Google Plus Facebook LinkedIn Twitter Vimeo RSS

Health care reform: The next decisions

By ,

Health care has reached another big crossroad, and the road signs aren't up yet.

The next step in the Patient Protection and Affordable Care Act is for states to decide whether to expand Medicaid and whether to implement a state-based health insurance exchange or default to a federal one.

Gov. Tom Corbett has not indicated his plans on either issue since the U.S. Supreme Court issued its ruling June 28. That puts him with the majority of governors, who collectively have been asking scads of questions to determine what the options are and where they lead.

Many of those questions have been directed to the U.S. Department of Health and Human Services, which has announced regional Affordable Care Act implementation meetings between July 31 and Aug. 15 "to address challenges, answer questions, and talk about how we will continue to move forward."



For states that expand their Medicaid coverage up to 133 percent of the federal poverty level, PPACA says the federal government will cover the whole cost of expansion from 2014 to 2016, phasing down to 90 percent by 2020.

A 2010 Kaiser Family Foundation report using participation rates from the Congressional Budget Office estimated that the Pennsylvania expansion would enroll more than 480,000 new people in Medicaid and cost an additional $18 billion from 2014 to 2019, of which about $1 billion would come from the state.

If there is a higher participation rate and more than 680,000 people were newly enrolled in Medicaid, the report estimated it would cost an additional $21.5 billion from 2014 to 2019, of which about $2 billion would come from the state.

A July 2 letter from the National Governors Association to the secretary of HHS asked whether states that expand Medicaid to a lower level, such as 100 percent of the federal poverty level, would still receive the full coverage, among other questions.

In a separate July 10 letter addressed to President Barack Obama, the Republican Governors Public Policy Committee asked 17 questions about insurance exchanges and 13 questions about Medicaid expansion. One of those questions was about Medicaid Disproportionate Share allotments.

Those allotments will be of great interest to Pennsylvania hospitals and health systems, according to Paula Bussard, senior vice president of policy and regulatory services at the Hospital and Healthsystem Association of Pennsylvania.

Bussard said that, as the allotments are structured under PPACA, certain Medicaid reimbursement rates will be reduced. That was supposed to be balanced by many new Medicaid patients entering the system, she said, but if Medicaid doesn't expand in Pennsylvania, "those payment cuts will be staggering."

Hospitals are making many efforts to reduce costs, Bussard said, but "that isn't necessarily going to be able to sustain hospitals if there is no coverage expansion." Over 10 years, she said, estimates are that the PPACA Medicaid and Medicare payment reductions to hospitals will equal $8.7 billion.

"From our perspective, it's not really optional; the Affordable Care Act is a law, and we should do our best to implement it to the full extent," said Antoinette Kraus, project director of the Pennsylvania Health Access Network.

Income equaling 133 percent of federal poverty levels is about $14,000 for an individual and $30,000 for a family, Kraus said: "We're talking about a lot of folks who are working jobs without health insurance that would be able to get coverage."

Eric Beittel is president of the Central Pennsylvania Association of Health Underwriters. He said studies have shown that not all people who are currently eligible for Medicaid register for it, so expanding Medicaid eligibility would not necessarily cover everyone.

"My personal opinion is bending the cost curve is far more important than access," he said, noting that he believes that PPACA will increase costs "significantly."

Beittel also said that not expanding Medicaid could force more people to health insurance exchanges, which are to provide subsidies for those whose income is up to 400 percent of the federal poverty level. The PPACA was not written counting on that many people getting subsidies, he said, so the increase could cause problems.


Health insurance exchanges

The basic question of the health insurance exchanges is whether residents would be better served with a state-based or federal one. The Pennsylvania Insurance Department has not released any updates since June 29, when it said research indicated a state-based exchange would be a better option than a federal one, but that it had not been created and the governor had instructed that proceedings continue so it remained an option.

Some, however, see the exchanges as more than a choice between two options. On June 29, many Congressional Republicans, including Pennsylvania's Sen. Pat Toomey and Rep. Joe Pitts, signed a letter to the National Governors Association asking governors to oppose the PPACA by standing against any creation of state-based insurance exchanges.

The letter argues that PPACA can impose the employer mandate penalty only if employees get health insurance through a state exchange. Although the IRS has said a federal exchange also qualifies, the writers disputed its authority to do that, arguing that if states don't create their own exchanges, employers shouldn't have to pay penalties.

Case Western Reserve University's Jonathan Adler and the Cato Institute's Michael Cannon have written an academic paper arguing the same point.

Gene Barr, president of the Pennsylvania Chamber of Business and Industry, had no comment on the argument, saying, "We are still sorting out the decision and its impact on exchanges."

Beittel said CPAHU had not explored the concept fully but had heard from a member who considered the argument silly and unlikely to succeed.

Kraus pointed out a November 2011 bulletin from the Centers for Medicare and Medicaid Services that said, "The proposed regulations issued by the Treasury Department, and the related proposed regulations issued by the Department of Health and Human Services, are clear on this point and supported by the statute. Individuals enrolled in coverage through either a state-based exchange or a federally-facilitated exchange may be eligible for tax credits."

Also Popular on CPBJ

Write to the Editorial Department at

Related Stories

Leave a Comment


Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
View Comment Policy