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Too Soon to Replicate Indiana’s Medicaid Waiver

Several states are considering adopting features of the federal waiver through which Indiana has expanded Medicaid — such as setting up accounts modeled on health savings accounts for each beneficiary, delaying coverage until beneficiaries pay premiums tied to their incomes, and ending coverage for some beneficiaries if they don’t pay their premiums.  But Indiana has had trouble implementing its waiver, our new paper explains.  Evaluations of the program — called the “Healthy Indiana Plan 2.0” (HIP 2.0) — are underway, and the Centers for Medicare and Medicaid Services should see the results before allowing other states to replicate it.

Indiana said it would use its waiver to test several hypotheses on how premiums affect participation in health coverage and the efficient use of health services.  A robust body of research already shows that premiums harm low-income people.  If Indiana isn’t implementing its waiver in a way that’s consistent with its agreement with federal officials, HIP 2.0 isn’t a true test of those hypotheses.

  • Indiana may not be charging premiums based on beneficiaries’ actual income.  HIP 2.0 beneficiaries must pay a monthly premium of 2 percent of income, but those with incomes below $50 a month pay $1 a month.  Enrollment data show that Indiana is counting an improbably large number of enrollees as having little or no income.  That’s likely because it’s easier to collect a flat $1 a month than a higher premium based on beneficiaries’ income, which can change from month to month as incomes rise or fall.
  • The extent of third-party premium payments is unclear.  Third parties are allowed to pay premiums for HIP 2.0 beneficiaries.  While Indiana’s most recent quarterly report says that employers and non-profit organizations did so for relatively few enrollees, it acknowledges that “some informal arrangements or payments on behalf of members” — from hospitals, friends, and family, for example — “may not be included in these numbers.” 
  • Indiana hasn’t created a robust presumptive eligibility system.  Indiana’s waiver requires it to implement a system enabling certain health care providers and other groups to screen their patients or clients for Medicaid eligibility and enroll those who appear eligible for a temporary period while they complete the eligibility process.  The goal is to mitigate the potential harm from delaying Medicaid coverage until beneficiaries pay their premiums. 

Indiana claims that it reached out to all providers that could participate, yet only 41 percent participated in the most recent quarter, and the vast majority of HIP 2.0 enrollees haven’t benefited from a presumptive eligibility period.