Federal Medicaid and ACA cuts could leave half a million Pa. residents uninsured

Pennsylvania regulators are warning that sweeping federal cuts to Medicaid and the Obamacare insurance marketplaces could leave half a million residents uninsured, and cost upward of $25 million to overhaul IT systems and hire hundreds of state workers to enforce new oversight requirements.

A federal budget bill would pay for tax breaks sought by President Donald Trump’s administration by slashing public service programs, including cutting more than $800 million from Medicaid and the Affordable Care Act marketplaces over 10 years. The legislation was approved by the House of Representatives last month and is under consideration by the Senate.

Medicaid provides free or low-cost health coverage to low-income individuals and families, including one out of every four Pennsylvania residents. People who do not qualify for the state- and federally funded program, and who cannot access health insurance through an employer, can buy discounted private health plans through marketplaces created under the 2010 Affordable Care Act.

Combined, the programs have reduced uninsured rates to their lowest in recent history. But the Congressional Budget Office estimates that about 10.7 million people could lose coverage over the next decade under the Republican proposal.

In Pennsylvania, officials estimate that half of the 500,000 people enrolled in plans through Pennie, the state’s ACA marketplace, would no longer be able to afford coverage or would become uninsured because they failed to reenroll. An additional 300,000 people are expected to lose Medicaid because they are unable to navigate new regulatory requirements.

The federal proposal would require adults under 64 who are not disabled to prove every month that they are employed or looking for work in order to remain enrolled in Medicaid. Instead of verifying that people are still eligible for coverage annually, as done currently, the Pennsylvania Department of Human Services would need to check twice a year.

Republicans say the changes are intended to reduce the number of people who abuse the safety-net program and reserve resources for those who need them most.

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But Pennsylvania Department of Human Services Secretary Valerie Arkoosh, appointed by Democratic Gov. Josh Shapiro, said the changes would create an “unprecedented and unfunded increase in administrative load.”

The proposal would “fundamentally restructure the way Medicaid has operated for 60 years,” she said Tuesday during a virtual town hall hosted by Pennsylvania Health Access Network, which helps people enroll in health coverage.

She estimated the department would need to add between 400 and 500 people to its income maintenance office staff of 5,000 to meet the new federal demands.

Pennie administrators warned that people who buy health insurance through the marketplace could see significant cost increases next year, unless Congress renews enhanced tax credits that help offset the cost of insurance premiums by the end of the year.

The enhanced tax credits ensure no one pays more than 8.4% of income on health insurance, and the vast majority of people who buy a health plan through Pennie qualify for a tax credit.

Next year, only people who earn less than $60,000 a year would qualify for a tax credit if Congress does not act to extend the current tax credits. Monthly costs are expected to increase 82%, on average, with some people seeing their insurance costs double or triple, said Devon Trolley, Pennie’s executive director.

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The Republican budget proposal also includes changes to ACA marketplaces that Pennsylvania officials say could further hurt enrollment: People whose plans were automatically renewed would now need to reapply for coverage, and the annual enrollment period would be shorter.

“These are not just technical adjustments. They create real barriers for real people,” Trolley said.

Among the most significant changes to Medicaid is a requirement that most people between ages 19 and 64 who are enrolled in the program prove on a monthly basis that they are working or seeking employment.

The so-called work requirements have long been controversial: Supporters say they help lift people out of poverty, by giving them government-subsidized health coverage while they seek employment. Opponents argue they create barriers to care that prevent eligible individuals from accessing services.

Arkoosh, a physician who served as head of Montgomery County’s health department during the COVID-19 pandemic, estimated that Pennsylvania would need to spend millions to upgrade its IT infrastructure, which is not currently equipped to process eligibility checks twice a year and does not currently require monthly employment verification.