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Better Late than Never? PA set to expand Medicaid in 2015

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The federal government has given its approval to a revised version of Governor Corbett’s Healthy Pennsylvania plan. The approval could mean that Medicaid health insurance coverage becomes available to over half a million currently uninsured adults beginning January 1, 2015.

Medicaid is the main public health insurance program for people with low income. It is the largest source of health insurance in the United States with coverage provided to more than 66 million Americans (1 in 5). The Medicaid program is administered by the states but most of the financing comes from the federal government. To get the federal funds, states must comply with federal rules.  

In the past, Medicaid was not available to many low income adults. The Affordable Care Act (ACA – commonly referred to as “Obamacare”) expanded the Medicaid program to cover millions of previously uninsured adults. However, a Supreme Court ruling effectively made the Medicaid expansion portion of the ACA optional for states.

In Pennsylvania, Governor Corbett initially declined to expand Medicaid. However, he changed his mind and earlier this year submitted his Medicaid expansion plan, called Healthy Pennsylvania, to the federal government for approval. After months of negotiation, during which many aspects of the Governor’s original plan were dropped, the state and federal governments came to agreement.

The newly approved Pennsylvania plan involves two parts: (1) changes to Pennsylvania’s current rules for regular (state plan) Medicaid (“Reformed Medicaid”); and (2) a demonstration project (Healthy PA PCO demonstration) that waives of normal Medicaid rules. “PCO” stands for “Private Care Option” and means the state will be utilizing private managed care health plans.

More information on the changes is available in a press release from the Governor’s office here, on the Healthy PA website, and in the federal government’s final approval letter, and special terms and conditions.

The Healthy PA PCO part is classified as a demonstration project (under Section 1115 of the Social Security Act) with federal approval given through December 31, 2019. The demonstration authorizes the state to require that a portion of the new adult coverage group receive benefits through private managed care health plans and provides authority for the charging of premiums and the implementation of healthy behavior incentives.  

Assuming the plan is implemented, Medicaid coverage will be available for Pennsylvania adults earning below 133 percent of the federal poverty level ($15,521 in 2014). In 2016, participating adults whose earnings are above the federal poverty line (currently $11,670) may have to pay premiums of up to 2 percent of household income. Healthy behaviors can reduce the cost sharing.

According to the Associated Press, the expansion is expected to save Pennsylvania billions of dollars over the coming years. The federal government will pay the cost of the state’s Medicaid expansion through 2016. The federal government’s match rate gradually drops beginning in 2017, decreasing to 90 percent in 2020 and after.

Expanded Medicaid coverage under the Healthy PA PCO demonstration may be particularly important to individuals who are over age 50 but not yet eligible for Medicare. As they reach age 50-64 people become more susceptible to health problems but private health insurance may be too expensive or difficult to obtain. As a result many in this age group go uninsured until they are eligible for Medicare. 

Some individuals are specifically excluded from coverage under the demonstration, including:

  • Pregnant women, with the exception that a woman who becomes pregnant while in PCO coverage may elect to stay in PCO coverage.
  • Individuals who are institutionalized.
  • Individuals who are dually eligible for Medicaid and Medicare
  • Individuals 65 years of age and older.
  • Individuals under 21 years of age.   

It is unclear how the election of Tom Wolfe as Governor this November might impact the implementation of the plan. Wolfe has proposed following the more traditional approach to expanding Medicaid.    

Note: Since January of 2014 some non-Medicaid eligible individuals have been able to purchase health insurance coverage through the ACA’s health insurance exchange. But gaps exist and insurance through the exchange has been unavailable or unaffordable for many lower income Pennsylvania residents. The new Healthy PA PCO demonstration program should help fill those gaps.

Further Reading:

CMS Final Approval Letter, August 28, 2014

Corbett Announces Historic Approval of New Healthy Pennsylvania Program, Office of the Governor Press Release, August 28, 2014)

Pennsylvania’s Healthy PA website: http://www.healthypa.com/

U.S. approves Pennsylvania Medicaid-expansion plan, Associated Press via York Daily News, August 28, 2014

Medicaid Moving Forward, Henry J. Kaiser Foundation, June 2014