On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (which you might know better as “Obamacare”) into law. Unless you have been in a coma for the past five years, you probably know that this is a controversial law that the GOP has been trying unsuccessfully to repeal ever since that day.
In addition to the legislative attempts to repeal the law, a landmark Supreme Court case (National Federation of Independent Business v. Sebelius) challenged the constitutionality of the law’s mandate that individuals purchase health insurance or pay a penalty.
On June 28, 2012, the Supreme Court ruled on the case, deciding 5-4 in favor of former Secretary of Health and Human Services Kathleen Sebelius, which meant the law would be upheld.
Although the case was mostly a victory for Obamacare, part of the Supreme Court’s ruling did weaken one important provision of the law that required states to implement an expansion of Medicaid to adults with incomes up to 133 percent of the federal poverty level. The court ruled that the federal government could not compel states to participate in the Medicaid expansion if the state legislatures and governors did not want to.
What followed was a split along partisan lines — basically the states with Democratic governors and legislatures implemented the Medicaid expansion, and states with Republican governors and legislatures (and states with divided governments) opted out. One of those opt-out states was my home state of Indiana.
In 2008, Indiana (at that time under Governor Mitch Daniels) implemented a Medicaid waiver program called the Healthy Indiana Plan, or HIP. HIP was based on principles of health savings accounts and high-deductible health plans, which are generally favored by conservatives over more comprehensive health coverage requirements. You can read more details about how HIP originally worked here.
The original HIP program did not meet the standards of essential health benefits required under the Affordable Care Act, and it capped enrollment based on a fixed budget rather than allowing anyone who met the income guidelines to enroll, so there was concern that the program would be suspended…it has been temporarily extended through 2014 to allow time for Indiana and the federal government to determine where to go from here.
Now Indiana Governor Mike Pence has proposed using a modified version of the Healthy Indiana Plan (known as HIP 2.0) to substitute for expanding traditional Medicaid under the Affordable Care Act. He has been negotiating with the U.S. Department of Health and Human Services about this for some time now, and it is widely believed that they will be able to reach some sort of compromise.
Pence has received criticism from both the left and the right for his approach. (He has also received bipartisan praise.) But my real question is whether HIP 2.0 is good public policy. I’ll explore in more detail how both version of HIP were designed and the policy implications of that in Part 2.