Corbett's insurance plan has unclear effects on Penn Med

Uncertainty surrounds how Gov. Tom Corbett’s proposed insurance expansion would affect Penn’s bottom line — which currently includes covering millions of dollars in medical expenses for uninsured patients.

The proposal, called Healthy Pennsylvania, comes as a response to the 2010 Affordable Care Act, which provides federal funding for state Medicaid expansion. Corbett, a Republican, instead proposed the plan as means to expand private health insurance in lieu of expanding Medicaid.

The ball is now in the federal government’s court: The plan must be approved by the Obama administration before it can go into effect.

While the Corbett administration produced a policy report explaining the proposal, Penn Medicine spokesperson Susan Phillips said in an email that a lack of detail is a cause for uncertainty over how the proposal will stack up against a flat-out Medicaid expansion. Private insurers generally pay more to health care providers than Medicaid, but Phillips said “we will have to wait and see” whether the Healthy Pennsylvania insurers will pay closer to what Medicaid pays.

Related: HUP adjusts to implementation of Affordable Care Act

Penn Med staff will meet with state officials on Oct. 21 to clarify the details of the proposal.

Healthy Pennsylvania would serve 520,000 currently uninsured people, according to the policy report. Instead of expanding the Medicaid program in Pennsylvania — which the administration says is costlier than private insurers — the proposal relies on a health insurance exchange that would allow private insurance companies to compete for enrollees, whose premiums would be subsidized by the federal government. The report cited a 2009 Kaiser Family Foundation estimate that Pennsylvania’s per-enrollee Medicaid costs are 34 percent higher than the national average.

Unlike Medicaid, Corbett’s proposal requires enrollees to pay up to $25 per month in insurance premiums, which could be bad news for Penn Medicine.

Related: New Penn Medicine outpatient building centralizes care

“The requirement for new enrollees to pay premiums will be a significant change,” Phillips said. “If these individuals are not able to pay even the subsidized premium, and consequently become uninsured, then our bad debt is likely to rise.”

In fiscal year 2012, the last year for which numbers are available, Penn Med paid $121 million to cover uninsured patients. Phillips expected that number to remain high in the short term, regardless of the finalized plan, because of the time needed for any plan to be implemented.

While Gov. Corbett has been slow to act on health reform, there is pressure for him to accept the money the federal government is offering while appeasing conservative Republicans who reject government-run health insurance like Medicaid.

“[Corbett is] desperate to get the federal money, but he’s a Republican, so he wants to change the conditions — and whether or not the [federal] government will agree is still up in the air — to make it more consistent with a Republican approach,” health care management professor Mark Pauly said. “The main component of what he’s proposing is not to put people in Medicaid but to send them to exchanges,” which has been approved in other states, he added.

Related: Affordable Care Act may affect jobs once fully implemented

Having enrollees pay a premium — along with additional work requirements not present in Medicaid coverage — are also tailored toward conservatives’ demands for personal responsibility, Pauly said.

But he added that, for Corbett, it comes down to money.

“Ultimately the bottom line here is, will this be a way for Pennsylvania to wring a little more money out of the federal government?” Pauly said. “As a Pennsylvanian, I hope so.”

Please note All comments are eligible for publication in The Daily Pennsylvanian.