SCOTTSBURG, Ind. — When former Indiana Gov. Mike Pence embraced Obamacare’s Medicaid expansion with conservative twists — such as requiring enrollees to contribute to their care — critics lamented poor people would be locked out while backers cheered the program’s focus on personal responsibility.

Neither side’s expectations were quite borne out. Two years later, as the program emerges as a national model thanks to Pence’s role in the Trump administration, the reality on the ground shows what happens when political philosophy collides with the practical challenges of providing health care to tens of thousands of people, many of them in crisis.


Advocates for the poor in Indiana argue that liberal fears of depressed enrollment were overblown. More than 400,000 Hoosiers are enrolled, despite state requirements that low-income residents make nominal monthly contributions to their care or face stiff penalties.

Likewise, Republicans’ contention that the system would promote personal responsibility and prod beneficiaries to ration their care and make better decisions about what treatments to seek also turned out to be overly optimistic.

By all accounts, the expansion — known as the Healthy Indiana Plan 2.0 — has made a difference. Health officials in Scott County, Ind., a poverty-stricken community about 30 miles from Louisville, Ky., paint a picture of a program that’s bolstered a patchy social safety net — especially during a major HIV outbreak triggered by the opioid epidemic — without bankrupting the Hoosier State or punishing enrollees.

To be sure, the program isn’t perfect, they say. But they overwhelmingly give more positive reviews than not.

“I feel that it has been a good success,” said Dawn Sanders, an outreach worker for Covering Kids & Families of Indiana, a statewide consumer group working in Scott County. “It’s working.”

Healthy Indiana’s influence is expected to increase in the months ahead whether or not Obamacare survives, as state officials and the Trump administration look to replicate some of its conservative features, potentially unleashing a wave of new state restrictions on how non-disabled adults get coverage without any action from Congress.

“The Healthy Indiana Plan has long been, and continues to be, a national model for state-led Medicaid reforms,” HHS Secretary Tom Price wrote in response to senators after his confirmation hearing.

“It is important that Medicaid's design helps its members to transition successfully from the program into commercial health insurance plans, as [Healthy Indiana's] consumer-driven approach and underlying incentive structures encourage,” he told lawmakers.

Seema Verma, meanwhile, a Pence ally who helped design the program before she was tapped to run CMS, now has the power to give states greater flexibility to reshape their own programs according to conservative principles.

Kentucky and Arizona have already borrowed aspects of Indiana’s plan while others, including Wisconsin, could move to enact new limits that resemble the approach.

Indiana’s plan also provides a measure of political cover to lawmakers in red states where supporting Obamacare’s coverage expansion is still deeply controversial. Republicans across the country have found it easier to back an expansion of government-funded health care for the poor if it more closely resembles a private insurance market. Yet liberals remain deeply skeptical because of the way the system is designed to cut people off who don’t make monthly payments, at least temporarily.

Both sides could find their assumptions challenged based on the experience in places like Scott County.

The Indiana plan does punish people above the poverty line who stop making monthly contributions by locking them out of coverage for six months. But because most enrollees have incomes below the poverty line, lockouts have been rare, according to state evaluations of the first year of the program. Instead, those below the poverty line who don’t pay are bumped from plans with more generous benefits — including coverage of vision and dental care and better prescription drug benefits — into skimpier plans with higher out-of-pocket costs.

“It sounds like, ‘Oh my gosh, people are going to have to pay.’ But people that were uninsured were paying for it already,” if they go to the doctor, said Beth Wrobel, who runs a federally qualified health center in Valparaiso, in the northern part of the state.

Diabetic patients who visited Wrobel’s clinic before the start of Healthy Indiana incurred significantly higher costs paying for their regular medical supplies and routine testing, she said. Now, under the more generous benefit package, “the most you have to pay is $26 a month, and that’s at the high end. Most of our patients pay between $1 and $10 a month,” Wrobel said.

“For the same amount that you were paying at that moment for your diabetic care, you could get medical, dental, behavioral health, optometry and pharmacy. [Healthy Indiana] treated the whole body,” she said.

Randy White, CEO of Fayette Regional Health System in Connersville, in the east-central part of the state, agreed that Healthy Indiana “is not harsh.”

