(St@teside Published May 15, 2007)

Indiana:

In May 2007, lawmakers and Governor Mitch Daniels (R) came to agreement on House Bill 1678. The legislation increases taxes on tobacco an estimated $0.44 per pack. Of this tax increase, $0.33 will be used for immunization programs, and for providing coverage to the uninsured including:

• Medicaid expansion for pregnant women to 200 percent FPL; up from 150 percent FPL. Pregnant women will now have presumptive eligibility.
• Expanding Medicaid to all adults and parents up to 200 percent FPL, contingent on federal approval.

The remaining $0.11 will be distributed as follows:

• Three cents of the tax will go toward increasing physician and dentist Medicaid reimbursement rates.
• Another 3 cents will be used to provide a tax credit to employers that establish a Section 125 plan. For employers who do not offer a fully insured health plan that satisfies Section 125 of the Internal Revenue Service code, the state will provide the lesser of $50 per employee or $2,500 for two years if the employer establishes a Section 125 plan.
• The remaining 5 cents will be used to increase tobacco prevention and cessation programs and for other health programs.

In addition to the new tobacco revenue, the state will use its general funds to:

• Expand SCHIP to children up to 300 percent FPL; up from 200 percent FPL. Children up until the age of three will now have continuous eligibility.
• Offer small employers (2-100 employees) a tax credit up to 50 percent of the cost of a qualified wellness program.

The bill also allows certain small employers to join together to purchase health insurance and expands the definition of 'dependent,' allowing parents to cover their children up until the age of 24 upon policyholder request.

A key aspect of the reform is the design of the health plan that will be offered to the newly covered adults. Utilizing the Health Savings Account model combined with comprehensive insurance coverage above the deductible, individuals would annually receive $500 of pre-deductible, free preventive care and have a $1,100 deductible.

The deductible is paid for through a POWER (Personal Wellness Responsibility) Account established in the individual's name. The account will contain the monthly contributions made by participants in addition to a State contribution for a combined total of $1,100 per adult, which covers the cost of the deductible. The State's contribution will vary according to a sliding scale based on a participant's financial ability to contribute to the account. The State will subsidize the account to ensure there is a total of $1,100 per adult in the account. Participants will contribute no more than 5 percent of their gross family income, and will not have any cost-sharing once the deductible is met. At the end of the year, the balance of the POWER account will roll-over to reduce the following year's required contribution, if the participant has received their age-, gender- and disease-specific preventative services. If they have not received these services, only their own pro-rated contribution to the POWER account will roll-over but the State's contribution will be returned to the State. This design is intended to create an incentive for recipients to utilize services in a cost-conscious manner.

Covered services include physician services, prescription drugs, diagnostic exams, disease management, home health services, inpatient and outpatient hospital services, and mental health parity. Individuals may elect to purchase an optional dental and vision rider. They must pay 50 percent of the cost of the premium which is in addition to their contribution to the POWER account. There is a $300,000 annual limit on coverage and a life-time benefit limit of $1,000,000. All recipients must be uninsured for at least six months, be a U.S. citizen, and not have access to employer-sponsored insurance.

The legislation also gives authority for a premium assistance program for adults who earn less than 200 percent FPL and have access to employer-sponsored insurance but cannot afford the premiums.