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Can Mitch Daniels Whip the GOP Into Shape?

The Indiana governor on health care reform.

11:00 PM, Nov 26, 2009 • By ROBERT M. GOLDBERG
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Mitch Daniels is probably the only governor with his workout schedule posted on the Internet. Indiana's chief executive has always exercised, but when Mitch (as almost everyone in the Hoosier state calls him) started to address the state's health care problems he discovered that it was the 16th most obese state in the country and 6th among all states in smoking prevalence. So he started INShape Indiana, a program that provides individuals and companies with personalized information on smoking cessation, exercise, nutrition, weight loss. Since then, cigarette sales are down and Indiana's obesity ranking has stabilized.

INShape Indiana reflects Daniels's broader approach to health care: Prevention is important not because it saves money but because it improves well-being. But it requires greater personal responsibility for health, changes in the way health care is paid for and, ultimately, innovations that prevent or slow the progression of diseases.

Taking the lead on health care is something Daniels is doing more frequently these days. His off-the-cuff critique of the House health care bill at last week's Republican Governors Association meeting was withering: " ['Deficit neutral'] is a fraudulent description of the cost of the bill. It counts ten years of taxes and only 5-6 years of spending. On this Medicaid mandate [for the states] . . . we all know a sucker play when we see one. The states' share will be relatively small initially. This is what people told subprime borrowers about their adjustable rate mortgages. We know the balloon payment will come outside the scoring window. The taxes on our states will be much, much higher. . . . The worst effect will be the depressing effect on economic growth."

Many observers have seen Daniels's higher profile on health care reform as an outgrowth of Indiana's budget surplus, the only state government to have one. In fact, it flows from his belief that Indiana's health care reforms offers a better solution than Obamacare.

"We didn't start by trying to save money. We started by finding ways to promote consumer responsibility and encourage prevention. First, we added a health saving account option for all state workers. I enrolled myself in an HSA the day the program was available. Now two-thirds of all state employees use an HSA plan." (Preventive care is covered.)

"Second, we didn't want to create a new entitlement that would add to the deficit or perpetuate the problems we have with Medicaid." So in 2007, with bipartisan support, Daniels created the Healthy Indiana Plan for chronically uninsured lower income individuals and families from a combination of some Medicaid dollars and revenue from a hike in the cigarette tax. Healthy Indiana establishes a Personal Wellness and Responsibility (POWER) account valued at $1,100 per adult to pay for initial medical costs. This is similar to a health savings account (HSA) and is used to fund the deductible. The state pays 95 percent and individuals pay the rest. If individuals use the free preventive services covered by Healthy Indiana they get to keep whatever is left in the POWER account at the end of the year, use it to pay for next year's deductibles and medical expense or save it.

Daniels says the "consumerist" health care benefit for low- and moderate-income Hoosiers provides insurance to more than 50,000 families and will be available to up to 150,000. "This empowers people to make decisions about their health. And we have evidence that costs are holding steady because people are getting healthier." Daniels notes the Healthy Indiana Plan would be the first victim of Obamacare, forcing the working poor into "traditional" Medicaid, increasing their costs, limiting the choice of doctors and services they now have. Not to mention, the new taxes and regulations on small businesses and entrepreneurs will kill economic growth, the source of Indiana's budget surplus and job creation.

Indeed, unlike health care reform proposals in Congress that impose higher taxes and regulations on biotech and medical device companies, Daniels has taken steps to encourage bio-innovation in Indiana. When he took office he slashed taxes for new biotech ventures and patents. In 2006 Daniels created two dedicated venture funds for Hoosier-based start-ups totaling $200 million. Under Daniels, Biocrossroads, a novel consortium of companies, universities, state agencies and venture capitalists, is promoting the rapid commercialization of medical discoveries.