Pennsylvania Gov. Tom Corbett has a plan to use federal subsidies targeted for an expansion of Medicaid to be used instead to help low-income residents of the state buy private health insurance.
Corbett, a Republican who has been opposed to President Barack Obama's health care reform program, said his proposal would also place new requirements on existing Medicaid recipients, including charging a modest monthly premium instead of co-payments for doctors' visits.
The plan to use Medicaid funds to purchase private insurance is modeled on similar proposals in Iowa and Arkansas, where Republican officials have also resisted efforts to expand Medicaid eligibility under Obama's Affordable Care Act - better known as Obamacare. Pennsylvania's plan, like those of the other two states, would require approval by the U.S. Department of Health and Human Services.
States that are refusing to expand Medicaid as envisioned under the new law will forfeit billions of dollars in federal subsidies to fund the expansion. Twenty-six states have so far refused to do so; some have balked at the expansion because of increased costs they will face in the future.
"These reforms are state-based solutions that will enable sustainability to the current Medicaid program, providing critical care for those most in need," said Corbett.
In addition to imposing monthly premiums on Medicaid recipients, Corbett's proposal would also require able-bodied Medicaid recipients to show they have actively sought work.
The proposal, he said, will "align" Medicaid benefits with private, commercial insurance for non-disabled adults.
Under the health care law, as many as 9 million Americans are expected to obtain health coverage next year as the income threshold for Medicaid eligibility is raised to 138 percent of the federal poverty level in states that accept the expansion. The federal government will cover the entire cost of new beneficiaries for the first three years, and then lower its participation to 90 percent over the remaining decade.
Corbett announced the plan Monday after touring the PinnacleHealth Harrisburg Hospital emergency room. Hospitals, which often carry debt due to covering the cost of treating uninsured patients, have lobbied his administration to find a way to expand Medicaid rather than forfeit new federal funding that will begin in 2014.
"We've advocated for a stronger Medicaid system because doing so will reduce the burden on hospitals and the health care community," said Andy Carter, president of the Hospital and Health System Association of Pennsylvania.
The Corbett administration hopes that monthly premiums and private insurance will help the state bridge the gap when the federal government reduces its contribution.
"I don't believe, right now, as planned, that we require any legislative approval," Corbett said.
The Hospital and Health System Association of Pennsylvania estimates that roughly 350,000 low-income, non-elderly state residents would be covered by the Medicaid expansion outlined in the new law. Uninsured people with higher incomes will be able to shop for subsidized private insurance in new online marketplaces being set up in each state under the law.