Expansion of Medicaid in Pennsylvania will have to wait. The State Senate has adjourned for the summer, after narrowly missing passing a bill that would have provided virtually free health insurance coverage to hundreds of thousands of needy persons. Typically, the federal government pays the entire cost (at first), and then each state must pay for most or all of the coverage in the future.
A bill that was mostly related to the state budget did pass this week, but any mention of Medicaid expansion was removed. Earlier in the week, the Senate voted and approved a bill that would have provided the needed benefits. However, the next day, the House removed the Medicaid-related legislation, and seemingly eliminated the chance of expansion.
Why The Delay?
One of the issues delaying the passage of the bill is the insistence by Pennsylvania Governor Tom Corbett that the federal government give permission to Pa to adjust and make changes to parts of the state Medicaid program. Although requested many months ago, there has been no definitive response from the federal government. Corbett wants assurances that specific reforms and guarantees will be provided. His intentions are positive, since he doesn’t want the state to be responsible for unexpected debt in the future.
Corbett has repeatedly contacted Kathleen Sebelius (US Department of Health and Human Services) requesting her not to transfer CHIP participants into Medicaid. The Pa CHIP program is different than many other states since it features a large network provider list that is bigger than local government-sponsored programs. Sebelius’ unresponsiveness is rather mysterious. Of course, she has resigned since this situation began.
Currently, about 16% of Pa residents are on Medicaid. However, under the expansion, that figure is expected to rise to about 25%. The financial burden on the state in future years could be substantial, and the money simply is not available. The only way to meet the cost of all of the extra coverage is to eliminate some current programs or increase taxes. Neither option would be very popular with residents or politicians that are up for re-election.
NOTE: For persons that have reached age 65, Medicare (not to be confused with Medicaid) is probably an option. Medigap plans in Pennsylvania can help reduce out-of-pocket expenses while keeping premiums very affordable. Advantage and Supplement contracts are offered by many major companies, including Aetna, UPMC, and Highmark. UnitedHealthcare also offers coverage through AARP.
It has been verified that the state will save almost $200 million by not going through with the expansion. The savings takes into account administrative costs, setup fees and additional salaries. The Rand Corporation also points out that by delaying expansion, between 30,000 and 40,000 employment opportunities might be gone, along with more than a half billion dollars of ER expenses that hospitals could have covered by Medicaid.
Senate Minority Leader Jay Costa, however, believes that the expansion will ultimately be approved. One reason may be because it will improve Governor Corbett’s ratings, which have recently been dropping. Also, more than 50,000 less children were covered through Medicaid and related services last month, compared to early 2011.
The Senate reconvenes in September, and the subject will be discussed again. Senate Majority leader Dominic Pileggi, a Republican from the 9th District (Delaware and Chester Counties), indicated that perhaps an agreement could be reached after the summer break. Lengthy negotiations may be needed, but a compromise is possible.
10-16-2013 CHIP has been extended to 2015, thanks to the passage of legislation by the Pa House of Representatives. Governor Corbett is expected to sign the bill. The six-month waiting period (specific persons were subject to this) has been terminated. No additional funding is expected to be needed for this extension.
November 2013 – Governor Corbett has submitted a proposal to the Obama administration regarding limiting plans, and requiring persons on Medicaid to show proof they are looking for employment, actively working or involved in a qualified job-training program. The use of Medicaid funds to buy healthcare from companies on the Exchanges has been tested in a few other states with no major drawbacks.
Blue Cross Blue Shield (BCBS) has many policyholders (soon to be ex-policyholders) that might benefit by this proposal. Since their guaranteed-issue policies are not being renewed, they would welcome the opportunity to purchase affordable benefits.
December 2013 – Governor Corbett released details of his proposal to the Federal Government designed to provide billions of dollars of financial aid to Medicaid recipients. The proposal emphasizes healthy behavior and personal responsibility. For example, healthier persons that are working at least 20 hours per week, would be required to meet specific job-searching requirements to retain benefits.
January 2014 – Discussion continues on helping about 500,000 Pa residents with their healthcare benefits. A waiver is still being requested, and will hopefully be received so that the program can be implemented on July 1st of this year. One of the sticking points is the work-search provision. This type of clause has never been approved before, which may be why HHS has still not approved it.
June 2014 – House Bill 2299 was approved by the House Insurance Committee. This should help the state’s CHIP program by making it easier to enroll and also simplifying the process of keeping coverage. Also, additional federal government funding in 2015 may result by the passage of the bill, since funding (under the ACA) will be increased from 2015 to 2019. Currently, less than 200,000 residents are covered by CHIP.
July 2014 – Nine companies have been picked to cover more than $500,000 Pa residents that are without coverage and would qualify for Medicaid expansion benefits. They are UnitedHealthcare, UPMC, Geisinger, Highmark, Health Partners Plans, Gateway, Coventry, Aetna and Capital BC. The large number of interested carriers should help convince the federal government to approve Governor Corbett’s proposed plan.
August 2014 – Finally! Pa Medicaid expansion has been approved by the Obama administration. It is expected that more than 500,000 residents may now receive benefits. Federal funds can now be utilized to purchase private medical coverage. Benefits could begin as early as Jan 1 (2015).
The federal government showed great flexibility in allowing Governor Corbett to design this program. With elections looming in November however, an unsuccessful re-election bid could halt the implementation of this expansion. The federal government will be paying the entire cost of the program for three years. Then, the state will pay a maximum of 10% of the expenses.
February 2015 – Well…That didn’t take long! New Governor Tom Wolf is wasting no time dismantling previous governor Tom Corbett’s “Healthy Pa” program. He has notified the state to inform the federal government that Corbett’s proposals should no longer be considered. Instead, the traditional Medicaid expansion will be pursued.
The recently-implemented screening tool will be phased out, and federal funding will pay all of the costs of the program until 2017. The requirement for some persons that must prove they are looking for work or enrolled in a job-training program has also been removed.
August 2016 – More than 600,000 Keystone State residents have enrolled in traditional Medicare coverage, following the expansion approved by Governor Tow Wolf. The long-term impact is still a bit unclear, but the short-term results have been mostly impressive. Single persons that earn under $16,200 per year (138% of the Federal Poverty Level) are Medicaid-eligible.
However, even the Department of Health and Human Services (HHS) has reported that the cost of expansion is 50% higher than expected. The results study 2015 statistics, and shows that federal funding is not having the impact that was previously expected. The report can be found here.