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Apr 2017

Is Uncle Sam Pushing for Medicaid Patients to Have Fiscal Responsibility?

Will Uncle Sam steal an idea from Indiana, where state Medicaid recipients have to pay a portion of the bill, as it assesses the financial sustainability of Medicaid? Perhaps to the surprise of some, there might not be much push-back from the public.

There’s a “common misperception” people who need government assistance are looking for a “handout,” musician and massage therapist Katie Josway told USA Today. Josway first received health care coverage from the state two years ago and is currently making monthly payments. Missing just a single payment could cause the loss of her coverage.

“Instilling a little bit of accountability and cutting people a break where needed will lead to a better functioning and happier society,” Josway said.

The stark reality is in the future the once free Medicaid plans will come with a new hitch. The Uncle Sam plan via states will cost covered individuals out-of-pocket money. The work requirements and higher cost sharing previously proposed by Congress – and rejected by former President Barack Obama’s administration – may gain traction with the Trump administration. Interestingly, Obama’s administration did approve the Indiana plan, which allowed the home state of Vice President Mike Pence to expand Medicaid on terms that were more politically palatable in the nation’s heartland.

According to USA Today, Health and Human Services Secretary Tom Price and CMS Administrator Seema Verma already announced in March states will have more latitude in designing Medicaid programs that may best suit their recipients’ needs. Currently, 19 states have declined to expand Medicaid under the Affordable Care Act despite a federal pledge to cover 90 percent of the cost of care for people in this population.

A major reason for many states electing not to expand Medicaid was the fear of taking on higher costs when the federal government’s match decreased.

What makes the Healthy Indiana 2.0 plan different?

• Payments
Healthy Indiana recipients pay between $1 and 2 percent of their income into a type of health savings account that is then used for some out-of-pocket costs. The accounts, called Personal Wellness and Responsibility or POWER accounts, sound good. However, nearly 50 percent of the state’s recipients aren’t even aware they have the accounts, according to a survey of recipients conducted by the Lewin Group for the state. The payments are supposed to be an incentive for patients to use health care services more wisely. But depending on their income, patients who don’t pay their monthly contributions are either temporarily locked out of the system or have to make co-payments and receive fewer benefits.

• Reimbursement
Doctors and hospitals are paid at the higher Medicare rates to encourage more providers to accept Medicaid patients. This is a growing issue in California where many doctors simply refuse to take on Medi-Cal patients because of the extremely low reimbursement. The Medicaid program has traditionally paid health care providers the least for services, which has led to a shortage of doctors willing to treat patients on the program. There are, however, lingering questions about the affordability of these larger rates.

• Work
Indiana sought to make working a requirement for coverage. However, the state was rebuffed under the Obama administration. Instead, job training is offered to recipients, but is not required. Indiana Governor Eric Holcomb, who took over for Vice President Pence, did not ask to include a work requirement in his request to extend the plan for three more years. The Kaiser Family Foundation reported last year 59 percent of all Medicaid beneficiaries who were not receiving disability payments were working. If they were not earning a paycheck, these recipients were either sick, taking care of a family member or in school. Even what seems like a small increase in working recipients could make a big difference in the cost of the program, says Costa, who is now with the law firm Buchanan, Ingersoll & Rooney.

It is too early to send the Indiana case to the jury to answer if the Indiana approach, Healthy Indiana Plan 2.0, is more effective than traditional Medicaid at keeping people healthy and lowering costs.

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