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December 12, 2012 | By | Posted in Governor

Insurance exchange decision leaves Medicaid fate unknown

By Melissa Daniels | PA Independent

LETTER OF THE LAW: Gov. Tom Corbett told the federal government Wednesday, Dec. 12 that the commonwealth of Pennnsylvania would not run its own health insurance exchange.

HARRISBURG – Gov. Tom Corbett has changed his mind.

Pennsylvania, Corbett had said, wasn’t ready to decide about running a health-insurance exchange because information from the federal government proved insufficient.

Wednesday, two days before the deadline to decide, Pennsylvania became the 28th state to allow the federal government take over the process.

“Pennsylvanians have waited long enough for answers, and continuing this environment of uncertainty harms Pennsylvania businesses and consumers who are attempting to prepare for the changes created by the ACA,” Corbett wrote in a letter to U.S. Department of Health and Human Services Secretary Kathleen Sebelius.

It’s the latest turn in Pennsylvania’s road to expanded health care under the Patient Protection Affordable Care Act. And it could give clues to how the state will comply with the law’s Medicaid expansion, where the discussion is also full of questions about cost and process.

Health-insurance exchanges will be online marketplaces that allow uninsured people to compare and buy plans, starting in 2014. Their purpose is to make buying health insurance more transparent, efficient and affordable. Under the law, states could choose to run the exchange, or let the federal government take on the responsibility.

Corbett has maintained that the federal government has not been clear about rules for setting up the exchange. More were released Monday, but that may have been too little, too late.

Corbett said in late November that setting up the exchange would cost Pennsylvania anywhere from $30 million to $100 million. The state got a $33 million federal grant to help defray costs, which officials said has not been touched. But they are still analyzing what has to happen to that money.

Corbett is worried about future costs of the program.

CORBETT: Told Secretary Sebelius there was not enough information from the federal government to make a plan for creating a health insurance exchange.

“I continue to have strong concerns that ‘state authority’ to run a health insurance exchange is illusory — when in reality, Pennsylvania would end up shouldering all of the costs by 2015, but have no authority to govern the program,” Corbett wrote.

For supporters of the health-care law, which is often cited as the pinnacle legislation of President Obama’s first term, Corbett’s decision is a disappointment colored in political undertones.

FRANKEL: Hopes that state will decide to expand Medicaid to new eligibility standards come 2014.

State Rep. Dan Frankel, D-Allegheny, Democratic Caucus chairman, said a year ago, workers in the state’s Insurance Department were preparing to design an exchange modeled after travel websites like Orbitz.com. But then they “put the brakes on it,” Frankel said, and now it would be too late for the state to try to comply with implementation deadlines, even if it wanted to.

“I think it’s unfortunate that we haven’t been more proactive about this,” Frankel said.

But this decision was less worrisome than what could happen with Medicaid expansion, Frankel said. One way or another, the state would have a health-care exchange. But the Medicaid expansion could provide insurance to a significant number of Pennsylvanians, Frankel said.

Starting in 2014, the national eligibility limits for Medicaid will expand to 133 percent of the poverty level, or an annual income of $14,404 for a single person, or $33,657 for a family of four. If states choose to expand their Medicaid programs to these eligibility levels, the federal government will pick up 100 percent of the cost through 2017, eventually decreasing to 90 percent thereafter.

Frankel called the expansion “an essential element to be successful in increasing access to health insurance to Pennsylvanians.”

Frankel said the costs of not expanding Medicaid outweigh the costs of doing so, including the effects on public health, federal tax dollars and the state hospital system.

“You need to have a thoughtful decision about this and take the politics out of it,” Frankel said.

Corbett referenced the Medicaid expansion in his letter to Sebelius, saying the state was still considering its cost and impact. But he was still concerned about “$4 billion in state-only costs during the next eight years,” according to the letter.

For those worried about ACA-related costs, Corbett’s exchange decision may come as relief.

METCALFE: Said he thought Corbett made the right decision by letting the federal government set up the state’s health insurance exchange.

State Rep. Daryl Metcalfe, R-Butler, chairman of the House State Government Committee, said Corbett made the right decision to protect Pennsylvania taxpayers.

Metcalfe was one of about 40 state lawmakers — all Republicans — who sent a letter to Corbett in July urging him to decide against a state-based exchange.

Following Corbett’s decision, Metcalfe said the move meant Pennsylvania would “stand with the other states that are standing in opposition to all these federal mandates and, ultimately, these unconstitutional mandates that are coming through Obamacare.”

In the short-term, Corbett’s announcement means that Pennsylvania-based insurance companies will be answering to the feds as the exchange is set up.

That will be a new experience for these companies, said Doug Furness, director of government affairs with the Insurance Federation of Pennsylvania. Insurance companies now deal only with the state.

Companies will want to know what essential benefits plans on the exchange must contain, and how they will determine eligibility standards, Furness said, but they’re still waiting to hear more .

There is a strict timeline between now and the Jan. 1, 2014, rollout in terms of what information companies need to have the exchanges ready.

This creates some nervousness for an industry that is “risk-sensitive,” Furness said.

“The fact is that the feds are releasing guidance documents and regulations pretty much daily,” he said, “so there’s still a lot of unknowns that companies are still struggling with.”

Contact Melissa Daniels at melissa@paindependent.com

— Edited by John Trump at jtrump@watchdog.org

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Melissa Daniels is a reporter for PA Independent. She can be reached at 717-350-0962 or Melissa@PAIndependent.com

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