On Tuesday,
Republican governor Mike Pence of Indiana became the latest to undertake the
expansion of Medicaid to an additional 350,000 poor residents that fall under
the Affordable Care Act. Pence intends to use federal funding to create a new
program, the “Healthy Indiana Plan,” (HIP 2.0) where benefits will be tied to
monthly payments by recipients below the poverty line. More notably, HIP 2.0 participants
will be required to pay a portion of their premiums to private sector health
savings accounts each month in order to receive health coverage. For those
above the poverty threshold, failure to pay could result in a lockout from
coverage for six months.
Not only
will expanding Medicaid provide broader health coverage, but it also has the
opportunity to provide economic stimulus. The program is projected to cost $18
billion through 2020, with $1.5 billion falling on the state’s shoulders.
Despite the hefty costs, federal funding will cover 90% of the program rather
than 67% of funding currently. This influx of federal dollars will certainly
have a positive economic impact. The new
dollars could support a number of jobs and increased economic activity,
both boosting state revenue to mitigate the high cost. Furthermore, with
additional coverage, there will be a reduction in spending for uncompensated
care. While this helps Indiana’s
government, it can also reduce uncompensated costs for hospitals and lower
health care costs for already insured consumers and businesses. Most
importantly, widened coverage affects the healthiness and therefore
productiveness of Indiana’s citizens. Medicaid expansion has the opportunity to
create a healthier workforce externality.
This move shows the willingness of
both the GOP to reach out to lower income brackets and the Obama administration
to stretch their original Affordable Care Act intentions to expand coverage.
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