Report says Pennsylvania would profit by expanding Medicaid access

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HARRISBURG -- As Gov. Tom Corbett deliberates expanding Medicaid access, the state Independent Fiscal Office on Tuesday released an analysis finding Pennsylvania would gain federal money and reduce state expenditures by doing so.

Mr. Corbett has declined so far to expand Medicaid access under the federal Affordable Care Act, a decision that fell to the states after the U.S. Supreme Court upheld the law's requirement that most people have health insurance but left states to determine if they would broaden eligibility for Medicaid.

His administration has said the expansion would add more than 800,000 new enrollees to the program and cost the state more than $4 billion in additional state tax dollars by the end of June 2021.

But in an analysis released Tuesday, the state Independent Fiscal Office found expanding Medicaid would have an average annual effect in the calendar years 2016 to 2021 of increasing federal expenditures by $3.2 billion and decreasing net state expenditures by $190 million.

Most state savings under expansion would result from moving people currently covered by a state-funded medical program to federally funded Medicaid, said Matthew Knittel, director of the IFO. The federal government is to cover the full cost of newly eligible Medicaid enrollees for three years, after which the federal share of the cost would decrease to 90 percent in 2020.

After the release of the report, the governor's office and the Department of Public Welfare distributed a letter from Acting Secretary Beverly Mackereth warning leaders of the House and Senate appropriations committees that certain Medicaid funding sources are in question.

Ms. Mackereth wrote that her agency is concerned the U.S. Department of Health and Human Services may reduce the ability of states to leverage Medicaid funding through a tax on managed care organizations. She wrote that third-party analyses have not considered the reduction or elimination of this funding mechanism, which "would severely impact the ability of the commonwealth to finance its current Medicaid program, let alone realize any savings relative to an expansion under the [Affordable Care Act]."

Mr. Knittel said the administration is correct that there are questions about the future of methods states use to pay for Medicaid, including the tax noted by Department of Public Welfare.

"Even without those, our computations suggest there's still a net savings to the commonwealth," he said.

The question of expanding Medicaid has been closely watched, and groups from both sides released statements responding to the IFO report. The state council of the SEIU said the study shows that a decision to broaden eligibility would be fiscally sustainable.

"This should be the tipping point for the governor," Neal Bisno, president of SEIU Healthcare Pennsylvania, said. "Pennsylvania must seize this moment to bring financial stability to our hospitals and access to quality, cost-effective care for Pennsylvanians. Without expanding Medicaid our healthcare crisis will only get worse."

The conservative group Americans for Prosperity countered by warning that after initial full federal payment the state could be liable for billions of dollars in new costs.

"Gov. Corbett is wise to view the federal government's promise with a great deal of skepticism and not to commit our state to expanding a failing program," the group's state director, Jennifer Stefano, said.

As of April 15, according to the IFO report, 25 states have announced they will expand Medicaid coverage and 14 states have said they will maintain current coverage levels, while 11 states have not committed.

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Karen Langley: or 1-717-787-2141.


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