March 5, 2013

DES MOINES, Iowa (AP) - Gov. Terry Branstad said Monday that his new health care proposal for some low-income Iowa residents would not provide the same benefits as an expanded Medicaid program but is more fiscally responsible.

Branstad unveiled his Healthy Iowa plan, a revamped version of the soon-to-expire IowaCare program, which provides limited benefits to about 70,000 low-income adults using state and federal funds. Branstad opposes the Medicaid expansion permitted under President Barack Obama's health care overhaul. He says the cost of the program is unsustainable for the federal government and has questioned the long-term price tag for states.

The Republican governor says his plan would better serve the state but offered few specifics on how the benefits or costs would compare to the Medicaid expansion.

"The coverage is not as rich as it is under the federal program. But then again it doesn't put Iowa at as much risk, I guess, and the nation with regard to unaffordable unsustainable programs," the governor said.

The estimated annual cost of Healthy Iowa is $162 million. The federal government would pick up 58 percent of the tab, and the rest would come from the state, local property taxes and other sources. The state general fund burden would be about $23 million - more than IowaCare's $18 million, said Michael Bousselot, a policy adviser to the governor.

Under Branstad's plan, those above the federal poverty level - $11,170 for an individual - would have to use federal tax credits to buy private insurance on the upcoming health insurance exchanges set up as a federal and state partnership. Residents who earn less but don't qualify for Medicaid could enroll in Healthy Iowa. State officials estimated that as many as 89,000 could be eligible for the new program.

If Branstad agreed to expand Medicaid to those at or below 138 percent of the poverty level, the federal government would pay the full cost for the new enrollees for the first three years, and then 10 percent of the cost would gradually be shifted to the state.

But Branstad said he wasn't convinced that commitment would be honored.

"I have grave misgivings about Iowa buying into federal entitlements that are not sustainable and not affordable in the long term," Branstad said.

Senate Democrats have passed Medicaid-expansion legislation through a committee. In an emailed statement Monday, Senate President Pam Jochum, D-Dubuque, slammed Branstad's proposal, saying it would "provide second-class health care to tens of thousands of working Iowans."

The redesigned program attempts to fix some of the problems critics have raised about IowaCare. Healthy Iowa would provide prescription-drug coverage, offer services in locations around the state and include some aid for transportation, according to administration officials.

Unlike Medicaid, participants would be responsible for small contributions to their coverage, though Branstad said some or all of that cost could be waived if they participate in wellness programs.

With IowaCare set to expire at the end of the year, Branstad would need a waiver from the federal government to continue it as Healthy Iowa. Branstad met with U.S. Health and Human Services Secretary Kathleen Sebelius last month and said he will present the full proposal to the federal government by May or June. He called the initial reaction favorable.

If approved, Branstad said, he hopes to have Healthy Iowa available by early 2014.