Daniels: Obamacare will 'annihilate' Hoosier health innovations

Mitch Daniels, who is giving the keynote address address to tonight's CPAC president's dinner, has naturally received quite a few interview requests. But he said this morning that he preferred instead to hold a small briefing on health care instead with a handful of reporters.

The moment in the briefing with the greatest significance for the 2012 race (which Daniels said he is not part of) came when Daniels was asked about the cigarette tax increase that paid for his state's health care program, and specifically what conservative anti-tax activitsts like Grover Norquist would say about it.

“I don't care what he thinks,” Daniels said at first. Later in the interview, he revisited this statement and backtracked: “It's not that I don't care what he thinks…He's doing the Lord's work.” But Daniels argued that he had cut taxes that were hindering economic growth, and that higher cigarette taxes only discourage smoking, not growth.

One of the burning issues on Daniels' mind is the future of Indiana's unique health insurance program, the Healthy Indiana Plan or HIP, which has allowed the state to cover many uninsured Hoosiers making less than 200 percent of poverty for 23 percent less than it would have cost under Medicaid. The program, aimed at uninsured adults who are ineligible for employer-provided insurance, is now threatened by Obamacare.

Instead of skimping on provider reimbursements — which is Medicaid's way of dealing with costs — HIP instead adopts a different model. It provides a high-deductible health plan with a POWER Account that more or less resembles a Health Savings Account (contributions to which are recoverable and not tax-deductible). The government mostly fills the account for those making less than 200 percent of the poverty level — at most, they can be required to contribute 5 percent of their family's monthly income to the account.

Once the money in the account has been spent, there is no donut hole — standard commercial coverage kicks in at that point. Also, the first $500 in preventative care is covered, without anything having to come out of the POWER account. Daniels claimed that this has resulted in low-income Hoosiers getting more preventative care than the state's general population.

So what happens to this system under Obamacare? “As matters stand, it will be annihilated,” Daniels said. He denounced the new reform law as a “cynical exercise,” a “terrible mistake,” and something governors have little power to counteract outside of legal challenges.

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