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For Immediate
Release
3/18/08
Contact:
Donald Houser
(717) 787-1377
 
Uninsured Pennsylvanians: Sen. Corman Discusses the Rendell Administration's
Plan
In January 2007, Governor Rendell first introduced his Prescription for
Pennsylvania that included the Cover All Pennsylvanians health care plan. While
sounding nice, the details left many with the feeling that CAP would be a bitter
pill to swallow. In fact, over a year has passed and as more information comes
out about the plan, the harder it is to swallow.
How the Plan Works
The Commonwealth would subsidize health care for small employers and insured
individuals below 300% of the federal poverty level. Individuals above the 300%
poverty level would be able to buy into the program through a sliding scale.
Small employers that do not offer insurance coverage with less than 50 employees
would be required to pay a portion of the premiums for participation in the
program.
The Governor's Cover All Pennsylvanians plan includes coverage that is
substantially better than what is currently being provided by the adultBasic
program.
Individuals in adultBasic pay a premium of $306 in addition to minimal
out-of-pocket expenses for hospitalization, physician care, emergency services,
diagnostic testing, maternity care and rehabilitation and skilled care coverage.
The CAP plan would include all of this and also cover prescription and
behavioral health services with a less expensive $286 premium. Who makes up this
difference? I'll talk about this in a minute or two.
The plan relies on funding from the federal government, medical providers,
employers, employees and the Commonwealth to provide these benefits. The
Commonwealth will ask the federal government to extend the federal poverty limit
to 300% in order to draw down additional federal dollars. Can we do this? Can
we assume the Federal Government will allow Pennsylvania to extend the limit to
300%? Probably not.
Last May, the State of Oklahoma asked the Federal Government to increase the
income limits to 300% of the poverty level. The Feds rejected the request and
gave a very clear signal that states would not be able to go beyond 250% of the
poverty level. Again, this was last May of 2007. Somehow Governor Rendell and
his staff did not get this signal and are still promising that Pennsylvania can
get a 300% approval – something that even Sec. Masch agreed was problematic in
his testimony before the Senate Appropriations Committee.
Now, back to who makes up shortfall in premium?
In order to provide the expanded services at the reduced rate, the
administration plans to greatly reduce the amount they pay to providers for
their services. While employers may or may not be subject to a 3% fair share
assessment, they will be required to pay a portion of the premium for their
employees.
According to the Governor's plan, employees and other eligible individuals
must also pay a monthly sliding scale fee ranging for $10 to the full $286 for
individuals over the 300% federal poverty limit.
We know these fees will be higher because we will not get approved for 300%.
Lastly, the Commonwealth will be tasked with making up the difference. Over
the next five years, the administration estimates the Commonwealth's share will
be $1.4 billion. Outside estimates say the number is in fact closer to $3.2
billion. In order to fund this in the first year alone, the Commonwealth would
need a 5% tax increase in the personal income tax in order to fund CAP.
If the Commonwealth doesn't make up the difference, then who does? It's the
providers. Again, the Governor's CAP proposal forces providers to offer greater
coverage than adultBasic – with a lower premium. He is saying to the providers
– eat the difference – it's good for you. So sorry that is has the potential to
bankrupt your company – it's for the common good.
The common good – sound familiar?
Let's put this in perspective:
The Governor's health care advisor, Rosemary Greco, testified that the plan
would cover 144,000 in the first year and 270,000 by the fifth year. Not quite
Cover All Pennsylvanians is it?
But what's the cost for these 270,000 covered Pennsylvanians - $3.2 billion.
Again, $3.2 billion.
While this Administration is quick to distance this plan from the
Massachusetts experience, it is worth noting that Massachusetts is experiencing
higher enrollment rates than predicted and the state did not budget for it.
Which brings us to the "What Goes Up, Must Come Down" Theory to Universal
Health Care"
The Rendell administration touts that by providing this coverage, the amount
necessary for the Commonwealth to fund uncompensated care and disproportionate
share payments to hospitals will proportionately decline as insurance enrollment
increases.
Naturally, when something goes up, something must come down. So let's apply
that theory to the entire plan.
The administration is claiming that the number of eligible individuals is
around 555,000. Last week when I spoke on this subject, I said that this number
is probably around 400,000, with many of this number being cash customers who
will not sign up for any plan that is offered.
By offering them health care coverage, you would assume the number of
uninsured would go down. Yet in this case, if you build it, especially with a
premier benefit package, they will come. Instead of reducing the number of
uninsured, it will only reduce the number utilizing private insurance plans.
Research estimates claim the actual number of eligible people will be more than
triple the administration's estimates because of several factors including
"crowding out." This is when individuals will opt for the publicly funded
coverage instead of taking the private coverage that they would have previous
held.
The administration is claiming that cost savings will be achieved by
requiring providers to take a reduction in their reimbursement. If provider
rates go down, then I can assure you that the number of citizens who cannot find
doctors will go up. Under this scenario, it will not matter who has insurance
because there will be no more doctors to provide care.
Clearly Mary Poppins had it right, if "a spoonful of sugar helps the medicine
go down," then a couple billion dollars will help CAP successfully transition
our Commonwealth into the cream of the crop insurance welfare state.
The facts are these:
The Governor states that Pennsylvania will be approved for 300% of the
poverty level for coverage – his plan depends on this number. We know this not
to be factual.
The Governor's plan assumes utilization by 270,000 individuals by the 5th
year – certainly not Cover All Pennsylvanians – at a cost of $3.2 billion.
Money we don't have in our coffers.
The Governor's plan forces private insurers to offer a plan with far greater
coverage than adultBasic – at a lower premium and asks them to eat the
difference.
The Governor's plan does not account for crowd out and the likelihood that
small businesses will discontinue coverage and force their employees on the
state rolls. Thereby creating the Welfare State.
This is socialized medicine and government at its finest.
The Governor's Cover All Pennsylvanians plan does all of this, but what does
it not do?
It does not do one thing to lower the cost of healthcare to make it more
affordable for employers, school districts, local and state governments and
individuals to purchase it.
The Governor's plan subsidizes a system that includes annual double digit
premium increases by $3.2 billion without a plan to save a nickel.
It's a feel good proposal to the editorial writers across this Commonwealth
without any serious proposal to get us out of bankruptcy five years down the
road – long after he's left town.
Now, we have the so-called Access to Basic Healthcare proposal, or son of
CAP. Is there a big difference in the two – no. This proposal still expects
our insurance companies to offer a more expensive product at a lower premium
than adultBasic, but with a new catch.
Whatever. Let me say it again, whatever.
This new proposal passed by the House has no mechanism to pay for the
program. It actually contains the words, "any monies derived from whatever
sources" to pay for the program.
How are taxpayers, who already spend over $14 billion on healthcare supposed
to pay for this new plan passed by the House?
Whatever.
Today the Governor called this legislation "landmark" and praised how it was
written.
Whatever.
We have to get serious this.
We have to be serious about affordability, cost reduction, and savings in our
health care system before we back a plan to designed to grab national headlines
that doesn't solve the uninsured problem – but creates a bankruptcy problem and
puts off paying for it until…whatever.
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