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Health Law Saves Consumers by Requiring Insurers to Spend Premium Dollars on Medical Care

11:38 am in Uncategorized by ThirdandState

By Chris Lilienthal, Third and State

Click for a larger viewA key reform in the Affordable Care Act requires health insurers to spend 80% to 85% of premium dollars directly on medical care or quality improvement expenses as opposed to other administrative costs, marketing, or profits. If an insurer does not meet the standard, it must provide rebates to consumers or businesses.

Insurers issued $1.1 billion in rebates to nearly 13 million consumers for 2011, the first year the rule was in effect, and are expected to return more than $500 million in rebates to 8.5 million consumers for 2012. The 2012 figures include nearly $6.9 million that will be returned to 123,581 Pennsylvania consumers — an average of $77 per family.

These rebates are among the more tangible ways that consumers have benefited from the law so far, but it is important to remember, as researchers with the Kaiser Family Foundation recently noted, that rebates represent only a portion of the savings to consumers from this provision, known formally as the “Medical Loss Ratio” Rule (MLR):

The primary role of an MLR threshold is to encourage insurers to spend a certain percentage of premium dollars on health care and quality improvement expenses (80 percent in the individual and small group market and 85 percent in the large group market). The MLR rebate requirement operates as a backstop if insurers do not set premiums at a level where they would be paying out the minimally acceptable share of premiums back as benefits…

Consumers and businesses, therefore, can realize savings in two ways as a result of the MLR requirement: by paying lower premiums than they would have been charged otherwise (as a result of lower administrative costs and profits), or by receiving rebates after the fact.

Final Pa. Budget Fails to Make Up Lost Ground

12:03 pm in Uncategorized by ThirdandState

By Sharon Ward, Third and State

The Pennsylvania Budget and Policy Center has released a full detailed analysis of the 2013-14 state budget plan spending $28.376 billion, roughly $645 million (or 2.3%) more than in the 2012-13 fiscal year.

Governor Tom Corbett signed the budget into law late in the evening of June 30, 2013. Overall, the plan is $64 million less than the Governor proposed in February, reflecting nearly $113 million in reduced spending for public school pensions and school employees’ Social Security payments along with a shift of $90 million in General Fund spending off budget to other funds.

2012-13 General Fund Summary
(in $ Millions)
2012-13 2013-14
Gov.
2013-14
Final
Change f/ 2012-13 %
Change
General Fund $27,731 $28,440 $28,376 +$645 2.3%

The plan includes a small increase to basic education funding, $122.5 million overall, with $30.2 million allocated to 21 school districts through a supplemental allocation, on top of the $90 million increase in the Governor’s proposal.

After many years of cuts, most programs received small increases in the Governor’s proposed budget, which remained in the final plan.

Changes to pension benefits for current employees, the cornerstone of the Governor’s original budget proposal, did not occur. The Legislature does not seem inclined to tamper with benefits for current employees. A proposal to move to a 401(k)-style retirement plan for new employees gained traction later in the session but was not adopted. This proposal may return in the fall.

Also abandoned was an $800 million education initiative to be funded through the sale of state liquor stores. While the privatization vs. modernization debate held center stage until the last week of the session, the school funding component was quickly abandoned and was not part of legislative proposals. Privatization is likely to be considered in the fall, as well.

For the first time in two years, there were no major cuts to services for vulnerable Pennsylvanians; however, a bill that would expand Medicaid coverage in 2014, a state option under the federal Affordable Care Act, was left undone. Legislation including the Medicaid expansion won bipartisan support in the Senate, but the House stripped out the expansion provision from the bill. When the bill returned to the Senate, a last ditch effort to restore the Medicaid expansion provision failed in a dramatic Senate committee vote on July 3.

Finally, a transportation funding package that would repair crumbling infrastructure and give a much needed shot in the arm to Pennsylvania’s flagging job growth failed to pass the House, despite overwhelming support in the Senate.

Get all the details from PBPC’s budget analysis.

Republican Governors Opt-In to Medicaid Expansion

11:28 am in Uncategorized by ThirdandState

By Sharon Ward, Third and State

There is growing bipartisan agreement that the optional expansion of Medicaid provided by the Affordable Care Act is too good an opportunity to pass up.

