Pennsylvania stands to lose $4.5B for Medicaid under Senate health care bill

Gov. Tom Wolf's administration said Thursday that federal funding cuts contained in a new Senate health proposal would force already-struggling Pennsylvanians to pay more for health care.

A group of senators released what they called a discussion draft of a bill that would reduce premium subsidies, weaken consumer protections and scale back and restructure Medicaid while getting rid of the Affordable Care Act's taxes and penalties for not having insurance.

The proposal would give more flexibility to states to structure benefits in Medicaid, a state-federal insurance program, and in employer-sponsored health plans, the type of insurance most people have.

The Medicaid changes would likely reduce federal funding for Pennsylvania by more than $4.5 billion over the long term, said Department of Human Services Deputy Secretary Brendan Harris. Pennsylvania could choose to receive the remaining money as a capped per-person amount or a flat payment known as a block grant.

Harris said the Senate bill reduces Medicaid funding even more than a House-passed proposal, known as the American Health Care Act, which would have cut spending in the program by $880 billion over 10 years across the country.

“It's worse for Pennsylvanians and would truly hurt children, seniors and people with disabilities,” Harris said.

About 716,000 people have enrolled in Medicaid since Gov. Wolf expanded the program to cover individuals who make up to about $16,000 per year. About 124,000 of them have accessed drug and alcohol treatment, including treatment for opioids, through the program, Harris said.

For employer-sponsored plans, states would have the option to apply for waivers to let employers reduce benefits, which would help lower premiums. The waivers would free employers from Affordable Care Act requirements that all plans maintain a set of essential health benefits, ranging from mental health coverage and maternity care to prescription drug and hospitalization coverage.

Pennsylvania Insurance Commissioner Teresa Miller said Pennsylvania would not seek a waiver for essential health benefits.

“We feel strongly they cover benefits that should be provided,” she said.

Elizabeth Stelle, director of policy analysis for the Harrisburg-based free-market think tank The Commonwealth Foundation, said in an email that the proposal would help stem growth in Medicaid spending. Stelle said Pennsylvania should seek a waiver as a way to reduce costs for consumers.

“The plan strengthens Medicaid and reduces Obamacare taxes, but stops short of repealing the root cause of skyrocketing costs — voluminous mandates,” she said. “So it's up to states like Pennsylvania to seek waivers to repeal harmful rules and drive down the cost of care.”

In the individual insurance market, where premiums have sharply increased since 2014, people will need to have lower incomes to qualify for subsidies under the Senate proposal. The proposal would make people eligible for premium subsidies at 350 percent of the poverty level instead of 400 percent — which is about $47,000 for an individual.

The proposal would decrease the level of coverage required for baseline plans, shifting the benchmark to higher-deductible plans that cover a smaller percentage of medical bills.

Miller said premium increases have hit hardest the people who buy individual insurance but don't qualify for subsidies.

“We should be looking for ways to bring down costs for everyone, especially those who don't qualify for subsidies,” she said. “Unfortunately, that's not the conversation we're having right now.”

The Congressional Budget Office said on Twitter that it expects to release an analysis of the Senate proposal next week. The office estimated the House bill would increase the number of people without insurance nationwide by about 24 million by 2026. The CBO estimated the bill would reduce the federal deficit by about $150 billion during the same time.

Details of the discussion draft could change before the Senate votes on it. The proposal would then need House approval.

Four conservative GOP senators quickly announced initial opposition to the measure, raising the specter of a jarring rejection by the Republican-controlled body. But Senate Majority Leader Mitch McConnell, R-Ky., indicated he was open to discussion and seemed determined to muscle the measure through his chamber next week.

“We have to act,” McConnell said, “because Obamacare is a direct attack on the middle class, and American families deserve better than its failing status quo.”

Senate Minority Leader Chuck Schumer, D-N.Y., quickly countered. “We live in the wealthiest country on Earth. Surely we can do better than what the Republican health care bill promises,” he said.

Rep. Tim Murphy, R-Upper St. Clair, said in a statement that he would continue to work to cut spending on the “astronomically expensive” Obama‑care.

“We are going to keep our promise to the American people to rescue and rebuild the collapsing health care system to deliver the medical care you need, at a price you can afford, from a doctor of your choosing,” Murphy said.

The changes in the bill would take place over the next several years. Penalties for not having insurance would go away immediately.

The measure would provide $50 billion over the next four years that states could use in an effort to shore up insurance markets across the country.

For the next two years, it also would provide money that insurers use to help lower out-of-pocket costs for millions of lower-income people. President Trump has been threatening to discontinue those payments, and some insurance companies have cited uncertainty over those funds as reasons why they are abandoning some markets and boosting premiums.

The Associated Press contributed to this report. Wes Venteicher is a Tribune-Review staff writer. Reach him at 412-380-5676, wventeicher@tribweb.com or via Twitter @wesventeicher.