Wednesday, May 21, 2014

Pence palms a card in plain sight

Obamacare must die. Medicaid is a disaster. Long live Healthy Indiana, an implementation of Obamacare and an expansion of Medicaid.

Such was the inherent logic of Indiana Governor Mike Pence's May 19 speech to the American Enterprise Institute announcing his intent to seek a waiver to use ACA funds earmarked for state Medicaid expansion  to expand an updated version of the Healthy Indiana Program, Indiana's current Medicaid alternative.

Healthy Indiana, which requires beneficiaries to make small monthly payments into a Health Savings Account supplemented by the state, was created by a Bush Administration waiver in 2007, extended through 2014 by the Obama administration. The administration will also likely approve Pence's proposed waiver application to adapt the program (rechristened HIP 2.0) to the ACA-mandated Medicaid expansion, while requiring Pence to end yearly and lifetime caps on coverage and offer maternity coverage, among other adjustments. HIP 2.0 allows those who can't or won't maintain an HSA to access more limited benefits, subject to small per-use copays, and also offers premium support to low-income citizens who have access to employer-sponsored insurance.

If approved and implemented, HIP 2.0 will be living proof, along with waiver-based alternative Medicaid expansions implemented in Arkansas, Iowa and Michigan, that a Republican state government can work with the federal government within the ACA framework to reshape both the ACA and Medicaid to conservative specs. But that's not the way Pence plays it. In his narrative, the ACA and Healthy Indiana are Manichean opposites -- as are Medicaid and Healthy Indiana, and the federal government and state government:
I truly believe that once Obamacare is repealed, the consumer-driven plan that we’re proposing in the Healthy Indiana Plan will serve as a model for what block-granted Medicaid programs could be in states across the country.

I believe there are only two futures for health care in America today. There is government-driven health care or consumer-driven health care. Years ago, when the Healthy Indiana Plan was first adopted, Indiana chose the better portion by embracing consumer-driven health care, giving eligible Hoosiers the power to make their own health care decisions. And now we are seeking permission from the federal government in a form of a waiver to build on that choice by expanding the Healthy Indiana Plan for even more working Hoosiers.
Pence, everyone saw you palm that card.  Healthy Indiana can be a model today for any state that cares to treat it as such.  You can make insurance offered under the ACA as "consumer-driven" as you want, and the federal government will smile and nod. 

There is the little "block-grant" caveat. Republicans would like even more flexibility in Medicaid program design than is now on offer ( mainly to cut funding and benefits). But that shining medical home on a hill, Healthy Indiana, is placed under no bushel by the ACA. And in fact the Obama administration has not yet seen an ACA Medicaid expansion waiver proposal it's proved unwilling to accept.

Throughout his AEI speech, Pence slanders Medicaid as if it's a uniform (and uniformly failed) federal program instead of a rules-based mandate with 50 state and hundreds of local variants, including myriad managed care experiments.  He also completely misrepresents the famous Oregon Medicaid impact study, which found, in a limited short-term sample, that the state Medicaid program improves beneficiaries' mental health and finances, though it did not find statistically significant improvements over a short period in a few physical health benchmarks. But never mind. The weight of mud Pence slings at Medicaid and the ACA is inversely proportionate to the degree of cooperation he is proposing.   And that points to an even larger lacuna in the Republican case against the ACA.

Just as governors and state legislatures can use ACA Section 1115 waivers to reshape Medicaid to their liking, so can they use the ACA Section 1332 waivers to reshape their states' private insurance market to their liking.  As the Washington Post's Dana Milbank points out, the waivers authorize rejiggering on the state level of virtually every core feature of the ACA:
Starting in 2017, states will be able to experiment further, securing exemptions from problematic provisions of the law such as the individual mandate, the employer mandate and the health-care exchanges. If Republican governors don’t like Obamacare’s requirements, all they have to do is come up with an alternative that provides comparable care and coverage.

Pence declined to speculate about whether he might seek a waiver exempting Indiana from Obamacare overall.
Governors and state legislators of all political persuasions have enormous leverage and leeway under the ACA to reshape healthcare delivery on a state level.  More on this in a followup post.

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