Pennsylvania House bill expands subsidized plans, phases out liability fund

Washington -- The Pennsylvania House last month adopted a bill that would expand access to health insurance, but physicians have concerns about the measure's funding and mandate for physicians to participate in its health plans.

The legislation, passed 118-81 on March 17, would provide coverage through state-subsidized private health plans to an estimated 218,000 of the state's 767,000 uninsured adults by 2012. It would gradually phase out the state's medical liability program. Democratic House leaders added the health expansion plan, called Pennsylvania Access to Basic Care, or PA ABC, to the liability reform bill.

The bill is expected to receive at least one committee hearing in the Republican-controlled Senate this month, but its future is uncertain.

The Pennsylvania Medical Society supports the measure's 10-year phase-out of the state's medical liability program, the Medical Care Availability and Reduction of Error program. Mcare provides an additional $500,000 in coverage above the $500,000 physicians are required to buy on the private market. The measure would continue Mcare assessment aid of at least 50% that the state has provided to physicians since 2003 as a way to retain and attract doctors. In later years, the bill would lower the amount of coverage provided by the state and the assessments needed for that coverage until they were phased out completely after 10 years.

The medical society favors ending Mcare because its rates are based solely on the previous year's claims and can be volatile, said society President Peter Lund, MD. "Mcare can fluctuate wildly because it has no reserves, plus it's less efficient than the private market."

The medical society also supports connecting more of the uninsured to health coverage, but PA ABC would require physicians to participate in all of the program's health plans in exchange for state aid with Mcare fees. The society opposes this stipulation, Dr. Lund said. Physicians should be free to choose to participate, he said. The society estimated that the PA ABC plans would pay doctors about 85% of Medicare rates. Amy Kelchner, spokeswoman for Gov. Ed Rendell's office of health system reform, said the rates would be 21% above Medicaid pay. The consumer advocacy group Public Citizen last year ranked Pennsylvania 46th-lowest of 50 states for Medicaid physician pay.

Bill supporters say the state no longer can justify helping physicians with liability insurance without asking them to care for more of the uninsured. Doctors have benefited from $950 million in Mcare fee assistance since 2003, Kelchner said.

Said House Majority Leader Bill DeWeese: "As a [state], we have been very responsive to the needs of our medical community. Now it is time to join together and intensify our efforts for those working adults who are unable to afford health insurance."

Rep. Tony DeLuca worked with other House Democrats to attach PA ABC to the Mcare phase-out bill because it was time to do something about health care, he said. "We've been talking long enough about it."

PA ABC represents the second recent legislative attempt to cover more of the state's uninsured. Rendell's Cover All Pennsylvanians plan, a similar effort introduced in early 2007, failed to attract support due to an unpopular provision to increase payroll taxes. The governor now supports the PA ABC bill.

Dollars an issue

The PA ABC proposal would rely on a rough balance of three major sources of funding: Premium payments, plus federal and state dollars. The program is estimated to cost $1.11 billion by 2012. Although the House approved the bill, it still needs an additional $120 million in state funding, which has raised some concerns about where that money could come from.

The Mcare fund is expected to have $500 million in surplus funds by the end of June, thanks to larger-than-expected collections from the cigarette tax that supports the fund and lower-than-expected lawsuit claims, Kelchner said. Dr. Lund is worried that the state might use this fund to pay for PA ABC instead of helping to cover the $1.8 billion in lawsuit claims Mcare will have to cover in upcoming years. But it's possible that there's enough money to do both, he said.

DeLuca said lawmakers might use the Mcare surplus to close the $120 million gap, but that there are other options. One of them is passing a new tax on smokeless tobacco products, which was part of Rendell's Cover All Pennsylvanians. "The funding will be there," DeLuca said.

Kelchner said PA ABC would not go over budget the way a similar program in Massachusetts has because PA ABC enrollment will be limited to the program's available funding. Massachusetts' state-subsidized Commonwealth Care plans are costing hundreds of millions more than expected due to a groundswell of enrollment at least partially driven by the state's individual insurance mandate.

Kelchner said the bill would help doctors by cutting the number of uninsured and adding the liability reform physicians have sought for years. "So what's not to like?" she asked.