Lessons From Pennsylvania’s Medicaid Expansion

Sep 24, 2014 | Health


The Obamacare Medicaid expansion became less of a political football last month as Pennsylvania Republican Governor Tom Corbett struck a deal with the Obama administration to expand the state’s low-income health care program. 

Pennsylvania is the latest in a series of Republican-led states to accept one of the central aspects of Obamacare after negotiating flexibility from the Obama administration. In conversations going back to 2013, Pennsylvania has asked for 24 waivers from traditional Medicaid rules in exchange for providing health care coverage to an estimated 300,000 state residents below 138 percent of the Federal Poverty Level. As in other states, the administration has accepted some of Corbett’s proposals while sidelining others.  Here is how the deal shakes out.  

Medicaid expansion states
Source: Center on Budget and Policy Priorities

Beginning January 1, 2015, Pennsylvania will provide health insurance coverage to those newly eligible through health plans called the Private Coverage Option (PCO). According to the waiver approval, these PCOs look like the coverage options provided to most Pennsylvania Medicaid recipients through the state’s managed care program. This sets Pennsylvania apart from another waiver state, Arkansas, and traditional Medicaid expansion states in terms of insurance offerings. Traditional Medicaid expansion states have offered coverage through the state’s fee-for-service Medicaid programs, while Arkansas beneficiaries purchased care through the Affordable Care Act Marketplace in the state.  

The state will be allowed to charge monthly premiums to beneficiaries above the poverty line starting in 2015. These premiums will not be allowed to be more than 2% of a patient’s income, and these premiums can be reduced by getting an annual physical, although the waiver does not specify how much those who get the check-ups will save. Pennsylvania joins Iowa in requiring premiums from those above the poverty line.  Michigan also requires a monthly financial commitment from beneficiaries, but this money goes towards a personal health savings account.  

Pennsylvania also joined Iowa in receiving a one-year waiver for providing a benefit common to Medicaid known as Non-Emergency Medical Transportation (NEMT). This benefit provides transportation to routine medical appointments to patients who do not have reliable transportation. Pennsylvania will have to provide NEMT in the second year.  

Finally, the administration rejected a Corbett proposal to require that Medicaid beneficiaries have or be in search of a job to receive Medicaid benefits. Although over half of those estimated to receive Medicaid under expansion are already working, Corbett proposed tying Medicaid to work.  

There are a few lessons for other states considering Medicaid expansion in the wake of the Pennsylvania decision. First, states should not expect to receive approval for tying work requirements to the receipt of Medicaid. States like Utah and Missouri, which are considering expansion, have indicated their interest in a work-requirement provision. Traditional Medicaid does not allow a work requirement to receive benefits, and the administration reaffirmed that the Medicaid waiver process will not allow them either.  

Second, Medicaid already has a significant presence of private insurers, and Medicaid expansion can be a route to continuing that trend. Between 2002 and 2011, the number of Medicaid beneficiaries who received coverage through Managed Care increased from 57% to 74%. Some states insure large portions of their low-income population through commercial Managed Care Organizations like Florida, Virginia, and Wisconsin (all currently non-expansion states). Other non-expansion states like Georgia, Tennessee, and Texas insure a significant number of people through Medicaid-only MCOs. Pennsylvania will be relying on its current network of Managed Care providers to implement its Medicaid expansion, and it is possible for other states to do the same.  

Finally, states have leverage with the Obama administration in designing traditional Medicaid expansion alternatives. The approaches taken in Arkansas, Iowa, Pennsylvania, Michigan, and the proposed Indiana plan are all unique. The administration has some concessions it will not make (like work requirements and expanding to only part of the eligible population) but the structure of expansion is largely left up to the states. States should take advantage of this leverage to craft expansion proposals that fit their state’s needs and address needed reforms without hurting beneficiary access to care while the federal government is paying for 90 cents on every dollar.  

As the political fire that is Obamacare turns to embers, states should begin to engage in a real debate about making Medicaid expansion work in their states. Pennsylvania just did.