Medicaid cuts would be costly to Pennsylvania, officials say
February 27, 2017 12:57 PM
In the 29 counties of Western Pennsylvania, UPMC controls 87 percent of the government exchange market with about 96,000 members, an increase of about 30,000 members since March 2016.
A draft copy of the Department of Health and Human Services form proposed for use to apply for low-cost insurance from Medicaid or the Children's Health Insurance Program.
By Kris B. Mamula / Pittsburgh Post-Gazette
UPMC Health Plan has become the biggest provider of government health exchange insurance in the region at a time when Republican leaders in Washington prepare to make it more expensive.
State officials are predicting that federal cuts to Pennsylvania’s Medicaid plan, which was expanded under the Affordable Care Act, would cost the state at least $2 billion by 2020. Medicaid covers many elderly Pennsylvanians, children, people with disabilities and those with low income; with the expansion, it now insures more than 2.8 million Pennsylvanians.
Federal legislation that could be introduced as early as this week could end the government subsidies for Medicaid, leaving about 700,000 Pennsylvanians in danger of losing coverage.
Precisely how UPMC Health Plan would be affected by legislation that will replace the Affordable Care Act isn’t yet clear. But UPMC Insurance Services Division president Diane Holder was confident Monday that UPMC would continue to be able to provide coverage to people in need.
“I’m betting there will be a replacement plan vs. repeal. Most of those plans get modified a lot and I assume that will happen,” Ms. Holder said.
“We’re going to have to find a way to make care affordable. My hope as a nation is that we can continue to strive to provide people with benefits they need to stay healthy.”
In the 29 counties of Western Pennsylvania, UPMC controls 87 percent of the government exchange market with about 96,000 members, according to figures released at a press briefing Monday, an increase of about 30,000 members since March 2016.
Ms. Holder cited a Pew Research Center survey, released last week, that found that support for the ACA had reached an all-time high. What’s more, there has been “fair amount of push back” by the public to repealing the law, she said.
A budgetary hole
Her remarks came the same day state officials predicted that federal cuts to Pennsylvania’s Medicaid plan would cost the state at least $2 billion by 2020, opening a budgetary hole they said would be impossible to fill.
Spending on Medicaid accounts for about one dollar out of every four in the commonwealth’s annual budget. The program is jointly funded by the state and federal governments, with state spending matched by federal funds.
Medicaid cuts in the federal plan would be in addition to ending premium tax credits and cost-sharing subsidies that would affect everyone with ACA coverage — more than 1.1 million Pennsylvanians all told.
Reducing Medicare funding is part of a Republican leadership plan to replace the ACA. The plan was presented Saturday to the National Governors Association meeting in Washington D.C. Details of the proposal were summarized in a report by Avalere Health, a Washington D.C.-based health care consultant, and New York City-based management consultant McKinsey & Co.
In addition to the Medicaid cuts, the legislation would end the ACA’s tax credit and premium cost-sharing subsidies and replace them with age-based, fixed-dollar tax credits — $2,000 for people under age 30 and $4,000 for people over age 60. The ACA replacement would also increase allowable contributions to health savings accounts and relax restrictions on approved expenditures and contribution amounts.
The bill would create “innovation grants,” funding for states to use for such things as reinsurance, high-risk pools and lower out-of-pocket costs. The amount of the funding wasn’t specified.
Ms. Holder said she supports the ACA requirement that everyone carry health insurance and opposes high-risk health insurance pools for people with high-cost medical conditions, something that can skew premium rates. Eliminating the individual mandate and creating high-risk pools are parts of the Republican leadership plan to end the ACA.
The health insurance requirement for all is needed to mitigate risk within groups of people with coverage, preventing members with costly health problems from dominating any one group, she said.
“Insurance is all about balancing the risk pool,” she said. “You need the mandate to mitigate risk.”
‘Simply a way to cut Medicaid’
The proposed federal legislation would replace open-ended federal Medicaid dollars to the state with fixed-amount grants, which is “simply a way to cut Medicaid,” state Secretary of Human Services Ted Dallas said at a separate briefing.
“There is no way to cover those costs,” Mr. Dallas said during a call-in news conference with state insurance commissioner Teresa Miller and health secretary Karen Murphy. “There is no way for us to cover the cost shift this federal legislation would have.”
The concern in Harrisburg comes as House Republicans draft legislation that would replace the ACA, also known as Obamacare, in part, with either block grants or per capita grants that are expected to reduce federal spending by $50 billion in 2020. States would have limited options to make up the loss: tightening Medicaid eligibility requirements, creating job search mandates for eligible beneficiaries; or increasing cost-sharing among Medicaid recipients.
More than 55,000 low-income adults and children in Allegheny County receive health care benefits through the Medicaid expansion money, according to a report by the Downtown-based Pennsylvania Health Funders Collaborative. Pennsylvania began receiving Medicaid expansion money in 2015.
Medicaid reform was expected to save the federal government $30 billion in premium tax credits and cost-sharing reductions that are part of the ACA, according to the Republican proposal.
Laura Janocko, who has government-subsidized coverage through the ACA, worries what will replace the law, which prohibits insurers from denying coverage to people with pre-existing health problems and eliminated lifetime spending caps for coverage. The 63-year-old Penn Hills resident was a researcher at UPMC in 2012, when she was diagnosed with breast cancer. In 2015, she was furloughed and soon enrolled in an ACA plan.
Her monthly premium for a gold plan: $400 with a $750 deductible, a bargain considering one of her medications costs $10,000 a month without insurance, she said.
“I can’t go without coverage, even for a month,” Ms. Janocko said. “It could be devastating.”
“It’s scary enough to have cancer,” she said. “It’s just heartbreaking the coverage could be lost.”
Kris B. Mamula: firstname.lastname@example.org or 412-263-1699.
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