This month, the Governors of Arizona and North Dakota, both Republicans, announced their intention to opt-in to the Medicaid expansion, joining their counterparts in Nevada and New Mexico. To date, 14 states have decided to expand Medicaid in 2014, and another seven are leaning toward expansion. Pennsylvania remains among the 21 undecided states.

Support for Medicaid Expansion Growing
Here’s what Arizona Governor Jan Brewer had to say about Medicaid:

By agreeing to expand our Medicaid program just slightly beyond what Arizona voters have twice mandated, we will:

• Protect rural and safety-net hospitals from being pushed to the brink by their
growing costs in caring for the uninsured;
• Take advantage of the enormous economic benefits — inject $2 billion into our
economy — save and create thousands of jobs; and,
• Provide health care to hundreds of thousands of low-income Arizonans.

Saying ‘no’ to this plan would not save these federal dollars from being spent or direct them to deficit reduction. No, Arizona’s tax dollars would simply be passed to another state — generating jobs and providing health care for citizens in California, Colorado, Nevada, New Mexico or any other expansion state … With this move, we will secure a federal revenue stream to cover the costs of the uninsured who already show up in our doctor’s offices and emergency rooms … Weigh the evidence and do the math. With the realities facing us, taking advantage of this federal assistance is the strategic way to reduce Medicaid pressure on the State budget. We can prevent health care expenses from eroding core services such as education and public safety, and improve Arizona’s ability to compete in the years ahead. I’m committed to doing this, and I want you on my side. Let’s work together in an atmosphere of respect and do what is BEST for Arizona.

For Pennsylvania, the expansion of Medicaid is projected to bring in $17 billion in new federal investments by 2019, while expanding coverage to between 482,000 and 683,000 uninsured adults.

When Governor Corbett gives his budget address on February 5, he will offer a glimpse into the state’s plans to take advantage of this opportunity. Opting-in will create jobs, strengthen our health care system and provide health coverage to working parents, veterans, and seniors.

Governor Corbett and the Pennsylvania General Assembly should consider the benefits and savings that come with a Pennsylvania Medicaid expansion as well as the price of forgoing this opportunity — fewer jobs, a weakened health care delivery system and hardworking people without affordable insurance.

Mind the gap: Opting Out of Medicaid Expansion Leaves Low-income Families Behind

8:01 am in Uncategorized by ThirdandState

By Michael Wood, Third and State

Federal health care reform is moving forward thanks to the U.S. Supreme Court’s ruling last year — and it is a great deal for Pennsylvania. Unless the state decides to “opt out,” Medicaid coverage will be expanded to include many Pennsylvanians who are uninsured.

One group that will benefit immediately are parents with incomes up to 133% of the federal poverty level ($25,390 for a family of three). The benefits don’t end there: others who don’t receive health coverage through their work will be able to buy insurance on a competitive health marketplace or exchange — making coverage more affordable.

However, if Governor Corbett prevents the Medicaid expansion, it will create a coverage gap for families between 46% and 100% of poverty, as the chart below shows (click on it for a larger view).

Those families between 46% and 100% of poverty earn too much to qualify for Medicaid (for a family of three, this means earning over $8,781 but less than the federal poverty line of $19,090). These families won’t receive Medicaid coverage, and they won’t receive subsidies to buy health coverage.

We all benefit when more people have health coverage. Let’s make the right decision in Pennsylvania and expand Medicaid coverage.

Will Pennsylvania Take Full Advantage of Health Reform?

12:03 pm in Uncategorized by ThirdandState

By Chris Lilienthal, Third and State

With the election decided, it is now clear that the Affordable Care Act is here to stay. That’s great news for Pennsylvanians, some of whom have already begun to benefit from the health reform law, and many others who will see more gains as major provisions take effect in 2014.

As Judy Solomon writes at the Off the Charts Blog, a key provision of the law will allow states to expand Medicaid to cover low-income adults earning up to 133% of the poverty line, with the federal government covering most of the costs:

The question now is whether some states will squander this opportunity to cover millions of uninsured Americans.

Coverage for more than 11 million poor, uninsured adults is at risk if states don’t expand Medicaid, according to the Urban Institute.

