Pa. Gov. Corbett discusses Medicaid issues with Health and Human Services Secretary

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WASHINGTON -- The Obama administration wants to be as flexible as possible within the confines of the Affordable Care Act, Health and Human Services Secretary Kathleen Sebelius told Pennsylvania Gov. Tom Corbett Tuesday night in a meeting aimed at persuading him to agree to accept federal funding to expand Medicaid eligibility in the state.

Ms. Sebelius stressed to the governor that the federal government will pay the full cost of newly eligible Medicaid enrollees for three years, a department official said late Tuesday. After that, the federal share would gradually decrease to 90 percent in 2020.

"She hopes constructive dialogue can continue on innovative ideas that work for Pennsylvania," said a federal official who called Tuesday's talk in Washington "a good conversation."

A spokesman for the governor could not be reached late Tuesday.

Mr. Corbett has said he can't support the expansion, contending it would, among other things, add to a Medicaid burden that's already unsustainable.

Tuesday's meeting came four days after Ms. Sebelius announced that her department had finalized the government's commitment to paying the full cost of newly eligible Medicaid beneficiaries through 2016.

State Senate Majority Leader Jay Costa, D-Forest Hills, said Democrats "very much hope the governor and the secretary can reach an understanding about some flexibility that may be able to be provided" so Mr. Corbett will feel comfortable expanding Medicaid.

"We believe it creates jobs, it creates investment in our health care delivery system in the commonwealth ... and it benefits more than half a million individuals who can't afford health care."

The department official could not immediately say where there's room in the law for flexibility or whether Mr. Corbett made any specific requests of the secretary.

Other Republican governors who met with the secretary over the last several weeks emerged from the conversations more open to participating in the expansion.

But Mr. Corbett has said he won't take his cue from those governors, including Chris Christie of New Jersey and Rick Scott of Florida. Each state has different needs, and Pennsylvania already offers health coverage to youth through the Children's Health Insurance Program, which bases premiums on household income, Mr. Corbett has said.

The Medicaid expansion is part of the 2010 Affordable Care Act. The law called for states to revise eligibility rules to include more working poor, but the U.S. Supreme Court struck down that provision, saying the federal government could not impose financial penalties on states that opted out. That left the decision to each state.

Currently the income limit for a Pennsylvania family of three is $8,524. If the state participates in the expansion, the same family could earn about $26,000 and remain eligible.

The Kaiser Family Foundation, a nonpartisan Washington think tank, estimates that Pennsylvania would spend $2.8 billion over 10 years to leverage $37.8 billion.

The Pennsylvania Department of Public Welfare, though, has said the cost to the state could be as much as $4 billion over 10 years because of additional staffing and administrative costs. The department also anticipates additional costs of new enrollees who the federal government would not pay for -- including uninsured Pennsylvanians who already were eligible but hadn't signed up, and for workers who drop out of private insurance plans in order to participate in the taxpayer-funded program.

There is no deadline for states to decide whether to participate, but because participation will add federal revenue to state coffers, Mr. Corbett will likely want to decide before July 1, the start of the new fiscal year.

Mr. Costa said a bill under consideration in the state Senate would allow Pennsylvania to pull out of the program at any point. If there's a good reason to turn down the federal funding, Mr. Costa hasn't heard it.

"We have a very generous package for our residents. If there's a way we can get coverage for more people, that's a good thing," Mr. Costa said.

If Pennsylvania participates, an additional 643,000 adults would qualify for the benefit, according to the Department of Public Welfare.

In a recent report, Families USA and the Pennsylvania Health Access Network said the expansion could bring 41,200 jobs and $5.1 billion annually in new economic activity to the state. That figure comes from new health care jobs, money providers would spend to expand facilities, and the impact on other industries where the new workers and expanded companies would spend wages and profits.

In a separate report commissioned by The Hospital and Healthsystem Association of Pennsylvania, whose members would benefit from the expansion, Rand Corp. estimated a slightly lesser impact: 35,000 jobs and $3.2 billion in economic activity.

Mr. Costa said those figures show a significant upside to participating in the expansion, and that Mr. Corbett needs to do the right thing.

The expansion also would save the state about $878 million over nine years by providing coverage to uninsured patients whose emergency medical care is not borne by state taxpayers, according to Kaiser Family Foundation.

"Treating people who don't have insurance coverage raises health care costs for hospitals, people with insurance and state budgets," Ms. Sebelius said.

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