HARRISBURG – Gov. Tom Wolf signed a law Tuesday that will allow the state to take over the marketplace for health insurance created for Pennsylvanians under the Affordable Care Act. It’s a move state officials say will allow for lower premiums for the roughly 400,000 people in the state who get health insurance under those plans.
The state is aiming to have the new exchange up and running by Jan. 1 2021, so people would be enrolling in the fall of 2020, said Jessica Altman, Pennsylvania Insurance Commissioner.
“It’s pretty rare for a program to come along where everyone pays less, but that’s exactly what this does,” Wolf said before signing the proposal into law. “I’m so proud of my colleagues for recognizing this as a priority and moving it along quickly.”
Ron Ruman, a spokesman for the state Insurance Department, said the state has already gotten initial rate proposals from insurance companies for 2020. In addition, the state’s insurance exchange would be managed by an authority, consisting of four appointees named by the governor, the insurance commissioners and the secretaries of Health and Human Services, along with appointees named by legislative leader.
“There isn’t time” to get the exchange operating before the enrollment period begins in November, he said.
Altman said that the state’s exchange takeover should translate into 5-10 percent drops in the cost of premiums for people getting insurance from the ACA plans, she said.
The change was included in HB 3, legislation that enjoyed bipartisan support in both chambers of the General Assembly and was co-authored by House Majority Leader state Rep. Bryan Cutler, R-Lancaster County, and House Democratic Leader Frank Dermody, D-Allegheny County.
“While there are continuing debates over the effectiveness of the Affordable Care Act at the federal level and in the courts, this law allows us to make the system as responsible and reliable as possible for Pennsylvania,” Cutler said, adding that “access to affordable health care” shouldn’t be a partisan issue.
Cutler said that the move to have state’s take over the exchanges has been endorsed by the federal government. President Donald Trump issued an executive order intended to make easier for states to take on that responsibility, he said.
Even so, the legislation does include a provision indicating that the state exchange would cease to exist if Congress repeals the Affordable Care Act or the U.S. Supreme Court overturns the law, according to a summary of HB 3 completed by the Senate appropriations committee.
To cover costs of running the healthcare.gov website that is home to the Pennsylvania exchange, the federal government charges insurers a 3.5 percent fee on premiums paid by ACA enrollees each month, a projected $98 million for Pennsylvania insurers in 2019.
This user fee is expected to be cut to 3 percent beginning in 2020, which would equate to approximately $88 million dollars from Pennsylvania insurers.
Wolf said that state officials believe they can run the state’s exchange for around $30 million and use the more than $50 million in savings to help create a program to lower premium costs.
Wolf said that the health plans serve people who don’t have access to or can’t afford other health coverage. He said small business owners and entrepreneurs are examples of people who turn to the exchange plans for health coverage.
If the state’s move does successfully lower premium prices, state officials would expect that to translate into more people turning to the exchange plans for coverage, Wolf said.
Altman said that if the state is running the plan it will also have more control over marketing to encourage people to use the health plans.