Pennsylvania forgoes state exchange

Pennsylvania took itself out of health insurance exchange limbo today by telling Health and Human Services (HHS) Secretary Kathleen Sebelius that it will not move forward with establishing a state-based health exchange at this time because of too many uncertainties to allow for planning an exchange.

The letter was written by Gov. Tom Corbett and dated Dec. 12, and now allows HHS to set up a federally facilitated exchange in Pennsylvania.

After repeated prods for information from HHS and public statements that not enough information was forthcoming, Corbett said in his letter that “Pennsylvanians have waited long enough for answers, and continuing this environment of uncertainty harms Pennsylvania business and consumers who are attempting to prepare for changes created by the Affordable Care Act (ACA).”

Corbett said that although many questions had been asked of HHS over the past two years, he has received scant information.

He said he remains concerned that state authority to run a health insurance exchange is “illusory” because it would end up shouldering all of the costs by 2015 but have no authority to govern the program.

“Until this week, less than five days before the deadline for a state-based exchange decision and blueprint, we received little acknowledgement of those questions. Even HHS Secretary Sebelius recently admitted on a call with governors that the regulations released a few weeks ago were not final and that more drafts are to be expected,” Corbett stated. 

The Republican governor said he was also concerned about the costs of Medicaid expansion in his state, noting that it could reach $4 billion in state-only costs over the next eight years, precipitating substantial tax increases. He wants more answers on flexibility, costs and impacts of any exchange, he told Sebelius. 

Pennsylvania is one of 28 states that declared it will allow the federal government to operate its exchange. 

The decision to establish a state-based exchange can be re-evaluated by states each year, and Corbett left that possibility open in his letter.

Pennsylvania Insurance Commissioner Mike Consedine testified exactly three months ago before Congress’ Health Subcommittee of the Ways and Means Committee on the general lack of direction and guidance Pennsylvania had received from HHS.

Consedine, a member of the Federal Advisory Committee on Insurance (FACI), also formed and chairs an NAIC panel on regulatory alternatives to state-based exchanges. Its members are largely those states, like Wisconsin and Kansas, who anticipate a federal exchange as they have decided not to move forward with the state exchange model for now. 

The group, the Health Care Reform Regulatory Alternatives Working Group, vice-chaired by Wisconsin Insurance Commissioner Ted Nickel, addresses the concerns of the many states that are expected to have the federal government work in concert or in full with them to create the PPACA-mandated health care exchanges.

Consedine had earlier noted that there is a need for the group, as more than half of the states have chosen a different route in dealing with PPACA, which includes, for states, implementing state health care exchanges and addressing Medicare expansion funding.

One of the charges is to “identify opportunities for members to continue to innovate and regulate outside of a federal exchange.”