Indiana wants Medicaid members to pay premiums, again. A federal judge says it violates the law

Mulugeta Wolfe, 24, is one of the hundreds of thousands of people on Medicaid in Indiana. Specifically, Wolfe is part of Indiana's Medicaid expansion program, called the Healthy Indiana Plan, or HIP. The program covers non-disabled adults between the ages of 19 and 64.

Wolfe enrolled earlier this summer and in May, he received mail from the state that explained he would have to make a monthly, income-based payment –– like a premium –– starting in July to keep his coverage. Those premiums are commonly referred to as POWER account contributions.

"It just seems like a pointless payment to make us have to do, other than to create a barrier for us, so we don't get re-enrolled and stuff," he said. "People are busy right now. People are busy trying to survive."

Wolfe said he is unsure how long he'll be able to stay covered, and he isn't the only one with questions about his coverage.

That's because Indiana says its Medicaid expansion program may be at risk along with the health insurance coverage of thousands of people.

A recent lawsuit filed against the U.S. Department of Health and Human Services argued that a number of policies of Indiana's HIP program — including the premiums it charges people — go against the objectives of Medicaid and violate the law. A federal judge agreed, and ordered Indiana to stop collecting these payments, just a few days before it was set to resume following the end of the COVID-19 public health emergency.

The state disagreed with the ruling.

"[Indiana] believes these actions have unintended consequences for our program," said Cora Steinmetz, Indiana's Medicaid Director. "The ruling creates uncertainty regarding which services are covered and removes the authority for certain administrative aspects of the program's operation."

A safety net that doesn't catch all

Under federal law, Medicaid expansion programs, like HIP, aren't allowed to charge premiums. But nearly a decade ago, Indiana obtained a waiver –– or an exception –– which allowed it to charge payments in exchange for additional coverage, like dental, chiropractic and vision.

Advocates and policy experts say some policies of Indiana's Medicaid expansion program create barriers to life saving health insurance coverage, which lead to confusion and thousands of people being dropped when they still qualify for and need Medicaid.

"These policies, they just result in people not getting enrolled," said Leo Cuello, a public policy expert with the Center for Children and Families at Georgetown University. "And indeed, that's what we see in state after state, study after study, where you look at what premiums do."

Beyond premiums, the lawsuit points to other issues with Indiana's Medicaid expansion including a lack of retroactive coverage and no assurance of non-emergency medical transportation.

Retroactive coverage has been a standard part of Medicaid for decades, covering medical bills going back three months. That mechanism was aimed at supporting a financially vulnerable person with an unexpected illness or injury.

In the ruling vacating the approval of Indiana's program, the federal judge noted that some 60,000 people in Indiana lost coverage from 2015 to 2016, simply because they failed to make these payments — that's about a third of the enrollees who were subject to premiums at the time.

"What prohibitive is, really is different if you are living in poverty," Cuello said. "You might not have a credit card or debit card account, you might not even be able to have a bank account open. So, are you going to, you know, walk to the county assistance office and give them $10 Every month?"

How we got here

The Healthy Indiana Plan actually predates the 2010 Affordable Care Act, which eventually expanded Medicaid to non-disabled adults under 65 who make up to 138% of the federal poverty level. To incentivize states to adopt the expansion, the federal government agreed to cover 90% of the cost of the services to this new group.

Since then, about 40 states plus D.C. have expanded Medicaid to cover more people with low incomes.

When Indiana decided to expand its Medicaid under the ACA in 2015, it did so with some conditions including keeping its ability to charge premiums. The state argued that the payments added an element of personal responsibility to health care coverage. And in 2020, Indiana's waiver received approval for another ten years.

Notably, though, the federal government's waiver approvals have not been without objection and concern over how the state operates HIP.

In a 2023 letter to Indiana, HHS noted the "large body of evidence" that premiums "reduce access to coverage and care." HHS ultimately declined to take any action against the state, arguing that changes to coverage would be too disruptive.

Indiana's decade-long approval came as many other states have moved –– or been pushed –– away from charging these premiums. In decisions to phase out premiums in other states, HHS even used data collected from Indiana to show why premiums led to a loss of coverage.

"There has been a slow but steady write-out of premiums from Medicaid," Cuello said. "Now, there are very few programs that have any kind of premiums left, and the ones that do are being phased out. So, the premiums are sort of bygone history at this point."

The future of Healthy Indiana Plan

Indiana's Family and Social Services Administration, which manages Medicaid, has filed a motion to stay the federal ruling. State officials said if the ruling is allowed to take effect, they'll need to transition some 335,000 members from HIP Plus to HIP Basic –– a plan with less coverage.

Ben Thorp

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WFYI

Tracey Hutchings-Goetz, communications and policy director at the local advocacy nonprofit Hoosier Action.

The state insists that the ruling threatens Indiana's ability to sustain HIP in the long term.

"The District Court's ruling is far-reaching and creates considerable uncertainty for the HIP program," state officials wrote in July. "Some implications of the ruling conflict with state law, which could eventually impact the state's ability to provide health care coverage to the Medicaid expansion group."

Tracey Hutchings-Goetz, communications and policy director of the advocacy nonprofit Hoosier Action, said the state's response sounds like a threat and feels like it is "holding members' health care hostage if they didn't get their way".

Advocates, and even the judge on the case, argue that the state doesn't need to keep premiums in place. Indiana was able to provide members with the additional coverage throughout the four years of the COVID-19 public health emergency, when the federal government barred all states from disenrolling people from Medicaid. During that time, Indiana enrolled all members in the HIP Plus program without charging premiums.

"Indiana seeks to paint a picture of massive disruption in the absence of a stay. But much of that imagined disruption would be of the State's own doing," the plaintiffs argued in a court filing responding to Indiana's motion to stay the ruling. "For more than four years, expansion group beneficiaries have retained HIP Plus coverage and paid no premiums — that is the status quo."

Advocates like Hutchings-Goetz said they don't think the state will end the HIP program entirely because if that happens, it will have a ripple effect on hospitals, providers and employers who rely on Medicaid.

"If HIP were to go away, it would be an unmitigated disaster for the people, the health systems and the economy of this state," she said.

As it stands now, the FSSA said people do not need to make those payments, and that people on HIP "remain covered, but there is uncertainty as to what services are included in that coverage." Other Medicaid programs are not affected by the ruling. Cost-sharing, including copayments and premiums, for the Children's Health Insurance Program, or CHIP, and MEDWorks resumed as planned.

But that can change in the future as the state's appeal makes its way through the courts.

Some people enrolled in HIP, like Wolfe, said they are confused and worried. He said he hasn't received any direct communication from the state about the status of the payments.

"In just knowing about the trial, that's probably the only way I know, the only thing making me think I don't have to pay," he said.

Abigail Ruhman is Indiana Public Broadcasting's health reporter. You can reach them at [email protected].

Ben Thorp is WFYI's enterprise health reporter. You can reach him at [email protected].

This story comes from a collaboration between Indiana Public Broadcasting, WFYI and Side Effects Public Media.

Side Effects Public Media is a health reporting collaboration based at WFYI in Indianapolis. We partner with NPR stations across the Midwest and surrounding areas — including KBIA and KCUR in Missouri, Iowa Public Radio, Ideastream in Ohio and WFPL in Kentucky.