Stanley Feld M.D., FACP, MACE Menu


Obama Administration Continuously Declines To Renew Indiana’s Medicaid Waiver

 Stanley Feld M.D.,FACP,MACE

In light of the recent alleged IRS
scandel targeting certain groups, I am reminded of the Medicaid incident in
Indiana. I believe the incident is resolved now with the Obama administration
granting a waiver to Indiana after two years of bureaucratic haggling.

In 2007 Governor Mitch Daniels (R.) was
successful in getting the Indiana state legislature to pass a Medicaid reform
plan called the Healthy Indiana Plan. It is an expansion of Medicaid. It uses a consumer-driven
health plan to encourage low-income beneficiaries to take control of their
health and healthcare dollars.

This healthcare plan is a variant of my
ideal medical saving account.

 The Healthy Indiana Plan has been very successful.

Healthy Indiana Plan has been the most
innovative and successful reform of Medicaid in the history of the Medicaid

The federal government’s waiver for the
plan was given in 2007 and set to expire on December 31, 2012. Indiana applied
for an extension of the Medicaid wavier in early 2011. In November 2011 the
Obama Administration rejected the state’s request to extend its federal waiver.

Over 45,000 poor Hoosiers on Medicaid
were scheduled to lose this innovative Medicaid coverage in 2013.

Medicaid is theoretically run by the
states in cooperation with the federal government.  In reality, any time a state wants to make
the tiniest changes in its
Medicaid program, it has to go hat-in-hand to the U.S. Department of Health and
Human Services with a formal request for a waiver and these waivers are usually

 This federal control has been part of the
disagreement states have with the federal government over health insurance
exchanges. The central government wants to shift the financial burden on the
states while controlling the states’ decisions.

Indiana succeeded in gaining a waiver in 2007
because it was seeking to expand Medicaid to
a group of people who weren’t then eligible for the program and because the
state’s effort required no additional outlays from the federal government.  Governor
Mitch Daniels paid for the
Medicaid expansion by increasing the state’s cigarette tax by 44 cents. It made
sense to everyone except the people that smoked. 

Patients had skin in the game because
they had to pay 2 -5% of their income for their insurance coverage. The plan
provided financial as well as wellness incentives.

We did a lot of reading on
criticism of health savings accounts,” says Seema Verma, who was the
architect of the Indiana
program. “One of the criticisms was that people didn’t have enough money to pay
for preventive care. So we took preventive care out, made that first-dollar

“ Also, people said that people didn’t have enough for the
deductible, so we fully funded it. Then, you have to make your contribution
every month, with a 60-day grace period. If you don’t make the contribution,
you’re out of the program for 12 months. It’s a strong personal responsibility

 I described the Healthy Indiana plan in
detail in January 2008 pre President Obama

Medicaid patients get a specified amount
of preventive care for free.  Included
are free annual physical exams, pap smears and mammograms for women,
cholesterol tests, flu shots, blood glucose screenings, and tetanus-diphtheria

Medicaid beneficiaries have no
cost-sharing requirements (co-pays, deductibles, etc.) except for non-urgent
use of emergency rooms.

The money remaining in the Medicaid
patients’ POWER accounts at the end of the year can be applied to the following
year’s contribution only if they obtain the required free preventive disease

“The program has been, by many measures, a smashing success. “What
we’re finding out is that, first of all, low-income people are just as capable
as anybody else of making wise decisions when it’s their own money that they’re
spending,” Mitch Daniels explains in a Heritage Foundation video.”

“And they’re also acting more like good consumers. They’re
visiting emergency rooms less, they’re using more generic drugs, they’re asking
for second opinions. And some real money is starting to accumulate in their
[health savings] accounts.”

The program has been
very popular. Ninety (90) percent of enrollees are
making their required monthly contributions. Employers didn’t dump their
workers onto the program, crowding others out, because you needed to be
uninsured for six months in order to be eligible for it.

 “The program’s level of
satisfaction is at an unheard-of 98 percent approval rating,” Verma told 
Kenneth Artz.

Lower income families are not too stupid
to be wise healthcare consumers despite popular belief.

2010 study by
Mathematica Policy Research found that in the program

71 percent met the preventive care
requirement and were able to roll the balances over to the following year.  Only 39% obtained preventive care in the
first six months. It proves financial incentives work.

The lack of physician access is the
biggest reason why health outcomes for Medicaid patients lag far behind those
of individuals with private insurance.

Healthy Indiana pays better than
traditional Medicaid. The physician access trend has been reversed. Preventive
care participation rates are higher than the
privately-insured population.

Why would the Obama administration, which
controls the states’ Medicaid programs, refuse to grant a waiver for Indiana’s successful

The first excuse HHS used was “ HSS  hadn’t written the regulations for Obamacare

According to Seema Verma  “the state will now have to file a much more
complex “State Plan Amendment” that may not get approved before the Healthy
Indiana program is set to expire.”

Before his term expired Gov. Daniels
had written to HHS Secretary
Kathleen Sebelius asking her for permission to use the Healthy Indiana Plan to
handle Obamacare’s mandatory expansion of Medicaid. He had not heard back.

The Obama Administration claims to be on
the side of the poor.  Why would it not
approve a waiver of a popular program for the poor that provides the poor with
superior health care?

Whatever the reason, tens of thousands of people will be
needlessly harmed.

burdens and “poison pills” have been thrown at the Indiana health plan. One
such poison pill is not allowing the state to include the $1100 Power account given to Medicaid patients to make
wise medical care choices.

the government pays the healthcare insurance industry for help desks and rent
for buildings where there are help desks as direct patient care instead of

It is
not only bewildering, it is obscene.

controversy continued throughout 2012 past the expiration date of the 2007
waiver into 2013.

Pence, the new governor, kept fighting off bureaucratic rules but got nowhere
through March of 2013.

The subtext of all of this is the
Obama administration wants a top down centrally controlled Medicaid system with
the financial burden on the states and Indiana wants to control its own destiny
with its successful plan.

like the following has been going on. Diane Gerrits, CMS' director of state
demonstrations and waivers, wrote in a Feb. 25 letter that the state will have
to resubmit its application because it had not yet held two public hearings
required by law.

CMS said as a result of the failure to comply with the transparency portion of
the proposal, the state must begin a 30-day state public comment and notice
period. The state must follow with an additional 30-day federal public comment.

has been going on since 2011

Mike Pence fired back,

 "The Feb. 25, 2013, letter from HHS does not
indicate in any way that the waiver application process has been
jeopardized," he wrote Thursday. "It does, however, speak to the
flawed bureaucratic process that has impeded progress on our successful Healthy
Indiana Plan."

Obama administration is trying to destroy all health savings accounts both
public and private. This is probably the reason for these artificial delays.

in mid April, under public pressure and possibly the impending IRS scandal Indiana’s
waiver request was approved.

is a happy ending to the Indiana saga and perhaps a model to get all the
Medicaid programs out of the deep ditch they are in.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

Please have a friend subscribe






  • Thanks for leaving a comment, please keep it clean. HTML allowed is strong, code and a href.