The Governor’s Plan for a Healthier Indiana

Seema Verma, MPHSeemaVerma Consulting

Health Savings Account

• Utilize key principles of HSAs: value and cost conscious consumerism

• Price transparency• Address key criticisms of health savings

accounts for low income persons:– Deductibles unaffordable especially if contributions to

premiums are required – Barrier to seeking needed preventative services– Low level of tax liability

New Program

• Consumers with “skin in the game”

• Financial incentives to be healthy and to use health care services appropriately

• Promote price transparency for providers

Current Medicaid Programs & Proposed Governor’s Plan Population

Age <1 1-5 6-18 Pregnant 19 - 64 *65+ DisabledBlind*

133%

150%

185%

200%

23%

100%

FPL is recalibrated annually and dependent on household size. For a family of four, 100% of the FPL is $20,000.

70% - 80%*

*Aged, Disabled and Blind income eligibility is driven by SSI standards rather than FPL

FPL

Medicare

ProposedPopulation

350,000 Eligible

(Childless Adults Between 100-200%

FPL only)

Medicaid Population-

One of the lowest coverage States in

the nation

The Governor’s

Plan $500 Free Preventive

Care

POWER Account

$1,100 Individual* and State Contributions

•Controlled by Participant to Cover Deductible

INSURANCE COVERAGE

$300,000 Annual Coverage

$1 Million Lifetime Coverage

• Smoking Cessation

• Prostate Exam• Mammogram

Covered Services•Physician Services

•Prescriptions

•Diagnostic Exams

•Disease Management

•Home Health Services

•Outpatient Hospital

•Inpatient Hospital• Physicals• Diabetes

*Individual contribution not to exceed 5% of gross annual income

Personal Wellness Responsibility (POWER) Accounts

How the POWER Account works:

• State and participant contribute a combined total of $1,100 per adult into account to cover deductible

• Individual contributes no more than 5% of family income, pro-rated to account for payments to other programs

• Employers may elect to contribute• Payroll Deduction• Not a traditional HSA, no tax advantage• Unspent funds

– $500 stays in account for next year & lowers individual and State contributions

– Participants that no longer qualify get a pro-rated payout– The participant may withdraw anything above $500, if preventative

services are completed

POWER Account

• State pre-funds account & individual makes monthly contributions

• Individual controls account spending

• Debit Card

• Covers only approved plan benefits by plan providers

Funding for POWER Account

$0

$200

$400

$600

$800

$1,000

$1,200

$9,800 $14,700 $19,600

Annual Income

Ann

ual C

ontr

ibut

ion

State

Participant

Single Adult: $1,100

$610

$490

$365

$735

$120

$980

Funding for POWER Account

$0

$500

$1,000

$1,500

$2,000

$2,500

$20,000 $30,000 $40,000

Annual Income

An

nu

al C

ontr

ibu

tion

State

Participant

Family of Four: $2,200(Two Adults & Two Children)

$1,200

$1,000

$1,096

$1,104

$800

$1,400

Contributions reduced to account for premiums paid to Medicaid for children

Administration

• 2-5 HMOs or Commercial Carriers– Benefit plans similar– Medicare provider payment as floor

• Plan Responsibilities– POWER Account contribution collections– Marketing– Enrollment– Claims payment etc.– Disease management programs or other incentive

programs for chronically ill

High Risk Individuals

• Screening for high risk conditions at enrollment

• Referred to high-risk pool for disease management

• Cost sharing remains consistent• State pays higher premium and may fund

a larger POWER Account• Those that exceed $300,000 will likely be

eligible for existing Medicaid program

Matched Federal Funding

$175M

Increased Cost of Cigarettes

$95M

DSH*

$50M

CNOM**

$80M

Increased Cost of Cigarettes

$172M

Matched Federal Funding

$316M

CNOM**

$130M

Participant

Contribution

$132M

DSH*

$50 M

Public Health $35M • Smoking Reduction $24M

• Immunizations $11M

Funding for The Governor’s Plan

+ 25¢ = $130M + 50¢ = $207M

$480M to cover 120,000 $800M to cover 200,000

*DSH: Disproportionate Share Hospital Program - Currently funded at $200M

**CNOM: Federal matching “credit” for State’s current health programs

Participant

Contribution

$80M

VALUES

•Promoting healthier Hoosiers

•Promoting personal responsibility

•Using private market solutions

•Using overt, not covert, subsidies

•Practicing fiscal responsibility

•Helping Hoosier business

•Work Incentives

OWNERSHIP SOCIETY•Cost sharing required at all service levels•All participants must contribute•Access to HSA-like Accounts

DISEASE PREVENTION & HEALTH PROMOTION

•First dollar coverage for preventive care• Rewards for positive health behaviors •Disease management for high cost populations

INCREASE ACCESS TO COMMERCIAL PRODUCTS

•Subsidies for low-income Hoosiers to receive commercial health plans and to have an“ HSA-like account.•Require subsidy eligible persons to maintain current coverage

ECONOMIC DEVELOPMENT•Reduces cost growth trajectory of premiums by limiting cost-shifting to insured populations•Brings new dollars to the State and healthcare industry

LONG TERM STATE BUDGET STABILITY

•Not an entitlement program•Enrollment capped•Commercial benefit package•Funding sources keep pace with cost growth

TRANSPARENCY IN PRICING AND SUBSIDIZATION

•Moves existing government subsidies away from providers to individuals to purchase health insurance•Reduces cost-shifting from uninsured to insured populations•Increases quality as providers compete to serve low income•Encourages subsidized population to make value conscious decisions in the health care market place.

VALUES & VISION

Contact Information

Seema Verma, MPH

sverma@seemavermaconsulting.com

(317) 809-8536