In January 2015, the U.S. Department of Health and Human Services (HHS) granted Indiana a Section 1115 Demonstration Waiver to experiment with consumer driven Medicaid. The Healthy Indiana Plan (HIP) 2.0 combines a $2,500 high deductible with a Personal Responsibility and Wellness (POWER) Account, premiums, and copays. Described as “the most significant departure from traditional Medicaid ever approved,” Indiana claims that the POWER Account, the signature feature of HIP 2.0, is “similar to a health savings account (HSA)” and encourages members to be more cost-conscious consumers, helps familiarize members with how commercial health insurance works, and encourages continuous Medicaid enrollment.
This article explains how and why POWER Accounts and HIP 2.0 fail on all counts: The POWER Account does not encourage members to comparison shop and be more cost-conscious consumers. Neither does it help educate Medicaid enrollees about how commercial insurance works because the POWER Account is nothing like a commercial HSA. Most troubling, though, POWER Account premiums create significant barriers to Medicaid coverage. Nearly 60,000 Hoosiers have lost Medicaid coverage because of missed POWER Account premiums and another 300,000 have been moved to more costly, less comprehensive Medicaid plans because of their inability to meet the POWER Account premium requirement.
HHS used its authority under Section 1115 of the Social Security Act to grant Indiana a waiver to conduct HIP 2.0 as an “experimental, pilot, or demonstration” project likely to promote the objectives of the Medicaid Act. HHS was wrong. Consumer driven Medicaid does not promote the objectives of the Medicaid Act. Indiana’s HIP 2.0 waiver experiment proves that consumer driven Medicaid suppresses enrollment by creating administrative and financial barriers to coverage.
Watson, Sidney D.
"Putting the Brakes on Consumer Driven Medicaid: The Failures and Harms of Healthy Indiana Plan (HIP) 2.0,"
Saint Louis University Journal of Health Law & Policy: Vol. 11
, Article 5.
Available at: https://scholarship.law.slu.edu/jhlp/vol11/iss2/5