Indiana’s Waiver Approval Adds More Barriers to Medicaid Coverage

Following the recent approval of Kentucky’s waiver, Indiana becomes the second major waiver approval by the Trump Administration which establishes more barriers to Medicaid coverage.

This is an unfortunate but not surprising turn of events. It’s worth noting that Indiana’s own evaluation shows numerous barriers to coverage already existing in Indiana’s HIP 2.0 program, yet these are not addressed – in fact they are likely to worsen under the new terms and conditions.

The most often highlighted of these is a work requirement – Indiana becomes the second state after Kentucky to receive CMS approval for this new approach – and likely the second state where litigation will be filed on this and other issues. (For a summary of the Kentucky case see National Health Law Program’s summary.)

Indiana’s work requirement has different twists and turns as compared to Kentucky’s (remember these waivers are extremely complex and hard to follow as I have said many times). For example, in Kentucky you can get an exemption from the work requirement if you are the primary caregiver/parent of a child but there is no age specified whereas in Indiana, you can get an exemption if you are the “primary caregiver of a dependent child below the compulsory education age”. In Indiana, “accredited homeschooling” would count as a work activity but in Kentucky it would not.

However, work requirements are not the only issue to pay attention to as I have also said many times. In fact, Indiana invented the “lockout” – one of my least favorite policies to hit Medicaid in a long time. This is a forced period of uninsurance, which penalizes people for missing a premium payment or a paperwork deadline for coverage renewal. Indiana’s original HIP 2.0 approval had a limited lock out for those who missed a premium payment and had incomes over the poverty line. Kentucky has more, and now CMS is reversing its previous decision in the first round of Indiana’s waiver negotiations and allowing a 3-month lockout for failure to renew in a timely way. (Note: The state had been requesting six months here.)

The lockout could affect many, many Hoosiers as the state’s quarterly reports show that failure to complete the renewal process is the number one reason people leave HIP 2.0. (We are talking tens of thousands of people here). Some of these folks may no longer need Medicaid, but for those who do, it will be very hard to get back on – resulting in gaps in coverage.

Another example of a failed health savings account was buried in the waiver amendment – the state is seeking to close its “HIP Employer Link” program which established POWER accounts for Medicaid beneficiaries who would use them in conjunction with their employer-sponsored insurance. The state said it wishes to terminate them because “Utilization of HIP Link has been low and administrative burden has been high.”[1] I wonder how much they spent on that on a per capita basis.

Indiana also becomes the first state to impose a surcharge on tobacco users, a policy which research suggests will be counter productive and may result in coverage losses.

There are some positives in this approval – the state will expand substance abuse treatment and will make a small improvement in the way premiums are charged – that should help make the system somewhat less cumbersome in that regard. But there is a lot of new red tape here that we are still trying to unwind so that we can give you a fuller assessment of how HIP 2.0 will impact Hoosiers who rely on Medicaid to access health care. Stay tuned as we’ll have more to say in the coming weeks.

[1] P. 9 of July 20, 2017 amendment to HIP Section 1115 waiver application of 1/31/2017.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.