Healthy PA

Senator Folmer's "Healthy Pennsylvania"

Health care is a major issue in Pennsylvania and across America: it is expensive; quality is not what is should be; and too few people have access to care.

There are many proposals to address the concerns surrounding health care, and possible solutions range from a single-payer, government-run system to managed care.

Senator Folmer proposes the tried-and-true solution of empowering consumer-driven market initiatives, as outlined in his "Healthy Pennsylvania" proposal. While the individual effects of these bills might vary, their collective impact – like fingers of a hand clenched in a fist – would impact and reduce health care costs and enhance the quality and access to care.

 

The Elements of Healthy PA

Sunset Health Care Mandates
Senate Bills 502 and 503

Pennsylvania presently has 40 mandates that must be part of health insurance products offered in the state. Some mandates are said to reduce health care costs while many are believed to increase costs. With changes in medical technology and medical delivery, all current (and future) mandates should be systematically analyzed for appropriateness, value, and affordability.

If each existing mandate is increasing costs by just 1 percent, consumers are paying $5.1 billion annually in extra costs – yet they have no say in whether they believe these costs are warranted. Consumers should be allowed to purchase this coverage through optional riders.

The first step in giving consumers more choices is requiring that each of the current insurance mandates be periodically justified. Healthy PA would do this by chronologically staggering the sun setting of all current mandates, as well as sun setting all future mandates five years after their enactment. Prior to the re-authorization of a mandate by the General Assembly, the PA Health Care Cost Containment Council would have to issue a cost-benefit analysis to the General Assembly.

Promote Health Savings Accounts (HSAs)
Senate Bills 505 and 506

Health Savings Accounts (HSAs) were created by federal law in 2003 as privately owned savings accounts funded with pre-tax dollars. HSAs are similar to 401(k) retirement plans, but rather than allowing people to save for future retirement expenses, they allow people to save for future medical expenses.

HSAs are popular with the previously uninsured. Government-subsidized health insurance programs tend to attract those who are already insured. Because HSAs are bound to "qualified high-deductible" health plans, they cost less and reduce spending:

Average 2005 HSA high-deductible premium   Average premium all other plans
$2,772 Single Coverage $4,024
$6,955 Family Coverage $10, 880

Healthy PA would provide tax credits for small businesses with HSAs and provide health care consumers with a basic HSA package. Healthy PA would exempt HSAs from state-mandated insurance benefits and establish HSA options for state and municipal employees.

Establish Tax Deductions/Credits for Those Who Pay for Their Own Health Care
Senate Bill 501

With the ever-increasing costs of health care, more and more people (especially retired people) are covering all or a portion of their health costs. Healthy PA would extend tax deductions and tax credits to these individuals:

  • Health Insurance Premium Deduction: authorize 100% of the amount paid for non-reimbursable, qualified health insurance premiums to be deducted from a taxpayer's Pennsylvania taxable income

  • Health Insurance Tax Credit: allow self-employed taxpayers (who are otherwise ineligible for the federal income health insurance tax deduction under federal law) to receive a tax credit

Increase Competition Among Health Insurance Carriers
Senate Bill 508

The current lack of competition among Pennsylvania health care insurers has hurt consumers because they have few choices on issues of quality and cost. Healthy PA would increase competition among health care insurers by allowing out-of-state insurers to offer their products in Pennsylvania. As many of these products do not include existing Pennsylvania health care mandates, consumers will be allowed to choose whether they want coverage with or without current Pennsylvania mandates.

Establish a State High Risk Pool
Senate Bill 507

Risk pools can help fill gaps in insurance coverage by providing coverage for those who are denied health insurance for medical reasons. Risk pools are state-created, nonprofit associations. 

Many other states have some version of a high risk pool, which do not allow public funds to pay premiums. Healthy PA would apply this ban to Pennsylvania law. Additionally, Healthy PA would disallow Medicare-eligible people and require that premium reductions be based upon 100% of the federal poverty level. 

As in the auto insurance market, such a pool would also ensure the ability of all insurers to appropriately match premiums to the cost of the underlying risk in all products sold in the Pennsylvania marketplace.

Reform Medicaid, CHIP and adultBasic

A significant portion of the state budget is devoted to government-mandated or government-controlled health insurance programs, including:

  • Medicaid - (Senate Bill 504)

  • CHIP - (Senate Bill 510)

  • PA adultBasic - (Senate Bill 511)

These programs are made possible with money paid by all taxpayers so that specific classes of citizens may benefit. Healthy PA would establish new income eligibility thresholds for each of these programs:

Medicaid: 100% of the Federal Poverty Limit
CHIP: 200% of the Federal Poverty Limit
adultBasic: 100% of the Federal Poverty Limit

Phase Out MCARE
Senate Bill 509

The General Assembly established the Medical Care Availability & Reduction of Error (MCARE) Fund to pay for catastrophic medical malpractice costs. While meaningful tort reform would help to alleviate medical malpractice claims, the MCARE fund has served to bridge the liability gap.

Healthy PA would use surplus MCARE funds to pay down current liabilities and ease the costs of transition from MCARE to the private insurance market.