PBPC Submits Comments on Healthy PA Medicaid Plan

The following comments were submitted by the Pennsylvania Budget and Policy Center to the state Department of Public Welfare in regards to the Healthy Pennsylvania waiver application to the federal government.

Thank you for the opportunity to comment on the Draft Healthy Pennsylvania 1115 Demonstration Application. The Pennsylvania Budget and Policy Center is a statewide nonpartisan research and policy organization that examines state spending policies for their impact on the economy and the quality of life of citizens and communities. We review state budget documents, state data trends, and academic and policy research to assess those impacts and make recommendations on best practices.

Because Medicaid is the second largest investment of state resources in the General Fund budget, we monitor expenditure, utilization, and eligibility policies affecting Pennsylvania’s 2.2 million Medicaid beneficiaries.

PBPC participated in the effort in 2007 to fully federalize Pennsylvania’s Medicaid program and expand coverage to 400,000 additional citizens. We have written extensively about the decline in employment-based health coverage which began in earnest after the 2001 recession and about the gaps that existed in employment-based coverage that left many insured citizens Pennsylvanians with significant medical debt. We worked to preserve adultBasic, the Commonwealth’s health insurance program for working Pennsylvanians ineligible for Medicaid coverage. The loss of adultBasic, one of former Governor Tom Ridge’s signature accomplishments, left a gaping hole in the Commonwealth’s health care safety net, a hole that has not yet been filled.

We believe that the best course of action to cover approximately 300,000 Pennsylvanians who fall into the Affordable Care Act coverage gap, those below 100% of poverty who are not Medicaid eligible under Pennsylvania’s current ̶ and proposed ̶ rules, is to increase eligibility in Health Choices to individuals up to at least 100% of the Federal Poverty Level (FPL). The federal government will pay 100% of the cost of enrollment for calendar year 2014, 2015 and 2016 and federal reimbursement will not fall below 90% after that. This is a substantially more generous federal-state cost sharing program than the one that exists for traditional Medicaid coverage. From the standpoint of administration, cost, and quality of coverage, expanding traditional Medicaid is the best option for the citizens of the Commonwealth.

The focus of much of our work has been to help the uninsured gain access to affordable, comprehensive health insurance coverage. We do not believe that the proposed 1115 waiver would accomplish that goal. The Healthy Pennsylvania plan proposes a bargain that we believe is untenable; conditioning health insurance coverage for lower income- working adults on changes that limit access, affordability, and coverage in traditional Medicaid, a program which serves the most vulnerable Pennsylvanians.

We raise four general objections to the waiver:

(1) The proposed waiver does not offer any policy innovation as required under Section 1115. In fact the main components of the plan are benefit limits, a work search requirement that conditions coverage completion of tasks linked to employment, and additional paperwork and reporting requirements to maintain coverage. None of these is innovative, and all run counter to the overall goals of the Affordable Care Act.

(2) Proposals for work search and monthly premiums tied to eligibility have been rejected by the Department of Health and Human Services in approved waiver agreements[1].

(3) Enhanced administrative review and new compliance requirements have been demonstrated here in Pennsylvania to deter individuals from obtaining public benefits. Administrative review of Medicaid eligibility in 2011 caused tens of thousands of otherwise eligible individuals, including children, to be dropped from the Medicaid roles. Work search requirements for TANF eligibility have been a deterrent to TANF access, leading to an increase in application denials in 2013.[2]

(4) There is an ample evidence that even small increases in out of pocket costs to low income individuals reduce access to primary and preventive care. The arguments of proponents of “skin in the game” costs simply don’t square with the evidence, nor with the lives of very low income working individuals, homeless families, and people with behavioral health disorders who struggle to pay for health insurance.

