End of coverage for uninsured in Pennsylvania sparks anger

The state had shifted tobacco lawsuit settlement funds away from their intended health care uses. Now those who were covered are suing.

By Doug Trapp — Posted May 2, 2011

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Pennsylvania Gov. Tom Corbett's recent decision to allow a decade-old state health insurance program to expire has drawn scorn from health care consumer advocates and a class-action lawsuit from former enrollees.

The program, adultBasic, was covering about 41,000 low-income adults when it ended on Feb. 28. It offered health insurance to uninsured people who didn't qualify for or couldn't afford other coverage and who earned less than 200% of the federal poverty level, or about $22,000 for a single person. Monthly premiums were $36, although the plan did not cover prescription drugs or mental health. About 500,000 Pennsylvanians were on a waiting list for the program.

The Corbett administration said the state could not afford to continue adultBasic because the program faced a $54 million deficit in fiscal 2011, which ends June 30.

The program never was supposed to be permanent, said Corbett spokeswoman Kirsten Page. The governor directed adultBasic enrollees to seek alternative coverage.

A class-action lawsuit filed March 14 in the Commonwealth Court of Pennsylvania by 75 former adultBasic enrollees seeks to compel the state to continue paying for adultBasic with the hundreds of millions of dollars Pennsylvania receives each year from a 2001 tobacco lawsuit settlement.

"By ending adultBasic, the governor is ignoring the responsibility given to him" by the Legislature, said Rep. Joe Markosek, the highest-ranking Democrat on the Pennsylvania House Appropriations Committee. Twenty-two Democratic state lawmakers filed an amicus brief supporting the plaintiffs in the lawsuit. Corbett is a Republican, and the Legislature is GOP-controlled.

Pennsylvania created adultBasic in 2001 after it and 45 other states settled a 1998 lawsuit against five major tobacco companies. The state's Tobacco Settlement Act of 2001 required 92% of the funds to pay for a variety of "current health programs," including adultBasic. The remaining 8% was designated for a trust fund for future health programs. So far, the state has received more than half of its $11.2 billion in anticipated payments, said Pennsylvania Auditor General Jack Wagner.

Funds shifted

Tobacco settlement funds covered adultBasic's costs until 2005, Wagner said. That year, the state's four Blue Cross Blue Shield health plans signed an agreement to help pay for adultBasic. The four nonprofit Blues plans had been criticized because their annual surpluses had been growing along with their premiums, but the state's uninsured population continued to rise. So the insurers signed a six-year agreement to help fund adultBasic as a charitable act.

"We never thought this would go on indefinitely," said Ruth Stoolman, a spokeswoman for Independence Blue Cross, one of the four plans.

The adultBasic deficit has its roots in that 2005 agreement. Once the plans agreed to chip in, the administration of former Gov. Ed Rendell and the Legislature shifted some tobacco settlement funds to other uses, including the state's general fund, according to a March 3 report by Wagner. In all, $1.34 billion in tobacco settlement funds have been diverted from their intended uses as stipulated by the 2001 tobacco settlement legislation.

Wagner called on Corbett and state lawmakers to restore the tobacco funds to their intended use -- health care. The lawsuit filed in March seeks that outcome and a continuation of adultBasic. However, Senior Judge James R. Kelley on April 14 denied a plaintiffs' motion to require the state to -- in effect -- put its 2011 tobacco settlement payment in escrow. The state received the $321 million payment in April.

Corbett didn't make a serious effort to extend adultBasic, said Antoinette Kraus, project director for Pennsylvania Health Access Network, a coalition of 55 consumer health care organizations.

Dennis Olmstead, MPA, chief economist for the Pennsylvania Medical Society, agreed. "The governor was pretty dead-set on ending that program." The medical society does not want to see any sort of health coverage program end, but it is open to exploring alternative coverage.

Kraus criticized Corbett for proposing to use $340 million in tobacco settlement funds to help start a business loan program called the Liberty Loan Fund. The Corbett administration said that's not the case. Approximately $220 million of this amount is designated for various health investments that will be overseen by the loan program managers. The rest of the funding will be transferred to the state's general fund to cover advances included in the state's fiscal 2011 budget. This shift allows the state to continue other health programs under the 2001 tobacco settlement agreement.

In January, Corbett did seek high-risk insurance pool coverage for adultBasic enrollees. He asked Health and Human Services Secretary Kathleen Sebelius to allow the enrollees to sign up immediately for Pennsylvania's federally funded high-risk insurance pool, but Sebelius refused to waive a requirement that pool applicants must have been uninsured for at least six months.

Corbett also worked with the Blues plans to secure private coverage. About 10,000 of the former adultBasic enrollees have signed up for SpecialCare, a private health plan offered by the four insurers that charges premiums of about $150 a month, said Pennsylvania Insurance Dept. spokeswoman Melissa Fox.

The plans are waiving SpecialCare's usual preexisting condition exclusion for adultBasic enrollees until May 2.

One new SpecialCare subscriber is Ken Kewley of Easton, Pa., who had adultBasic coverage for nine years. The full-time artist, a painter, said adultBasic helped him obtain an aortic replacement valve in May 2010. He said he paid $900 as a hospital co-pay but didn't face other major costs. He believes he will face higher costs in SpecialCare because the plan covers only four physician visits a year.

Kewley said the governor and state lawmakers probably could have continued adultBasic. "I think they could have found a way if they just raised the premiums." Kewley is not a plaintiff in the lawsuit.

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