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Feeling Budget Pinch, States Cut Insurance

Ken Kewley woke up Tuesday without health insurance for the first time in nearly nine years.

So did most of the 41,467 other Pennsylvanians who had been covered by adultBasic, a state-subsidized insurance program for the working poor that Gov. Tom Corbett shut down on Monday in one of the largest disenrollments in recent memory.

Pennsylvania Governor Tom Corbett
Jenn Grover
Pennsylvania Governor Tom Corbett

Mr. Corbett, a Republican elected in November, has said the program he inherited is not sustainable with Pennsylvania facing a $4 billion budget shortfall. He blames his predecessor, Edward G. Rendell, a Democrat, for not keeping the plan solvent. His administration notified beneficiaries in late January that their coverage would expire Feb. 28.

For Mr. Kewley, 57, an abstract artist in this gritty town in the Lehigh Valley, it meant the end of the coverage that made possible an aortic valve replacement last May. While the life-saving procedure cost about $85,000, he said he had paid only $915 out of pocket.

The state has pointed Mr. Kewley toward other options, but the coverage would be less comprehensive and the premiums far higher than the $36 he had been paying each month. Now any minor symptom, like a mild pinch in his chest, prompts a devil’s calculation about whether he can afford to have it checked.

When he noticed such discomfort on Tuesday morning, he broke into a cold sweat, felt his stomach tightening and experienced “a sense of impending doom,” he said. For the moment, Mr. Kewley is trying to convince himself it is just a pulled muscle.

“It’s a worry, and it’s draining,” he said, seated in the home studio where he applies bold acrylics to landscapes of the sloping hillsides nearby. “It’s always present in my mind so it’s hard to come up here and do my work.”

Pennsylvania is one of several destitute states seeking to help balance budgets by removing adults from government health insurance programs.

Gov. Christine Gregoire of Washington, a Democrat, recently removed 17,500 adults covered under Basic Health, a state-financed plan for the working poor. In Arizona, Gov. Jan Brewer, a Republican, proposes to remove up to 250,000 childless adults who have been insured by her state’s Medicaid program under a decade-long agreement with the federal government.

Medicaid, which is financed jointly by state and federal governments, primarily covers low-income children, parents and the disabled. Most states do not now offer coverage to childless adults, but starting in 2014, the new federal health care law will require them to expand Medicaid to insure adults earning up to 133 percent of the poverty level.

Former Gov. Tom Ridge, a Republican, started Pennsylvania’s adultBasic program in 2001 to cover those who earned too much to qualify for Medicaid but too little to afford private insurance.

Originally supported with national tobacco litigation proceeds, the policies were made available to adults who earned up to twice the federal poverty level (which would be $21,780 this year).

When the tobacco money started to dwindle, Mr. Rendell negotiated a deal with the state’s four nonprofit Blue Cross/Blue Shield insurers, which had been accumulating large surpluses. The Blues agreed to contribute to the plan to show they were fulfilling the charitable obligation that accompanies their tax-exempt status. The agreement expired on Dec. 31.

Over six years, the Blues provided $542.7 million to the plan, and $356.5 million more to other state health programs. They agreed last year to add $51 million to help maintain coverage through the fiscal year, which ends in June. It was not nearly enough.

The program’s revenue streams have never met more than a fraction of its demand, which has soared in the economic downturn. When the program closed, 505,000 people were on its waiting list, nearly seven times as many as in early 2007.

In an interview, Kevin Harley, a spokesman for Governor Corbett, called the program’s closing “unfortunate,” and then quickly blamed Mr. Rendell. He said the former governor had pledged to find $56 million to sustain the plan as part of last year’s deal with the Blues, but never did.

Donna Cooper, who was Mr. Rendell’s secretary of policy and planning, and the senior official in those negotiations, called Mr. Harley’s assertion “just wild.”

“That is patently untrue,” said Ms. Cooper, now a senior fellow at the Center for American Progress. “That commitment was never made.”

Mr. Corbett met with the Blue Cross plans, but did not persuade them to make additional contributions. “My understanding is that the Blues were not willing to continue,” Mr. Harley said. “They fulfilled all their obligations under the law.”

The Obama administration rejected the state’s request to allow refugees from adultBasic to qualify immediately for the high-risk insurance pool authorized under the federal health law. Kathleen Sebelius, the secretary of health and human services, responded that she could not waive the law’s requirement that applicants be uninsured for six months.

In Harrisburg, the state capital, Democratic legislators proposed to keep the program alive by seeking $25 million each from the Blues and the state, and by nearly doubling premiums. The Republicans, who control both houses of the General Assembly, have expressed no support.

“At the end of the day, the Blues are not willing to do it,” said Senator Jay Costa Jr., the minority leader, “and the administration is not willing to put the strong arm on them to get them to participate in the way that Governor Rendell did.”

The Blue Cross/Blue Shield plans continue to run substantial surpluses, rising to a cumulative $5.6 billion in 2009 from $3.5 billion in 2002, according to the Pennsylvania Budget and Policy Center, a research group that advocates for low-income families.

But the insurers say their obligation to pay for a state program has ended. “Our support to adultBasic was always a temporary financing mechanism,” said Aaron Billger, a spokesman for Highmark Blue Cross Blue Shield, the largest of the state’s plans. “We have long told the state that it was unsustainable.”

As the program’s shutdown loomed, many enrollees scurried to schedule doctors’ appointments and procedures. Mr. Kewley had his blood checked, and asked for new prescriptions. Roseanne Davis, a mother of two from Perkasie, scheduled a hysterectomy for Monday, her final day with coverage.

Doctors had discovered a benign ovarian cyst in January, but told her it did not have to be removed immediately. “I said, let’s get this done before I roll off insurance,” Ms. Davis said. “Down to the last day.”

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