Pennsylvania’s Republican governor expands Medicaid

August 28, 2014

Pennsylvania Gov. Tom Corbett is the 9th Republican governor to expand Medicaid. (AP Photo/Matt Rourke)

Pennsylvania won federal approval to expand its Medicaid program to nearly 500,000 low-income adults on Thursday, becoming the ninth state led by a Republican governor to join the expansion under the president's health-care law.

Pennsylvania Gov. Tom Corbett had sought the Obama administration's permission to use money authorized by the Affordable Care Act to purchase private health insurance for poor adults. With Thursday's announcement, Corbett and the federal Centers for Medicare and Medicaid Services instead agreed to a plan to expand the program through managed care organizations.

The agreement means that Pennsylvania joins 26 other states and the District of Columbia in expanding Medicaid.

Medicaid coverage for Pennsylvania adults earning below 133 percent of the federal poverty line, or about $15,500, will begin in January. Starting in 2016, adults earning above the federal poverty line will have to pay premiums worth no more than 2 percent of household income. Those adults can be dropped from the program for failing to pay premiums, but they can also receive discounts for healthy behaviors, like going for a check-up.

“Like we are doing in Pennsylvania, [the Department of Health and Human Services] and CMS are committed to supporting state flexibility and working with states on innovative solutions that work within the confines of the law to expand Medicaid to low-income individuals," said CMS Administrator Marilyn Tavenner in a statement. "But, unfortunately, millions of Americans are still without Medicaid coverage because their state has yet to act."

Corbett, whose reelection campaign is suffering, joins Republican governors like Jan Brewer of Arizona and New Jersey's Chris Christie who oppose the ACA but have taken the law's billions of dollars to expand coverage to its poorest citizens. The federal government will pay the full costs of the expansion population through 2016, and the federal reimbursement will gradually lower to 90 percent in 2020 — still much better than the average 57 percent federal match rate for the traditional program.

Iowa and Arkansas used private insurance to expand their Medicaid programs, as some states have sought flexibility from the federal government after a 2012 Supreme Court ruling made the ACA's expansion an option for states, rather than mandatory. Indiana Gov. Mike Pence (R), a rumored 2016 presidential candidate, is also seeking the federal government's permission to expand Medicaid through an existing state program providing health savings accounts to low-income adults. Pennsylvania's expansion will be contracted through managed care plans, which are already used in the state's Medicaid program.

“From the beginning, I said we needed a plan that was created in Pennsylvania for Pennsylvania − a plan that would allow us to reform a financially unsustainable Medicaid program and increase access to health care for eligible individuals through the private market,” Corbett said in a statement.

Pennsylvania Democrats have been critical of Corbett's expansion plan, known as Healthy PA, which has been in the works for almost a year. They wanted Corbett to accept the traditional Medicaid expansion outlined by the ACA.

In negotiations with the federal government, Corbett earlier agreed to drop a controversial provision that would have required most unemployed individuals seeking coverage to prove that they were actively looking for a job — a condition that Medicaid experts say the program forbids.

Before Thursday's announcement, Pennsylvania had one of the largest Medicaid-eligible populations among states that hadn't yet expanded their programs. A report from the Urban Institute earlier this month estimated states that haven't expanded their programs are missing out on a combined $423 billion in federal funding between 2013 and 2022.

This post has been updated to clarify Pennsylvania's Medicaid expansion will be carried out through managed care organizations.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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