March 8, 2011

PSSSST... (via John Thacker):

Mitch Daniels Does Not Have an ‘Obamacare Problem’ (Grace-Marie Turner, March 07, 2011, National Review)

Governor Daniels devised a unique plan to expand health coverage to the uninsured through a Medicaid waiver and a new cigarette tax. But rather than creating a path to dependency, as Cannon charges, HIP creates incentives for people to spend and utilize health services wisely.

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.

Cannon calls this a “taxpayer-funded health savings account” and makes is sounds like the state is handing out cash. It’s not. He needs to get his facts straight. 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.

It sounds to me like Governor Daniels got the incentives right.

...when they're universal they're going to be tax-payer funded.

Posted by Orrin Judd at March 8, 2011 6:33 AM
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