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June 20, 2012 | By | Posted in General News

To spend or not to spend: Federal grant for health-care exchange in limbo

By Melissa Daniels | PA Independent

HARRISBURG — While the country waits with baited breath to hear the U.S. Supreme Court’s decision on the Affordable Care Act, millions of dollars hangs in the balance.

At least, that’s the case in Pennsylvania, where $33.8 million is scheduled to fund a program that may not need to be created.

In February, the state received this grant from the federal Department of Health and Human Services to support the establishment of a state-operated health insurance exchange. The exchange, required under the Affordable Care Act, would create a searchable marketplace for individuals and businesses to purchase health insurance.

The exchange goes hand in hand with the law’s individual mandate, which requires all Americans without insurance to purchase a plan or face a fine.

The U.S. Supreme Court is expected to rule on the law’s constitutionality, specifically the individual mandate, this month.

Kelli Roberts, spokeswoman for Gov. Tom Corbett’s office, said the U.S. Health and Human Services Department did not give any specific instructions on what the state should do with the grant if the individual mandate is overturned.

Roberts said administration is waiting for the U.S. Supreme Court ruling before making any firm decisions, because action that would completely or partially overturn or even uphold the law would yield different situations, she said.

“The governor has never contested the need for health-care reform, but we need to make sure whatever we do works for Pennsylvanians here,” Roberts said.

If a state does not set up its own exchange by 2013, the federal government would set one up. Having the grant allows Pennsylvania to design and implement its own system should the Affordable Care Act be upheld.

The funding would be a one-year allocation for setting up the state-operated exchange.

Of the $33.8 million, contractual costs for building the technology and getting the system up and running would cost $19.3 million, including $5 million for the hardware and software. Another $7.9 million could be used for information technology and outside legal counsel, and $1.2 million would cover salary and fringe benefits for personnel.

Tarren Bragdon, CEO of Florida-based public policy think tank Foundation for Government Accountability, said states promised future money under the law may not receive it if the Supreme Court overturns it.

But states like Pennsylvania, which received funds, should return the money to the federal government if the law is not upheld.

“Pennsylvania should return that money to the federal coffers and reduce the federal deficit, rather than keep that money and try to set up an exchange that is not going to interact with the federal government, is not needed and frankly, would just be an expensive bureaucratic activity that wouldn’t help individuals,” Bragdon said.

Rosanne Placey, spokeswoman for the state’s Insurance Department, said the department hasn’t spent any of the grant money and is waiting on the court’s decision before moving forward with implementation.

The state has polled consumers and businesses on their interest in the exchange. Results showed four out of five businesses were unaware of the concept, and about one in 10 consumers.

If the health-care exchange provision moves forward, Placey said a system would need to be in place by late 2013 in order to roll out for use at the start of 2014.

Placey said she could not comment on what will happen to the money if the law is overturned, but that the department wants to be prepared for either scenario. Holding back on rolling out a program means the state won’t be on the hook for millions in payback if that’s how the decision proceeds, Placey explained.

“We’ve tried to be as prudent as possible as to not expand money that would ultimately have to be returned to the federal government,” Placey said.

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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