Status of Health Reform Medicaid Expansion

As you can see in the chart above, Pennsylvania is among the states that have not made a clear decision on the Medicaid expansion. 

Failing to expand Medicaid would squander the opportunity to boost our state economy. The Kaiser Commission on Medicaid and the Uninsured estimates that the Medicaid expansion in Pennsylvania will amount to at least $17 billion in additional federal dollars invested in the state between 2014 and 2019. By contrast, as Solomon writes, the “Congressional Budget Office estimates that if all states adopt the expansion, they will spend only 2.8 percent more on Medicaid from 2014 to 2022 than they would have spent without health reform.”

Failing to expand Medicaid would also cost Pennsylvania real money that would otherwise be saved by reducing what the state spends to provide health care in emergency rooms and health clinics to people without insurance. 

Governor Corbett and the Legislature should take steps to expand Medicaid in 2014. It will help thousands of working parents and other adults in Pennsylvania get the quality health care they need and give the state’s economy a real boost.

PA Must Reads: Closing Tax Loopholes, Health Reform and Economic Austerity

7:46 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Associated Press this morning reports on competing efforts to close some tax loopholes in Pennsylvania.

After blocking similar efforts by Democrats in recent years, Republicans in Harrisburg now want to chip away at a couple of state tax provisions that benefit businesses…

A month-old bill backed by the leaders of the House Republican majority would attempt to close the so-called “Delaware loophole.” It would give the state Department of Revenue the power to stop firms — usually large, multistate companies — from using accounting sleight of hand to move profits out of Pennsylvania to a lower-tax jurisdiction in order to avoid paying the state’s 9.99 percent corporate net income tax.

To make it easier for business advocates to swallow, the bill would also take major steps long sought by the business community to lower business taxes, including gradually reducing the corporate net income tax rate to 6.99 percent in 2019…

At the same time, the Corbett administration wants to scale back part of a $73 million incentive for retailers that collect the sales tax and send it to the state in a timely fashion…

Under the proposal, retailers that get to keep 1 percent of the sales tax money they collect would be allowed to keep no more than $250 per month, which would bring another $41 million to the state in the fiscal year that begins July 1.

The Scranton Times-Tribune reports on benefits of preventive services made available by the Affordable Care Act.

More than 3.8 million Pennsylvanians have used at least one free preventive service — ranging from annual checkups to tests for specific types of cancer — offered through health care reform legislation in the past year, according to a study by U.S. Health and Human Services.

The Affordable Care Act requires many insurance plans to provide coverage without any co-pay or deductible costs for a variety of preventive health services, including screenings for colon cancer, mammograms, well-child visits and flu shots. The move is part of an increasing emphasis on providing care that helps to keep people well.

Finally, in case you missed it, we highly recommend this inventive but persuasive op-ed on economic austerity.

Don’t Weaken PA’s Oversight of Health Insurance Rate Hikes

6:00 pm in Uncategorized by ThirdandState

A blog post by Sharon Ward, originally published at Third and State.

Many states have taken steps to ensure that there is a meaningful review of proposed health insurance rate increases for small businesses and individuals.

Pennsylvania, however, is headed in the opposite direction with legislation in the House and Senate that would keep more consumers in the dark and undermine the state’s ability to review most rate hikes.

House Bill 1983 and Senate Bill 1336 would extend rate review to insurance providers that currently escape any scrutiny, but they also reduce the Insurance Department’s authority to review and disapprove rates. The bill would give insurers license to raise individual and small business rates by 9.99% annually without any review at all. Small employers already struggling from the recession cannot afford continual rate increases and deserve to have better protection than this bill affords.

You can get more details in a memo that Pennsylvania Budget and Policy Center Director Sharon Ward wrote to editors and reporters today.

Under current state law, the Pennsylvania Insurance Department has some authority to review rate increases. It is not a perfect system, but the Department has used it effectively to perform rigorous reviews of numerous rate proposals. According to a recent Government Accounting Office study, in 2010, 37% of rate filings were reduced or withdrawn after Insurance Department review, ranking Pennsylvania 9th in the nation.

Instead of curtailing the Department’s authority, lawmakers should improve upon it with greater transparency, citizen input and meaningful review of all rate proposals.