas-medicaid-private-option-debunked-in-new-report/