POLITICO Pro Pence scores conservative points on Medicaid expansion

Indiana Gov. Mike Pence, a potential 2016 presidential contender, announced Tuesday that he had won federal approval for a form of Medicaid expansion that includes elements championed by conservatives.

Indiana becomes the tenth state with a Republican governor to take up the Obamacare Medicaid expansion, though Pence won some concessions that could give him conservative bragging rights. For instance, people eligible for the Indiana program would have to contribute to a health savings account — and some will lose their coverage and get locked out for six months if they don't pay up.

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Pence sought to find a way of enabling Indiana to accept billions of federal Affordable Care Act dollars to cover 350,000 uninsured adults, while also promoting some of his own ideas about free market approaches to health care, and personal responsibility.

His approach, known as Healthy Indiana Plan 2.0, is different from that of other potential 2016 contenders like GOP Govs. Chris Christie and John Kasich. They both enacted straight Obamacare Medicaid expansions in their states and didn't negotiate a compromise with the federal government on how to do it.

All of the Medicaid expansion plans cover people up to 138 percent of the federal poverty level. The federal government pays the full cost through 2016 and at least 90 percent after that. Including Indiana, 28 states and the District of Columbia have enacted the Obamacare option.

Pence — who insisted Tuesday that he still wants Obamacare to be repealed — has long tried to show that he can bring about conservative alternatives to Washington. He described the plan as a victory for Indiana's working poor and said it would empower them to provide for themselves. Health care advocates on a national level had urged CMS to reject several elements of the proposal, though Pence had the support of the state's hospital association and Indiana-based advocacy groups.

"We were always willing to compromise on the details of this plan," he said Tuesday. "We were never willing to compromise the principles of personal responsibility." Medicaid expansion will kick in in Indiana on Feb. 1.

Conservatives cried foul when Pence first announced that he would seek to get an expansion model approved that they describe as less conservative than the original Healthy Indiana Plan, created by his predecessor Gov. Mitch Daniels.

As Pence pointed out on Tuesday, Daniels' program was approved with bipartisan support from the Indiana Statehouse. It included a longer lock-out period for people who didn't pay into their accounts, enrollment caps and premium payments as a condition of eligibility for people who had incomes below the poverty line. Those conditions were jettisoned during Pence's negotiations with federal officials over what was allowable under Obamacare expansion.

Indiana submitted its Medicaid expansion proposal in July for federal approval, and silence over the course of several months led observers to believe that negotiations had stalled over details that were unpalatable to the Obama administration. But Pence ended up getting several conservative ideas approved.

He didn't get a work requirement, but Indiana will try to encourage employment through a state-funded incentive program. All enrollees will also pay copays if they make an unnecessary trip to the emergency room, and individuals with incomes below the poverty level must pay copays — consistent with current Medicaid rules — if they don't contribute to their health savings accounts.

Sen. Dan Coats, an Indiana Republican, on Tuesday lauded the state for being a national leader "by creating state-based, innovative ideas for governing."

Pence said he thought the new plan could be a model for the country, and there are signs of interest from other states. In Wyoming, a legislative committee said they supported a proposal for Medicaid expansion modeled off the Indiana plan, instead of the model developed by Gov. Matt Mead. North Carolina Gov. Pat McCrory has said he is looking at other states' waivers for inspiration.

And the feds' approval of another red state's approach could move efforts in Tennessee and Utah, where governors are trying to gain support for expansion in their state legislatures.

Like Tennessee's proposed plan, Pence said Indiana hospitals will help fund the program. Cigarette taxes will also finance the plan.

Indiana Hospital Association President Doug Leonard said in a statement, "By leveraging billions of dollars in available funding, we can strengthen the state's health care safety net, which is strained by the rapidly growing costs of uncompensated care. All Hoosiers will reap tremendous benefits from this decision."

Sarah Wheaton contributed to this report.