The waiver application makes the argument that the proposed changes are necessary to address program costs. There are two cost drivers which are not addressed by the waiver application that should be noted. The first is that Pennsylvania’s caseload mix is different than the national average. We have a higher share of seniors and disabled individuals than most states. In 2009, 35% of Medicaid enrollees in Pennsylvania were seniors and people with disabilities vs. 25% nationally. Only 19% of enrollees were non-disabled adults compared to 26% nationally. Pennsylvania serves more expensive individuals, which helps to explain its higher costs.[3]

The Commonwealth also has higher than average costs because it has not moved assertively to reduce reliance on expensive nursing home care. Pennsylvania ranks seventh[4], near the top among states nationally, in its per-person expenditures for long term care for older people and adults with physical disabilities.[5] Pennsylvania ranks 42nd among the 50 states in its spending on home and community based services as a percentage of all long term care spending for older people and adults with disabilities.[6] Pennsylvania spends only 22% of its long term care budget on home and community based care, while the national average is 40%.

A significant body of research shows that medical cost sharing generally and premiums and enrollment fees specifically create barriers to receiving appropriate health care coverage and services, particularly for low income individuals with significant health care needs.[7] In other states that have tried to impose premiums on Medicaid recipients, such as Oregon, the imposition of premiums was the direct cause of massive Medicaid disenrollment.[8] In light of the overwhelming research, the 1115 Demonstration Application’s plan to impose any premiums on Medicaid recipients is bad policy and will prevent both currently and newly eligible Pennsylvanians from getting intended coverage under federal law.

Specific objections.

Work Search Activities – p. 12. Individuals who are working any amount of hours should not have to demonstrate work search activities to maintain health care coverage.

Cost Sharing – p. 48. It is stated that there will be only two rates: one for a single adult, and another for a household of two or more adults, because no premiums are assessed to children. However, the number of children in a household will significantly affect the affordability of a health care premium. For example a low-income single person with no children might be able to afford a minimal premium but, for a low-income single parent with 4 children, the same premium would be entirely unaffordable. We recommend that, if a premium is imposed, the size of the family be considered, regardless of the fact that separate premiums are not assessed for children.

Quality-based Supplemental Payments – p. 63. This section states that the Commonwealth will bring together all relevant stakeholders including consumers, physical and behavioral health care providers, commercial insurers, etc. to design new payment and delivery models for health care services in PA to focus on quality of care rather than how much care is provided. The Philadelphia Coalition would very much like to participate in this process and will be happy to identify a representative when you are ready to convene such a group.`


[1] http://www.familiesusa.org/resources/newsroom/press-releases/2013-press-releases/fed-approves-iowa-medicaid.html

[2] Alfred Lubrano, The Philadelphia Inquirer, "As Many As 8 in 10 Welfare Recipients Denied in PA," September 19, 2013. http://articles.philly.com/2013-09-17/news/42117456_1_tanf-cash-welfare-public-welfare

[3] http://pennbpc.org/who-pennsylvanias-medicaid-program-serves

[4] http://www.aarp.org/content/dam/aarp/research/public_policy_institute/ltc/2012/across-the-states-2012-pennsylvania-AARP-ppi-ltc.pdf

[5] AM. ASS’N OF RETIRED PERSONS, ACROSS THE STATES: PROFILES OF LONG-TERM SERVICES AND SUPPORTS: PENNSYLVANIA (2012), available at http://www.aarp.org/content/dam/aarp/research/public_policy_institute/ltc/2012/across-the-states-2012-pennsylvania-AARP-ppi-ltc.pdf (last visited Jan. 8, 2014).

[6] Id.

[7] Kaiser Family Found., Premiums and Cost-Sharing in Medicaid: A Review of Research Findings, Feb. 25, 2013, available at http://kff.org/medicaid/issue-brief/premiums-and-cost-sharing-in-medicaid-a-review-of-research-findings/ (last visited Jan. 8, 2014).

[8] Bill J. Wright et al., Impact of Changes to Premiums, Cost-Sharing, and Benefits on Adult Medicaid Beneficiaries: Results from an Ongoing Study of the Oregon Health Plan (Commonwealth Fund, Wash., D.C., July 2005), available at http://www.commonwealthfund.org/Publications/Fund-Reports/2005/Jul/Impact-of-Changes-to-Premiums--Cost-Sharing--and-Benefits-on-Adult-Medicaid-Beneficiaries--Results-f.aspx (last visited Jan. 8, 2014).