Help is on the way for Pennsylvanians who buy insurance through the marketplace l Opinion

During the spring, the Pennsylvania legislature unanimously voted to create a new state-based online health insurance marketplace, rather than continue using the federal healthcare.gov system. Gov. Tom Wolf quickly signed the bill, and the state has already begun creating the new marketplace.

In a time when bipartisanship — particularly on the issue of health care — is rare, the new online marketplace stands out as an example of good policy design that will reduce the cost of health insurance coverage for the 400,000 Pennsylvanians buying through the marketplace.

Creating a state-based marketplace, which has been considered in the past but rejected due to the cost and complexity of creating a new online system, has now become much easier and less expensive. Vendors experienced in designing, implementing, and troubleshooting state-based exchanges are now available to help states through the process, and the 12 states already operating a marketplace as well as the four in the process of doing so can offer best practices and lessons learned.

How will a state-based marketplace reduce the cost of health insurance?

Currently, it costs Pennsylvania more than $88 million to use the federal healthcare.gov system, while cost estimates of running a state-based online marketplace range from $30 million to $35 million a year. That extra $50 million was subsidizing smaller states that use the federal platform. Now, it is slated to be used along with an additional $150 million to $250 million in federal dollars that Pennsylvania would receive as a result of the change to a state-based marketplace as part of an innovative proposal to create a reinsurance program in the commonwealth.

Put simply, reinsurance is insurance for insurance companies. The state fund will insulate insurance companies from paying for extraordinarily costly health care, allowing them to reduce the cost of their plans on the marketplace.

This proposal is expected to quickly lower premiums across the board by as much as 10% without costing taxpayers any additional dollars. The impact will be felt especially by the 20% of Pennsylvanians who do not receive tax credits through the marketplace because their income does not qualify them.

This reduction in out-of-pocket costs for Pennsylvanians comes at a critical time, particularly in light of a recent study that found that half of Pennsylvania adults say they struggle to afford health care and four in five are worried about affording it in the future.

Other benefits of the new marketplace

The new online health insurance marketplace’s benefits go beyond cost reduction, however. It will put oversight and control of our state’s health insurance marketplace where it belongs: in Pennsylvania, not in Washington.

Pennsylvania officials will gain significant oversight of the health insurance marketplace, allowing them to better consider the needs of our diverse communities and implement innovations in local markets. In fact, the state has already begun to do this by investing more heavily in outreach and the navigator program, which helps consumers sign up for the most appropriate plans and was deeply cut by federal authorities over the last couple years. Pennsylvania Insurance Commissioner Jessica Altman has estimated that this additional investment could result in as many as 100,000 more Pennsylvanians using the marketplace to purchase insurance.

What do Pennsylvanians need to know about the new marketplace?

The marketplace is expected to be up and running by 2020 so that people can purchase health insurance policies that will begin in 2021.

People who purchase their insurance through the new exchange will still be eligible for tax credits.

Antoinette Kraus is director of the Pennsylvania Health Access Network, the state’s largest statewide health coalition, and is a member of the Inquirer’s Health Advisory Panel.