Dr. Matthew Ladner

Man Down: Conservative Indiana Governor Caves to Obamacare Medicaid Expansion Demands

June 20, 2014

Dr. Matthew Ladner

By Tim Caiello, Visiting Fellow

Over the last few months the Forum has been heavily focused on education issues like Read to Succeed and pushing back on Common Core’s federal overreach.

But we’ve still been keeping an eye on what may be the biggest threat to state autonomy: Medicaid expansion. As we shared in our Fast Fact sheet Top 10 Reasons Medicaid Expansion is Bad Medicine for South Carolina is Bad Medicine for South Carolina, expanding Medicaid to able-bodied adults would overwhelm an already broken program, harming the very people it was created to serve: poor children, the elderly and people with disabilities.
(To see what happens when the government can’t handle health care responsibilities it already has, we don’t have to look any further than the recent news with the Veterans Administration – a perfect example of the well-intentioned dysfunction of government-rationed health care.)

Given the documented fact that Medicaid is not serving current recipients well (and according to Forum research is already the single largest driver of growth in South Carolina’s state budget even without expanding it), it seems to defy logic that conservative governors would fall into this unsustainable trap.
Yet that’s exactly what we see happening…
Until now, twenty four states had refused to approve the Medicaid expansions. Well, make that twenty three. On Thursday, June 12, conservative Indiana Governor Mike Pence announced a plan that would expand Indiana’s Medicaid coverage through the “Healthy Indiana Plan 2.0” (HIP). The original HIP plan was applauded by free-market thinkers for introducing Health Savings Accounts (HSA) into the mix. The goal: encourage more fiscally responsible medical decisions by giving patients more control and incentivizing them to be shoppers and savers.
However, the Obama administration demanded big changes to this plan, claiming that it would create a gap that left some still uninsured. So Governor Pence reworked HIP and announced the new HIP 2.0 version of the plan, which essentially amounts to a significant expansion of Medicaid eligibility in Indiana. This has caused significant confusion for many conservatives who originally supported the initial HSA-style HIP plan and count Governor Pence as a strong conservative ally. In light of the commotion surrounding this Indiana decision, here are a couple helpful facts to keep in mind:

The plan approved by Governor Pence is not the originally proposed HIP plan that featured a health savings account style approach.
The plan approved by Governor Pence is a significant expansion of Medicaid along the lines of ObamaCare demands, meaning very limited state flexibility.
The plan as approved by Governor Pence expands coverage to working age adults whether or not they have a full time job: contradicting the original intent to cover primarily working citizens.
The state of Indiana anticipates having to divert $1.5 billion into the program to cover the increased costs incurred.

In sum, we find that unfortunately, despite Governor Pence’s solid conservative credentials, Indiana Medicaid expansion is yet another open ended entitlement program that leaves the state holding the bag (with minimal flexibility) when federal funding comes up short.
Here in the Palmetto State, we continue to see Medicaid grow as publicity around ObamaCare drives more currently eligible citizens to enroll. And expansion supporters recently vowed that they weren’t giving up and would take their fight to the grassroots. So the fight is far from over.
However, we were pleased to see the House sustain Governor Haley’s veto of funding for a commission to study expanding Medicaid that was slipped into the budget. And we will continue to support all efforts to resist federal pressure to further expand Medicaid. Like Governor Haley, we are confident that South Carolina is more than capable of providing the medical care its citizens need without expanding eligibility for a broken and unsustainable Medicaid program.
Tim Caiello is a 2014 graduate of Columbia International University.