Indiana gets OK for novel health plan

In a novel plan, low-income adults in Indiana who can’t afford health insurance will be able to tap into as much as $300,000 in coverage by contributing to health savings accounts.

The plan, which won federal approval last week, will make Indiana the 13^th state to cover childless adults under Medicaid, a federal-state program created in 1965 primarily to cover families and the elderly, blind and disabled. Even more unique is the plan’s requirement that poor applicants pay into a health savings account before getting access to taxpayer-funded medical care.

The changes, approved by the Indiana General Assembly this spring and set to take effect Jan. 1, are the latest in attempts by states to stretch their Medicaid programs to cover more of the nation’s 47 million uninsured. Because the federal government covers 57 percent of Medicaid bills nationally, it must sign off when states expand who and what is covered..

Overall, 130,000 uninsured Hoosiers are expected to gain coverage, including 37,000 childless adults, plus 39,000 more children in working families covered through the State Children’s Health Insurance Program. But Indiana’s plan is different than traditional Medicaid, because it allows the state to limit how much it spends by halting new enrollment if it runs out of money. Under regular Medicaid rules, states must sign up all eligible applicants.

“People in Indiana don’t believe that you have to have a child to get health care. It doesn’t make any logical sense,” said Mitch Roob, Indiana’s secretary of the Family and Social Services Administration.

Advocates for the poor are critical of Indiana’s attempt to use health savings accounts to put Medicaid patients in control of their own medical spending. While Medicaid enrollees nationwide face co-payments, Indiana will require even the poorest adults to contribute to get access to subsidized care.

Enrollees must pay 2 percent to 5 percent of their income, or $45 for the poorest eligible single adult making $2,246 annually. Each recipient then will be given a health savings account of up to $1,100 for medical expenses. Once their accounts are empty, participants get traditional health insurance, with a $300,000 yearly limit. Participants also get $500 in free preventative services.

“We’re very concerned, because this is very different from what other states have done,” said Sarahbeth Zemel, an analyst for Families USA, an organization promoting expanded health care coverage. “It sets a precedent – a dangerous one....You’re making people under 100 percent of poverty pay an enormous amount for their health care.”

The state is funding its share of the Medicaid expansion by raising cigarette taxes 44 cents a pack. The federal government is expected to contribute an additional $1.1 billion over five years for the new services.