Analysis of Ind. Medicaid plan, Bevin model, shows same concern about financial hardship voiced by Ky. critics; Ind. officials reply

Gov. Matt Bevin

By Danielle Ray
Kentucky Health News

While Republican Gov. Matt Bevin works on his proposal to reform his Democratic predecessor's expansion of Medicaid, the Indiana program that was his model is suffering mixed reviews from a recent analysis.

Bevin's administration has said it hopes to file his plan with federal officials in August. The changes are modeled after Republican Gov. Mike Pence's "Healthy Indiana Plan 2.0," which includes premium contributions, health-savings accounts, incentives for healthy behaviors and a benefit lockout for people who don't pay premiums. The Indiana plan took effect last year.

A state-funded analysis by an independent consulting firm, released in early July, illustrates one of the issues raised by Kentucky critics of Bevin's plan: possible financial hardship for those required to pay monthly premiums.

Indiana Gov. Mike Pence

Among top concerns regarding the Indiana program are the number of Medicaid recipients either locked out of benefits or losing dental and vision coverage for six months after failing to pay into their health savings account.

Among the 345,656 Healthy Indiana Plan 2.0 enrollees (as of January 2016), 2,677 above the poverty line were locked out for six months for failing to pay their contribution, and 21,445 below the poverty line transitioned to basic Medicaid because of non-payment, Virgil Dickson reports for Modern Healthcare.

Those totals were 5.9 percent and 8.2 percent, respectively, of those groups, Indiana Secretary of Family and Social Services John Wernert said in a letter to Kentucky Health News. He said 56 percent of those who were locked out "had actually found other coverage, either through their work or their spouse’s work, which may explain why they stopped paying. Nearly all HIP members (166 out of 176) who applied for a waiver of the lock-out period were granted one."

The report says more than 90 percent of people in the expansion have been able to continue their HSA contributions of $3 to $25 a month depending on income level, but almost half said they worried about being able to make the contributions: 16 percent said they always worried, 7 percent said they usually worried, 22 percent said they did sometimes, and 14 percent said they did rarely. Three percent said they didn't know and 38 percent said they never worried.

Wernert said some of the "most telling" results of the survey were that members who contribute to their accounts "were more satisfied with the program (84% to 71%), had better drug adherence (84% to 67%), sought more primary (31% to 16%) and preventive care (64% to 45%) and relied less on the emergency room for treatment (775 to 1,034 visits per 1,000 member years)."

If federal officials approve the proposed changes in Kentucky, the state would make dental and vision coverage a reward, not a basic benefit. Recipients could gain the coverage, as well as non-prescription drugs and gym-membership subsidies, by enrolling in job training, volunteer work or health-related classes.

Similar to the Indiana plan, the changes would apply only to able-bodied adults, not pregnant women, the disabled or those deemed "medically frail." Working-age adult members without dependents would be required to participate in volunteer work, have a job, look for one or take job training, on a gradually increasing scale, phased in by county.

Also like the Indiana plan, most Kentucky Medicaid recipients would have to pay premiums of $1 to $15 a month. Failure to pay would result in a six-month lock-out period for those above the federal poverty level, though they could re-enroll if they catch up on their payments and take a financial- or health-literacy class. Those below the poverty level or who are medically frail and don't pay premiums would shift to a co-pay system and have $25 deducted from their rewards account, which could then be suspended.

Bevin's proposal says it "represents the terms under which the Commonwealth will continue Medicaid expansion" as established by Democratic Gov. Steve Beshear. Bevin has said that if federal officials don't approve it, he would end the expansion, which provides largely free health care for about 400,000 Kentuckians who were not covered before 2014.

Bevin has said that former Gov. Steve Beshear's Medicaid expansion is financially unsustainable. His proposal attempts to offset the state's costs with what he has referred to as "skin in the game" for Medicaid recipients, meaning that they must be more active in their health care. The federal government is paying all bills for Medicaid expansion enrollees through this year. Next year the state would pay 5 percent, rising in annual steps to the federal health-reform law's limit of 10 percent in 2020. The estimated cost of the state share in the two-year budget that begins July 1 is $257 million.

Read more here about Bevin's proposed changes, including premium payments and Medicaid deductibles.