‘Indiana needs a HIP replacement,' social services secretary says about insurance program

INDIANAPOLIS — In his second tenure leading Indiana's most expensive state agency, Family and Social Services Administration Secretary Mitch Roob wants to significantly change Indiana's insurance program for low- to middle-income Hoosiers. But ongoing negotiations in Washington could undermine or fundamentally alter the third iteration of the Healthy Indiana Plan, otherwise known as HIP.

Some congressional changes could be prohibitively expensive for the state, coming on the heels of a bleak revenue forecast projecting $2 billion less in Indiana's coffers over the next two years.

"This is a five-alarm fire for us," said Roob, who introduced the first version of HIP while he was the FSSA secretary under former Gov. Mitch Daniels.

In a sit-down with the Indiana Capital Chronicle, Roob previewed a Wednesday presentation before the State Budget Committee introducing HIP 3.0, including work requirements, provider taxes and wellness incentives. But the final details can't be determined until Congress agrees on President Donald Trump's "big, beautiful bill," which could be approved in the coming weeks.

Work requirements for able-bodied adults on HIP were fiercely debated in the legislative session earlier this year, ultimately advancing with the support of the Republican supermajority. But the process would take months, requiring Indiana to submit a modified waiver for federal approval before it could be enacted.

That timeline could be shortened under the latest version of the bill, which would force all states to adopt such regulations.

"Once the big, beautiful bill passes, we will move forward as quickly as we can with that," Roob said about work requirements.

Other states have stumbled in their rollout of such conditions, including Arkansas and Georgia. Roob said details of Indiana's plan would largely hinge on Congress' actions and pointed to support from Indiana Gov. Mike Braun.

"He believes in work requirements; he doesn't believe in work requirements to kick people off of the program," said Roob. "He believes that Medicaid ought to be a program that incentivizes individuals to work – not disincentivizes them to do so."

While Indiana's work requirements would have allowed an exception for parents in general, Congress now proposes limiting that exemption to parents of children who aren't teens. More than 712,000 Hoosiers rely on HIP for their health coverage, according to a May enrollment report.

Braun issued a statement Wednesday saying he supports the Trump administration's efforts to reduce spending and promote responsible governance at the federal level.

"However, flexibility in managing Indiana's HIP program will be essential for the state moving forward, especially if we are required to take on more of the financial obligation. This will require a hands-on approach to updating and maintaining Indiana's Medicaid system that only Hoosiers can provide," he said.

Ongoing discussions

Other portions of the bill threaten to undo Indiana's program, particularly its cap on state provider taxes, according to Roob. The Senate has proposed a cap of 3.5 percent on the levy, which applies to hospitals and managed care entities. A higher tax means the state can leverage more federal dollars.

But Indiana uses the maximum allowed tax of 6 percent on hospitals, known as a hospital assessment fee, to fund its obligation for HIP. Those taxes – along with a portion of the cigarette tax – pay for the entire program, meaning that no general fund dollars need to be dedicated to HIP.

"That's how we pay for the Healthy Indiana Plan," Roob said. "If (Congress' proposal is) signed into law, this would require the state of Indiana to significantly roll back eligibility in the Healthy Indiana Plan.

"Not because we want to – because we have no match."

Indiana is responsible for 10 percent of the costs while the federal government picks up the tab for the remainder. However, under its current waiver, Indiana could be on the hook if the hospital assessment fee is cut and would need to come up with the difference. Roob said he was working with Indiana's congressional delegation to provide states explicit authority to change their plans in a later version of the bill.

This rate cap would also apply to any provider tax levies on managed care entities, which oversee several of Indiana's Medicaid programs, including services offered under the divisive PathWays for Aging waiver. Indiana submitted a plan to tax managed care entities earlier this month based on the plans of other states, such as Ohio and Illinois, which could net the state $865.8 million.

But Congress could invalidate that proposal by prohibiting that type of tax, which isn't uniform and varies by provider type, in favor of something more equal across the board.

"It is not law yet, so we are racing to try to get this approved," said Roob. "I view our prospects of getting this done as not quite as good as the Pacers winning the series."

Portions of the proposal in Congress would require copays and premiums for certain Medicaid enrollees, something that was halted in Indiana by a federal judge last year. If allowed, Roob said the state would "likely" bring that back – though he said the state was seeking more "explicit authority" to implement cost-sharing requirements in the final version of the bill.

Undoubtedly, such a move would be challenged in the courts.

But Roob said Hoosiers on HIP could reduce such charges by meeting certain wellness guidelines, such as preventative care check-ups. Women getting regular pap smears, for example, would lower their cost-sharing obligations.

"And while we recognize that that won't save Indiana much money in that particular year, it may save that woman from having cervical cancer," Roob said. "So it is the governor's desire to 'Make Indiana Healthy Again,' and part of that is to incentivize changes in behavior."