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Pennsylvania election may undo state Medicaid plan

Pennsylvania Democratic gubernatorial nominee Tom Wolf.
Matt Rourke | AP
Pennsylvania Democratic gubernatorial nominee Tom Wolf.

Pennyslvania's Gov. Tom Corbett spent a year negotiating a deal that will allow the state to expand Medicaid eligibility on its own terms.

But Corbett's deal, which differs in some key ways from the Medicaid expansion originally envisioned under the Affordable Care Act, could be scrapped soon after it is set to take effect. And that would be just fine for Obamacare advocates, since, either way, hundreds of thousands of Pennsylvanians will end up being eligible for health coverage that they previously couldn't get.

The odd situation is the result of the ongoing governor's race in which Democratic challenger Tom Wolf is looking to unseat Republican Corbett. Both favor Medicaid expansion—but Wolf is saying Corbett's way of doing it might not be the right way.

Last week, Corbett announced that the federal government had agreed with his plan to expand Medicaid eligibility in Pennsylvania to include nearly all poor adults, including those without children. His announcement came on the heels of a new campaign poll showing Wolf leading by about 25 percentage points.

Corbett's plan included details that were different than so-called straight Medicaid expansion. While federal money will be used to buy health coverage for newly eligible adults—as many as 600,000—it will be done through the private insurance market in a managed care program.

And while Corbett failed in his bid to have enrollees be obligated to be employed, he did manage to get the federal Centers for Medicare and Medicaid Services to agree to require those who earn more than $11,670 annually to start paying premiums for their coverage beginning in 2016. Medicaid enrollees typically aren't required to pay premiums. Under the state's plan, the premiums can be reduced if an enrollee agrees to change certain behaviors and work.

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"From the beginning, I said we needed a plan that was created in Pennsylvania for Pennsylvania," Corbett said last week.

Much of the coverage of Corbett's announcement focused on the fact that Pennsylvania was the 27th state, along with the District of Columbia, to endorse the major Obamacare provision to expand Medicaid coverage for low-income adults who had previously been ineligible for the joint state-federal program because of income caps or parenthood conditions. The federal government will foot the entire cost of insurance for the newly eligible through 2016, and then its share will decrease over time to 90 percent.

Pennsylvania Gov. Tom Corbett speaks at a news conference in State College, Penn.
Craig Houtz | Reuters
Pennsylvania Gov. Tom Corbett speaks at a news conference in State College, Penn.

But Corbett had to get a waiver from CMS because Pennsylvania's plan is not exactly as the Affordable Care Act designed. The plan is allowed to run for at least five years, and then will be subject to review.

Wolf immediately issued a statement blasting Corbett for delaying Medicaid expansion, and then suggested, if elected, he might discard Corbett plan. If elected, Wolf would take office in late January, after Corbett's plan takes effect Jan. 1.

"Tom Corbett's unconscionable delay has cost Pennsylvania hundreds of millions of dollars while making it more difficult for hundreds of thousands of Pennsylvanians to get the health care they deserve," Wolf said. "Tom Corbett should have expanded Medicaid on day one instead of wasting two years."

After Wolf posted that statement online on Thursday, the liberal blog Keystone Politics posed a question to him via Twitter: ".@WolfForPa if you get elected will you promise to do the real Medicaid expansion and cut loose the fake #CorbettCare plan?"

In response, Wolf tweeted back:

And on Tuesday, Wolf's spokesman told CNBC.com, "As Tom Wolf has made clear, he supports the full real expansion of Medicaid and last week's decision does not change that. As governor, Tom Wolf will work with the appropriate parties to fully expand Medicaid and provide accessible health care for Pennsylvanians."

In fact, it might be easy for Wolf to do just that quickly if he wins in November.

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Asked whether a Wolf victory would allow him to quickly pivot to a regular Medicaid expansion program without Corbett's conditions, CMS spokesman Aaron Albright said, "Yes." He added, any state can work with CMS to change the terms of the proposed waiver.

Medicaid expert Joan Alker agreed Wolf could easily substitute Corbett's plan.

"It's not a big deal at all. CMS will be very accommodating," said Alker, executive director of the Center for Children and Families and a research associate professor at Georgetown University's Health Policy Institute.

She credited Corbett for getting the expansion approved this year, saying it otherwise would have been "near impossible" for Wolf to do so in early 2015 if he's elected.

However, Alker said, she would not advise Wolf to pursue Corbett's plan.

"It's too complicated," she said. "There's five different benefit packages. It's injecting more complexity in the program than is needed."

And, Alker said, "the premiums will certainly depress enrollment."

Whether voters will be moved by the differences in the programs remains to be seen.

"I think, generally speaking, that voters support Medicaid expansion, so that's presumably why he [Corbett] is doing this," Alker said. "I would imagine that a lot of voters are probably not paying a huge amount of attention to the details."

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Pennsylvania ranks fifth in terms of people who are ineligible to receive Medicaid but who earn below 100 percent of the federal poverty level. Those in this situation are in the so-called coverage gap.

"It really speaks to how this is very hard for governors to say 'no,'" to Medicaid expansion, Alker said.

Governors who oppose Medicaid expansion are confronted with the fact that some of their poorest residents are being priced out of health coverage while higher-earners get subsidies to buy insurance, and by the fact that hospitals and other medical providers are being denied federal funds that would offset the cost of caring for the poor, Alker said.

Republican governors in four other states—Indiana, Tennessee, Utah and Wyoming—are taking steps to expand Medicaid or are talking about doing so soon.

By CNBC's Dan Mangan

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