Meadville Tribune

April 4, 2013

Gov. Corbett mulls using private insurance to expand health care coverage

By John Finnerty
Meadville Tribune

HARRISBURG — Gov. Tom Corbett revealed Wednesday that he is exploring whether Pennsylvania should use private insurance exchanges to expand health care coverage to the working poor, rather than simply adding more than 500,000 people to the Medicaid rolls.

“Until we know whether or not significant reform is possible, I continue to have concerns that Pennsylvania’s Medicaid program will be able to serve, in a sustainable manner, the approximately one in four Pennsylvanians that would be covered under a full expansion,” Corbett said in a written statement released after his meeting Tuesday night with Health and Human Services Secretary Kathleen Sebelius.

Corbett, a Republican, said he requested information around using the private insurance market to expand coverage in Pennsylvania, similar to what Arkansas and Tennessee are pursuing, coupled with significant reforms to Pennsylvania’s current Medicaid program.

But the staff at the Commonwealth Foundation, a free-market think tank, cautioned that the Arkansas plan is “fake flexibility” because the federal government is requiring that if the private insurers do not provide all the benefits of Medicaid, then the government-run insurance program must be used to fill in the gaps.

Officials estimate the plan will cost taxpayers 13 to 14 percent more than regular expansion, but no one really knows the true cost, said Elizabeth Stelle, a policy analyst at the Commonwealth Foundations. The Congressional Budget Office estimates it will cost an additional $3,000 per enrollee, she said.

The idea of buying private insurance with Medicaid money was first broached by Arkansas' Democratic Gov. Mike Beebe as a way to get his Republican-controlled Legislature on board with the expansion. The plans would be bought through the insurance marketplaces being created under the federal health care law.

Stelle, at the Commonwealth Foundation, said that real flexibility would allow the state to run Medicaid in a manner that plans could be tailored so that people would only need to get the benefits they need. Allowing states to tailor the plans more efficiently would make Medicaid less expensive, she said.

Advocates for Medicaid expansion have argued that the move would create 39,000 jobs, as well as providing insurance to the working poor. Advocates have also argued that if Pennsylvania does not expand Medicaid, taxpayers in the commonwealth would be subsidizing the expansion in other states without benefiting from it themselves. The way Medicaid expansion was designed, though, if a state does not expand, the federal government does not spend the money that would have gone toward providing medical insurance to those residents, Stelle said.

A Congressional Budget Office report, which was released after the Supreme Court ruling that allowed states to opt out of Medicaid expansion, estimated that the federal government would save $84 billion because not all states would participate.

The Affordable Care Act promises the federal government will pay for 100 percent of the newly eligible Medicaid enrollees for the first three years of an expansion, beginning in 2014.

Officials in more than half the states are either against the expansion or undecided about it.

Finnerty reports from Harrisburg for Community Newspaper Holdings Inc.’s Pennsylvania newspapers, including The Meadville Tribune. Follow him on Twitter @cnhipa.

- The Arkansas plan: Under a proposal in the Arkansas Legislature, people who earn up to 138 percent of the poverty line would receive private insurance purchased using federal Medicaid dollars.

- The Tennessee plan: Those who earn up to 138 percent of the poverty line would receive health insurance from private providers. That would include a provision that would force people to pay some amount of co-pay if the government determines they can afford it. Includes a sunset provision so that the expansion would end unless the state re-approves it, and reform the payment structure so that providers are paid based on outcomes, not just based on services. The U.S. Department of Health and Human Services did not approve the Tennessee plan, so Gov. Bill Haslam announced the state will not expand Medicaid this year. The state continues to negotiate.