Federal officials are pointing to Indiana businesses as the model for how health insurance can be managed.
Mehmet Oz, Administrator for the Centers for Medicare and Medicaid Services, visited the state Thursday to announce a rebranded health insurance program.
Oz promoted the CHOICE program, a renamed federal program allowing businesses to offer health insurance outside a traditional employer-sponsored group plan.
Indiana previously instituted tax credits for small businesses that utilize the program, offering up to $400 per covered employee in the first year.
Oz said those marketplace options could help lower health insurance costs for businesses.
“The CHOICE programs that are out there now, we will continue to embrace and endorse at the federal level,” Oz said. “We need more states to come forward with both their own legislation, as Indiana has done, but we also need more companies to look up and just witness what opportunities are out there.”
Oz made the announcement at Hancock Health, a health system serving East Central Indiana. The company has projected nearly $4 million in annual savings after switching to a CHOICE model and away from its self-funded group plan.
The Chief Operating Officer of Hancock Health, Matt Browning, said they moved to the individual plan options after hearing employees were largely unhappy with the health insurance options previously offered.
“As an organization, we're [now] spending over $2 million less on benefits, but we're actually offering more options, if you will, through this model,” Browning said.
The program allows Hancock Health to give employees a monthly stipend so they can choose a health insurance plan that works for them. The size of the stipend varies from employee to employee.
According to Browning, over 40% of Hancock’s employees pay less than $10 a month on health insurance.
Hancock Health works with a separate company, Remodel Health, to help employees tailor their health insurance plans.
Remodel’s CEO, Austin Lehman, said the appeal of individual insurance plans for a smaller company is increasing the insurance “risk pool.” That means employees are joining a larger group of Indiana residents with stronger bargaining power around pricing.
“You pay your health insurance cost based on your population, and so that gives a real inherent advantage in the system to employers like Walmart and Amazon with 100,000 employees as compared to people with 100 employees,” Lehman said. “With CHOICE, you get to join Indiana. ”
Companies that provide CHOICE programs for employees allow them to find coverage through the ACA marketplace, off-exchange marketplaces or Medicare.
Oz’s visit comes as the cost for employer-sponsored health plans is expected to spike next year.
The spike will coincide with an expected loss of coverage for people through Medicaid, driving up expenses across the healthcare system as hospitals look to balance the rise in uninsured and underinsured care.
Medicaid coverage losses will largely be driven by changes made by the Big Beautiful Bill in 2025. The state of Indiana has also implemented measures to align with federal rules.
Broad use of obesity and diabetes drugs like GLP-1s and other prescription drugs has also been cited as a reason for the spike in employer-sponsored health coverage.
Separately, premiums for marketplace plans through the ACA have also risen because republicans broadly chose not to renew federal subsidies last year. That led some 4-million people to either disenroll in the ACA marketplace or drop coverage.
Republicans, including Oz, have suggested that those losses in marketplace participation are largely due to their efforts to address fraud.
CHOICE arrangement plans are included in the ACA marketplace risk pool, meaning they are considered together when insurers set rates. Shrinking marketplace participation could impact people who join a CHOICE plan.
But at the press conference, Oz said the CHOICE arrangements and the number of people participating in the ACA marketplace are separate issues.
“This is a separate issue, but I think a great opportunity to use the exchanges for good for small businesses in America,” he said.
Contact Government Reporter Benjamin Thorp at bthorp@wfyi.org
