Indiana Gov. Mike Pence’s yang to Donald Trump’s yin is more than just opposite personalities being complementary, but “are forces that interact to form a dynamic system in which the whole is greater than the assembled parts” — and on healthcare reform, this is certainly true.
Gov. Pence has “street cred” on healthcare reform because he has been through the ever-so-painful process of applying for a waiver from the U.S. Department of Health and Human Services so his state could engage in negotiations to see how far the Obama administration would let Pence go in his innovations. It is a minor miracle that even the negotiated, and very heavily compromised, version of Healthy Indiana Plan 2.0 was approved.
But Pence’s successful Medicaid reform puts him at the bleeding-edge of innovation in Medicaid. He has created rational healthcare reform that actually works. And if imitation is the greatest form of flattery, the state of Ohio has been very flattering toward Pence’s Medicaid reform. Ohio and Indiana have at their center of their Medicaid reform Health Savings Accounts.
Congress is planning a major overhaul of the Medicaid system next year. It has no choice under the twin weights of increased enrollment in Medicaid due to Obamacare and the fact that post-Obamacare enrollees are more than twice the cost of pre-Obamacare enrollees. State and federal budgets for Medicaid are being crushed.
In this context, assuming my prediction of a Trump-Pence victory in November is correct, Gov. Pence’s experience of trail-blazing will no doubt come to be relied on by both Houses of Congress and by President Trump.
Reforming Medicaid with Health Savings Account-like plans will be on the Trump-Pence agenda, since Medicaid has become such a large part of Obamacare. Most of those now covered by Obamacare have coverage under Medicaid.
This means that repealing and replacing Obamacare will mean reforming Medicaid.
The Trump-Pence HSA plan for Medicaid could work something like this: Each Medicaid beneficiary would contribute a nominal amount, say $8 a month, and would receive an account with their deductible amount fully funded, minus their $8 a month contribution.
For example, if the Medicaid HSA policy had a $2,000 deductible, then the beneficiary would receive an HSA account with $1,904 in it that the beneficiary could spend on healthcare.
They would be expected to fund fully the account with their $8 a month contributions, and if they did not keep their own skin in the game, they would be moved to a more traditional, less desirable Medicaid plan.
The Ohio version of this idea is a $10 to $1 match for every dollar the Medicaid beneficiary puts into a Health Savings Account. Ohio has applied for a waiver from HHS to conduct its Medicaid HSA program, which has the beneficiary paying no more than $99 over the course of the year. Ohio will match 10 times the dollars each Medicaid beneficiary deposits into their account. That means in order to stay in the Ohio program and fully fund their $1,000 deductible, each beneficiary needs to deposit $8.25 into their account every month and Medicaid coverage of medical expenses would be 100 percent above the deductible.
States must be allowed to require contributions from beneficiaries and to take action should those contributions not be made. The precedent set by the Obama administration’s agreement with Indiana to allow Medicaid beneficiaries to contribute each month is significant, as it allows the penalty of dismissal from the HSA-like plan to a less desirable plan if the beneficiary does not make their required monthly contributions.
Beneficiaries would access the funds in their account via a debit card, with specific electronic restrictions that would prevent non-medical purchases.
The above is an example of how it could work, but it is likely that any HSA Medicaid plan would have significant variability and flexibility for all 50 states to design their own plan, since this reflects the great variance of views about how to design the plans. For example, states could have various deductibles and therefore different immediate government and individual HSA contributions or funded amounts.
Trump has made clear his desire to repeal and replace Obamacare. And Pence has the street cred and the experience and credibility to shore up Trump’s lack of experience in the weeds of Medicare and Obamacare healthcare policy.
