Pennsylvania Poised to Take Over Health Insurance Exchange

Pennsylvania is poised to roll out its own online health insurance exchange to take the place of the one run by the federal government for the state's residents since 2014, saying it can save money for hundreds of thousands of policy-buyers. 

The Republican-controlled Legislature gave final approval Friday to legislation authorizing the move, after Gov. Tom Wolf had pressed for the bill's passage this month in the hope that its savings measures can take partial effect in 2020 and full effect in 2021. 

Wolf plans to sign the bill Tuesday, his office said. 

Wolf, a Democrat, said too many people are paying too much and getting too little out of their insurance, and his administration can reduce premiums for the 400,000 people who purchase health insurance through Healthcare.gov. 

"I think that's a big deal," Wolf said in an interview Friday. 

House Majority Leader Bryan Cutler, R-Lancaster, who helped shepherd the bill through the Legislature, said he expects the bill to curb the state's rising Medicaid bills, as well as save money for the state's health insurance buyers. 

"It's a great opportunity to look beyond identity politics, you know, Republican vs. Democrat, and focus on our constituents that are paying the premiums and increased costs," Cutler said. 

Cutler also said having a state-run exchange gives the state more control over it. 

Currently, Pennsylvanians can buy Affordable Care Act-compliant policies on the Healthcare.gov website operated by the federal government. 

But Wolf's administration says the state can operate the exchange for less money than the federal government. Currently, the federal government takes 3.5% of the premium paid on plans sold through the exchange, or an estimated $94 million this year. 

The state can operate the exchange for $30 million to $35 million and use the savings to qualify for extra federal reinsurance funds to reimburse insurers for certain high-cost claims, Wolf's administration says. 

The state's share would be about 20% to one-quarter of the reinsurance program cost, according to Wolf administration estimates. 

Limiting insurer liabilities with that pot of money would allow insurers to lower premiums across the board within the state's insurance marketplace, health insurance policy analysts say. 

Wolf's administration said it believes consumers would see premiums that are 5% to 10% lower than what they would otherwise pay. 

Twelve states built and operate their own exchanges, including determining eligibility and getting policy buyers enrolled with insurance companies. The Wolf administration said four other states are in the process of moving to their own exchange.

The Washington, D.C.-based nonpartisan Kaiser Family Foundation says seven other states have started a reinsurance program, and evidence from them shows that insurance premiums paid by consumers can drop. 

While states at first struggled with running their own exchanges in 2014, operating them has become cheaper and simpler as information technology systems have improved and become standardized, analysts say.