A Trump Pick, and Why Indiana’s Strict Medicaid Rules Could Spread


In most of the United States, anyone poor enough to qualify for Medicaid simply receives whatever care doctors recommend at minimal cost. But many Medicaid enrollees in Indiana can’t get full benefits unless they pay monthly premiums, and some who fail to pay can be shut out of coverage entirely for six months. If they go to the emergency room too often, they have to pay a fee.

These provisions were unprecedented departures for the program last year, and they were negotiated with federal health officials by Seema Verma, a consultant, on behalf of Gov. Mike Pence, now the vice president-elect. This week Donald J. Trump chose Ms. Verma to lead the Centers for Medicare and Medicaid Services, the influential agency inside the Department of Health and Human Services that oversees Medicare, Medicaid and the Obamacare insurance markets.

It is not clear what Ms. Verma may have planned for Medicare, a fully federal program that covers millions of older Americans and that usually makes up most of the administrator’s job. Administrators of the agency typically come with some Medicare experience, and Ms. Verma appears to have little.

Her policy priorities for Medicaid are much clearer. Mr. Trump and congressional Republicans have vowed to repeal the Affordable Care Act, and to create new systems for providing health insurance to low and middle-income Americans. But even without legislation, the executive branch can do a lot to reshape existing programs by giving states more power. Ms. Verma’s nomination suggests that the administration will become much more enthusiastic about approving novel Medicaid policies like those adopted in Indiana.

The Healthy Indiana Plan, as it’s known, “has been successful in meeting its policy objectives, but it also continues to demonstrate the potential for consumer-driven health care as an alternative to the traditional Medicaid model,” Ms. Verma wrote in an article in the journal Health Affairs this summer, arguing that other states should adopt its provisions. (An employee of her consulting firm said Ms. Verma was not doing interviews or answering questions.)

The Medicaid statute allows states to throw out many, but not all, program rules to test whether they can deliver better care to Medicaid patients at a similar cost. The bright lines about which rules can be waived are often decided in court.

The Obama administration has been open to new ideas in Medicaid, in part because it has wanted to encourage Republican-led states to expand coverage to more of their residents. It has allowed major policy experiments in Arkansas and Iowa, but the Indiana plan pushed the furthest in requiring beneficiaries to spend their own money and follow complex rules to continue receiving full benefits.

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Seema Verma in New York recently. Donald J. Trump selected her to be the administrator of the Centers for Medicare and Medicaid Services.

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Drew Angerer/Getty Images

Other changes to Medicaid long favored by Republican state officials, like requirements that applicants work to obtain benefits, could also be approved. The Obama administration has argued that such requirements violate the Medicaid statute.

Republican state officials argue that such rules help beneficiaries take a greater stake in their own health and help them learn the value of their benefits.

“When things aren’t completely free, people begin to make more careful decisions about how and how much to consume,” said Mitch Daniels, the former Indiana governor, who worked with Ms. Verma on an early version of the plan. Mr. Daniels, now the president of Purdue University, praised her as an “indispensible technician” for her efforts in devising the proposal.

Analysts have criticized the Indiana program, saying that there hasn’t been good evidence that beneficiaries understood the incentive structure or changed their behavior because of it. They have also raised concerns that the program is complex and hard to manage — that the cost of collecting small premiums exceeds the revenue the state receives. Judith Solomon, the vice president for health policy at the left-leaning Center on Budget and Policy Priorities, said the state had not cooperated with efforts to independently evaluate the program.

At the Centers for Medicare and Medicaid Services, Ms. Verma could also encourage large changes in middle-class coverage. A provision in the Affordable Care Act allows states to replace traditional Medicaid and the Obamacare insurance marketplaces with a different system if it can be demonstrated that the plan would cover a similar number of people at a similar cost. The provision was envisioned as a way to allow liberal states to pursue single-payer systems. But health policy experts believe it could also be used to reshape many of the Affordable Care Act’s insurance market rules.

“The Affordable Care Act really federalized the health insurance market, so now we can decentralize that again, bring that authority back to the states in determining what benefits are,” said Dennis Smith, a former federal director of Medicaid in the Bush administration, who has also run the Wisconsin Medicaid program. He is now working for the Medicaid agency in Arkansas.

Other Medicaid experts worry about new barriers to health care, if the Trump administration approves plans that Obama administration officials have blocked.

“We can expect to see far-reaching changes contemplated for Medicaid that will erect many more barriers to coverage — and very punitive barriers,” said Joan Alker, the executive director of the Center for Children and Families at Georgetown University, in an email. “For example, forcing people to remain uninsured for up to year if they miss a paperwork deadline or a premium payment, even though we know that conditions like mental illness or homelessness — or something more simple like a notice getting lost in the mail — may explain the missed deadline.”

But experts across the political spectrum agree: Ms. Verma’s appointment will probably usher in a new era of state flexibility in health care.

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