If the liberal specter of a punitive system pushing out enrollees hasn’t quite materialized, neither has conservatives’ vision of a market-like system where patients with “skin in the game” make hard choices about their own health spending. That’s because family members, health workers and nonprofits are helping cover their out-of-pocket costs.

“With some people, I think [personal responsibility] might be a little bit lost,” Sanders said in her office at the Scott County Partnership, a nonprofit. “We try and do what we can in the little bit of time we have with them. But you can only give them so many pamphlets.”

About 2,100 of the enrollees who gained coverage through Indiana’s expansion live in Scott County, a poor, sparsely populated area that gained notoriety where an HIV outbreak took off two years ago, fueled by needle sharing and opioid abuse.

Sanders recalled how a man with substance abuse problems signed up for health coverage in the small town of Austin, Ind., which had set up a “one-stop shop” to get people enrolled and provide medical services like HIV screenings and vaccinations.

“He knew he had hit rock bottom. And he knew he needed help,” Sanders said. “He no longer lives in the area, but he had to be able to get away from this. He has stayed clean this whole time. He now has his children back. We have quite a few success stories, as far as that’s concerned.”

As of early April, there were 216 county residents with HIV, according to Scott County Health Department Administrator Michelle Goodin, but roughly three-quarters of the patients don’t have enough of the virus in their blood to spread it to others. New cases are still being diagnosed.

“We’ve got about 30 to 40 people usually that are HIV-positive in our facility,” said Sheriff Dan McClain, whose staff helps prisoners apply for Medicaid so that they can receive benefits, including mental health and substance abuse treatment, as soon as they are released. “We offer them a test for HIV and … we offer to sign them up for HIP 2.0,” he said.

With an ad-hoc support network fortifying the safety net, some liberal groups and Democratic lawmakers question whether the conservative tweaks are really adding value or simply burdening enrollees with unnecessary complications. Without those hurdles, they say enrollment would be even higher.

Progressives also fear that if the Indiana model is embraced in states that initially did traditional expansions of Medicaid, it would erode enrollment gains.

"Work requirements, lock-out periods, time limits and imposition of onerous premiums and cost-sharing on Medicaid families, who are generally living on a budget of roughly less than $15,000 per year, are not only punitive but also counterproductive in the long-term," Sen. Ron Wyden (D-Ore.) and Rep. Frank Pallone (D-N.J.) wrote in a letter to HHS last month to discourage it from approving additional restrictions, many of which would be program firsts. "Requiring poor families to pay more than they can afford for care makes them less likely to access the care they need and less likely to maintain their coverage."

State surveys of how Healthy Indiana is working present a fragmentary picture, and despite the program’s popularity in Indiana, there are some signs of hampered enrollment because of its complex structure and broader concerns about affordability. For example, roughly half of the enrollees in the more comprehensive benefit package worried about being able to afford their monthly payments. Left-leaning groups have used the data to raise flags about harmful implications for other states.

The first-year report also estimated that roughly 1,240 enrollees received financial help from nonprofits to pay their premiums, a paltry slice of overall enrollment. But residents here believe many more enrollees likely rely on family members, friends and others sources undetected by official surveys. Sanders and others pointed out that the premium cost of keeping someone covered in the program’s more generous benefit package — which includes vision and dental benefits as well as more robust coverage of prescriptions — is as little as $12 for an entire year.

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“We’ve paid it out of our pocket many times at the office just to get them hooked up,” said Jeanni McCarty, a nurse at Foundations Family Medicine in Austin. McCarty said she has four family members affected by HIV and five relatives who have passed away from drug abuse-related problems.

Indiana officials by the end of the month will send CMS two more reports, including one that specifically examines the use of health savings-like accounts to help beneficiaries cover their costs. Pence’s successor, Republican Gov. Eric Holcomb, has already asked the Trump administration to extend the program through January 2021 with a handful of tweaks — though notably absent is a request to institute a work requirement as a condition of receiving benefits.

“We don’t want to put policies and programs in place that are not member-centric,” said Jennifer Walthall, secretary of Indiana’s Family and Social Services Administration. “Increasing barriers is not the name of the game.”