Low-income Hoosiers just started signing up for the state's innovative Healthy Indiana Program (HIP). No this program is not a cure-all. It carries a lot of the usual baggage of contemporary state reforms, i.e., the notion that when the federal government transfers money to the state government to expand government programs the people somehow benefit, as well as a politically popular but unhealthy tobacco tax. But both these fallacies are part of pretty much every state health reform these days, and I've criticised them here and there.

To the good, it ignores the fashionable fallacy of "universal" health care through mandatory coverage that is driving the Massachusetts reform into the tank. And the best part of HIP is the POWER (Personal Wellness & Responsibility) account.

Adult Hoosiers earning between 22 percent and 200 percent of the Federal Poverty Level (FPL) will open a POWER account of $1100 annually, with the individual pitching in up to 5 percent of his income and taxpayers the rest. The state covers up to $500 preventive services before the individual starts using his POWER account. Patients, not bureaucrats will decide how to spend their health dollars.

That's POWER to the people!

Indiana ranks 30th out of 50 in the government health care category in the Index of Health Ownership: this waiver will likely increase its rank in the 2008 score. In the private health insurance category it ranks 11th, so the state recognizes that a deregulated health insurance market is important to quality care, and should be congratulated for bringing similarly good incentives into HIP. However,Indiana ranks 28th in provider burden of regulation and 34th in medical tort. These bottom-half rankings drive up costs in a way that POWER accounts cannot overcome. In order to allow its low-income citizens to benefit fully from their POWER accounts, Indiana must also make its provider markets competitive, and limit medical tort abuse.