Governor Corbett’s ‘Healthy PA’ Plan: A Summary
On September 16, the Corbett administration announced that it would take up the federal option to expand Medicaid health coverage to individuals who would be newly eligible under the Affordable Care Act. The plan has three major components:
- A restructuring of the current Medicaid system with a scaled back benefit plan, new cost sharing, and a work search requirement.
- New health care coverage for 520,000 additional Pennsylvanians who would be given financial support (premium assistance) to purchase a commercial health insurance product on the insurance exchange. An additional 90,000 people who are deemed to be medically fragile would have the option to enroll in the existing Medicaid program.
- Incentives to increase the supply of health care providers through additional funding to community health centers, additional physician loan forgiveness in rural areas, telemedicine, and the continued expansion of electronic health records.
The administration will pursue a waiver under Section 1115 of the federal Social Security Act, which is the route for states seeking to make changes that are not consistent with the Medicaid statute as it is written. This means that the state will have to convince the federal government that the experimental proposals are worth doing and meet federal requirements for waivers. Various provisions will likely be negotiated between the Corbett administration and the Centers for Medicare and Medicaid Services (CMS). Assuming that the federal government gives its approval, the waiver provisions will be formally adopted through a State Plan Amendment. State plan amendments do not usually require state legislative approval, but several proposed measures, including changes in the benefit package, may require changes in state law. Whether the General Assembly will allow other changes without legislation is not clear.
Medical Assistance, Pennsylvania’s Medicaid program, has a current enrollment of 2.2 million. Medicaid covers 1.1 million children, 379,000 parents, 250,000 seniors, 515,000 people with disabilities, and 72,000 chronically ill adults. “Able bodied,” childless adults without a disability are not eligible for Medicaid.
Current eligibility differs among the sub-groups: non-working parents (through Temporary Assistance for Needy Families, or TANF) have an income cap of 26% of the Federal Poverty Level (FPL), working parents who were previously receiving TANF are eligible up to 46% of FPL, seniors up to 100% of FPL, and people with disabilities up to 100% of FPL. General Assistance-related Medical Assistance is limited to individuals with no more than $255 per month in income who have a temporary disability or a permanent disability that has not yet been recognized by the Social Security Administration.
Individuals with significant health problems can count their medical expenses against their income to obtain Medicaid coverage under the “Medically Needy Spend Down” provision; these benefits are somewhat more limited than those of other eligible groups.
The Governor’s “Healthy Pennsylvania” plan proposes a number of changes for current Medicaid enrollees:
- Modifications to the current benefit plan for enrollees. Currently, Medicaid benefits differ based on eligibility “group” but are generally robust, which is appropriate given the high health needs of most enrollees and their very limited income. If “Healthy Pennsylvania” is approved, the Corbett administration says the new benefit package would mirror the essential health benefits package, which is the minimum coverage for insurance products that are to be sold on the health exchanges. The new package would require severe benefit cuts for enrollees.
- The new plan would include drug and alcohol services and mental health parity, although what that means is not clear.
- The benefit package for children would remain the same.
- New premiums of $25 per month for an individual and $35 per month for a household, beginning at 50% of FPL ($479 per month for an individual, $646 per month for a household) to 133% of FPL ($1,273 per month for an individual, $1,719 per household).
- Current copayments ($1 to $5 in most cases) would be eliminated, except for a $10 copay for inappropriate use of emergency room services.
- Premiums may be reduced for participation in preventive and wellness care.
- Premiums may also be reduced for those who “actively engage in job search and training programs.”
- New work search requirements for all working-age, unemployed, or underemployed Medicaid enrollees, with limited exceptions.
- Work search requirements would be comparable to those recently instituted in the unemployment insurance program.
- Individuals will be required to register with Job Gateway, an online portal administered by the Department of Labor and Industry, which allows individuals to track and manage job applications and search for job openings.
- Individuals who engage in work search or job training may be eligible for premium reductions.
Federal law and policy prohibit premiums in the Medicaid program for anyone under 100% of FPL and the conditioning of health care coverage on job search or training requirements. The Corbett administration will be applying for a waiver to suspend those provisions of the law. Where CMS comes down on these issues remains to be seen. Another waiver might be needed to cut the benefit package.
A New Premium Support Plan for Newly Eligible Individuals
Information provided by the Corbett administration appears to make the Medicaid expansion conditional: if the reforms are approved then Pennsylvania would expand health coverage.
Coverage would be extended to adults with incomes up to 133% of FPL. Individuals newly eligible for Medicaid with incomes from 0-133% of FPL would purchase insurance on the exchange rather than becoming eligible for traditional Medicaid, which is administered through private Managed Care Organizations.
- Medically frail individuals would have the option to enroll in traditional Medicaid. This group will be identified using some version of the federal definition of medically frail, which includes individuals who have (1) a disabling mental disorder, (2) a chronic substance abuse disorder, (3) a serious and complex medical condition, (4) physical, intellectual, or developmental disability that significantly impairs activities of daily living, or (5) are determined to be disabled by Social Security.
- The commonwealth will identify qualified health plans that will offer the commercial insurance, and it is expected that some of the current Medicaid MCOS would be on the list.
- The health insurance plan will be comparable to the Silver level plans on the exchange, the second lowest of the four “metal” levels. Silver plans generally cover 70% of the medical costs a person might incur.
- Premiums will be required, although it is not specifically stated whether those premiums would start for individuals at 50% of FPL.
- The same work search requirements would apply, and individuals in wellness programs or work search might see reductions in their premiums.
The Affordable Care Act requires that premium assistance programs provide benefits comparable to traditional Medicaid, and states must offer those services through a second “wrap-around” policy or in some other manner. Cost-sharing also cannot be greater than in traditional Medicaid, so the state cost will include the balance between the individual premium and the cost to the individual.
The Corbett plan does not specifically mention any wrap-around program or policy. Both the Affordable Care Act and the Children’s Health Insurance Reauthorization Act (CHIPRA) require that premium assistance programs result in cost savings to the federal government. Since commercial insurance is more expensive than Medicaid, that will be difficult. Either the program will not meet cost reduction requirements or the “savings” will come from the individuals who will be limited to a less expensive, lower quality health coverage plan.
Two other states are submitting waivers to CMS to offer premium assistance programs. The state of Iowa has proposed enrolling all individuals up to 100% of FPL into traditional Medicaid and offering premium assistance to individuals between 100% and 133% of FPL. Pennsylvania’s plan is more like that of Arkansas, which would provide premium assistance to all new enrollees. Neither Iowa’s nor Arkansas’ plan is proposing a work search requirement.
There are many unknowns about the “Healthy Pennsylvania” proposal. Still, it seems clear that the Corbett administration is using the Medicaid expansion as leverage to press for significant reductions to the health care program that has served the state’s most vulnerable citizens for more than 50 years.