Pennsylvania proposes alternative to expansion of Medicaid

By Daniel Kelley

PHILADELPHIA (Reuters) - Pennsylvania Governor Tom Corbett unveiled a plan a Monday 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 healthcare 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 like Pennsylvania, Iowa and Arkansas that are refusing to expand Medicaid as envisioned under Obama's healthcare reform will forfeit billions of dollars in federal subsidies to fund the expansion.

Some states have balked at the expansion of Medicaid 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," Corbett, a Republican, told reporters.

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, Corbett said, will "align" Medicaid benefits with private, commercial insurance for non-disabled adults.

Under Obama's healthcare reform 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 made his announcement 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 healthcare community," said Andy Carter, president of the Hospital and Health System Association of Pennsylvania, who spoke at the announcement made by Corbett.

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.

Twenty-six states have so far refused to expand Medicaid under Obamacare.

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.

(Editing by Michele Gershberg and Leslie Adler)