Grace-Marie Turner has written a convincing defense of Gov. Mitch Daniels’s Healthy Indiana Plan, a program that uses HSAs to expand access to health coverage, against Michael Cannon’s charge that it is essentially PPACA in miniature:
Traditional Medicaid promises virtually unlimited medical services, if people can find a doctor or hospital to provide them, with few if any financial obligations.
By contrast, HIP helps people transition from an entitlement program to a plan that operates much more like private insurance. It requires members to make monthly contributions (i.e., premiums) to a Personal Wellness and Responsibility (POWER) account. The state and the member both contribute on a sliding income scale, for a total of $1,100 a year.
Anything the member spends on health care comes out of the account first. If the account is exhausted, then “catastrophic” coverage is provided through Medicaid. State spending is capped at the revenues that are available, so enrollment is limited.
As Turner explains, HIP is designed to encourage self-reliance on the part of beneficiaries:
The state and the participants work in partnership to jointly fund the POWER account. Those closest to the income limit — 200 percent of poverty, about $22,000 for an individual — fund the account almost entirely on their own.
Three-quarters of those participating in the program make monthly contributions to their POWER accounts. (The rest don’t contribute because their incomes are below thresholds.) If people don’t make the required contribution to their account, they are tossed out of the program. Because of that, 97 percent make the payment, according to a Mathematica Policy Research study.
Turner suggests that HIP offers a model for Medicaid reform across the states:
And HIP also rewards people if they get preventive care. If they get screening tests, vaccinations, etc., all the funds remaining in their POWER account at the end of the year can roll over to the next to reduce the member’s monthly contributions.
This is exactly what we want our health-care system to do: provide incentives for individual responsibility in using the system and spending health-care dollars wisely, and rewarding people who follow sensible rules. And there is cost transparency: Members receive a monthly statement showing their POWER balances.
Seventy percent of those in the program have incomes at or below the federal poverty level and would be unlikely to have coverage otherwise, yet a high proportion have serious chronic conditions that likely would have landed them in hospital emergency rooms for care rather than doctor’s offices. …
Governor Daniels is doing us a favor by showing how Medicaid could be transformed into a program that would encourage individual responsibility and a wiser expenditure of taxpayer dollars without expanding massive open-ended entitlement spending as Obamacare does. Rather than criticizing Governor Daniels, we should be thanking him. [Emphasis added.]
I would go further: I wonder if something like HIP offers a broader guide for how to reform the U.S. health system.