Pennsylvania to shift from healthcare.gov to state-based insurance exchange

Pennsylvania state leaders on Tuesday touted their plan to transition from the federal insurance exchange, healthcare.gov, to their own online marketplace as a move that will save money and improve access to affordable health insurance.

Gov. Tom Wolf on Tuesday signed legislation establishing a state-based exchange where Pennsylvania residents who buy individual health plans can shop for coverage. The state-based exchange and new reinsurance fund, which helps insurers cover their most expensive members, could reduce premiums for residents by up to 10 percent. It is expected to be operational for enrollment in plans that take effect in January 2021, pending approval from the federal Department of Health and Human Services.

The vast majority of states use healthcare.gov, but Pennsylvania is among several, including New Jersey, transitioning to state-based exchanges and reinsurance programs as a way to make insurance more affordable for families increasingly strained by health-care costs.

“It’s my goal to have no Pennsylvanian worried about affording the care that they or their loved ones need,” Wolf said. “This bill is a huge step forward for making health insurance affordable and effective for all Pennsylvanians."

The Affordable Care Act created healthcare.gov and its state-based counterparts for people who do not have access to affordable insurance through an employer, and are not eligible for Medicaid or Medicare, to shop for individual health plans.

People who buy insurance through the exchange are eligible for an income-based tax subsidy to offset their monthly premium.

In Pennsylvania, about 400,000 people bought health insurance through healthcare.gov for 2019 and about 80 percent received financial assistance.

Pennsylvania has made progress in stabilizing its individual insurance marketplace, with premiums decreasing an average of 2.3 percent in 2019, and shifting to a state-based exchange will "continue to make health care more accessible and more affordable for those who buy health insurance for themselves and their families,” Pennsylvania Insurance Commissioner Jessica Altman said during the bill-signing event Tuesday.

Premiums could decrease an additional 5 percent to 10 percent from what they would otherwise be in 2021, officials said. That savings would be especially beneficial to consumers like Denise Major, who earn too much to qualify for financial assistance and are strained by insurance prices.

Major, 53, of Philadelphia, used to buy insurance through healthcare.gov, but started making too much money to be eligible for a subsidy and could no longer afford the plan.

“As a home-care worker, it’s hard to afford health coverage,” said Major, who is currently uninsured.

The savings would come from a 3.5 percent user fee insurers pay on all plans sold through the exchange that would no longer be passed on to the federal government for operating healthcare.gov.

Insurers in Pennsylvania paid about $98 million in 2019 and are expected to pay about $88 million in 2020, when the fee drops to 3 percent.

The state plans to continue collecting the fee and will use it to fund its exchange and reinsurance fund, which serves as a sort of “insurance for insurers,” covering their most expensive medical claims.

Operating the exchange is expected to cost about $30 million a year, according to the state’s analysts. The remaining money can be combined with federal funding in a reinsurance fund.

Health insurers decide how much to charge in premiums in part on how much it costs to provide care to all their members. Reinsurance funds cover expenses for outliers whose medical costs are much higher than most and could otherwise contribute to higher premiums for everyone.

A study by researchers at Georgetown University’s Center for Health Insurance Reform found that the approach has helped states reduce premiums or slow increases.

To create the fund, Pennsylvania will need to apply for a federal 1332 waiver, created to allow states to use federal money being used for ACA financial assistance programs for state-based initiatives.

Pennsylvania will also gain more flexibility for managing and promoting the marketplace by taking ownership of its exchange.

President Donald Trump stripped federal funding for exchange marketing and navigator programs that help people sign up for coverage, and shortened the annual enrollment period.

Antoinette Kraus, president of Pennsylvania Health Access Network, said she is hopeful that once the exchange is in Pennsylvania’s control, state regulators will decide to lengthen the enrollment period and boost marketing efforts.

“We know it makes all the difference when folks have someone they can sit down with, just to help walk them through the process,” said Kraus, whose organization helps people enroll in health insurance.

The legislation received bipartisan support, sponsored by House Majority Leader Bryan Cutler, a Republican from Lancaster County and Minority Leader Frank Dermody, an Allegheny County Democrat.

“For too long, people have been frustrated with health care,” Cuter said during the bill-signing event. “I think we would all agree that saving money and increasing access to health care are not partisan issues.”

“It’s a great example of how we can and should work together across party lines. We can make sure everyone can afford to see a doctor when they get sick,” Dermody said.

Though the changes are more than a year away, Kraus said the initiative is a positive sign for consumers who have long struggled to find affordable health care.

“Folks should hang on. We see relief ahead,” she said.

Sasha Hupka of the Harrisburg Bureau contributed to this article.