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DPW's Health Care Proposal Is Bad for Pennsylvania

Public Benefits

DPW's Health Care Proposal Is Bad for Pennsylvania

Date Posted: 

Updated March 11, 2014

On February 19, 2014, Pennsylvania Department of Public Welfare (DPW) submitted its Healthy Pennsylvania proposal to the federal government.  The proposal claims to extend coverage to 500,000 adults who do not otherwise qualify for health insurance under the Affordable Care Act.  In reality, the proposal slashes benefits for 1.1 million Pennsylvania adults who already rely on the Medicaid program, most of whom are pregnant, elderly, sick, or have disabilities.  It also creates unnecessary barriers to health insurance coverage that would be impossible for many current and potential recipients to overcome.

Community Legal Services opposes DPW’s proposal.  While the final proposal includes some improvements over the initial draft – for example, it rolls back funding cuts to health clinics – it still includes severe benefits cuts for current Medicaid recipients and insurmountable barriers to coverage that would do lasting harm to Pennsylvania’s safety net. 

The federal government will now decide whether to approve DPW’s proposal.  In the meantime, the Corbett Administration’s Executive Budget would “lock in” the severe benefits cuts, even if the federal government rejects DPW’s proposal.  Pennsylvania should reject the Medicaid cuts and instead implement a traditional, cost-saving Medicaid expansion as soon as possible.

Key features of DPW’s proposal include:

  • Severe benefits cuts for all current adult Medicaid recipients, including pregnant women, seniors, and individuals with disabilities.
    • The proposal:  Medicaid recipients would be moved into one of two benefits plans, a high-risk plan or a low-risk plan.  The high-risk and low-risk plans include new limits on x-rays and MRIs; hospital admissions; outpatient surgeries; mental health treatment; and medical equipment and supplies like catheter tubing, adult diapers, and wheelchairs.  People may get treatment beyond these limits only if they show that denial will jeopardize their life or result in serious damage to their health.  (For details, see CLS’s handout, “Final Healthy PA Proposal Includes Severe Medicaid Benefits Cuts.”)
    • The problem:  The new benefits packages are insufficient to meet the health care needs of the Medicaid population, many of whom are pregnant, elderly, sick, or have disabilities.  In its final proposal, DPW made the benefits packages slightly more generous than in its initial proposal, but the cuts are still severe.  Eligibility rules for the high-risk plan are very stringent, and many people with disabilities will not qualify.  The exemption standard is very hard to meet, and DPW denies most exemption requests.
  • Premiums for individuals are living at the federal poverty line.
    • The proposal:  Beginning in 2016, all newly eligible and many current recipients above the federal poverty line would be required to pay $25 per month.  While DPW has claimed that it no longer intends to impose premiums on lower income recipients, its final proposal reserves the right to impose premiums on people below the poverty line as well.  Failure to pay for three months would result in loss of coverage.  Premiums may be reduced by meeting work search requirements, paying premiums on time for six months, and completing an annual physical exam.
    • The problem:  A significant body of research shows that premiums and other cost-sharing for low-income people results in loss of coverage, unmet health care needs, and adverse health outcomes.  Premiums are particularly burdensome for people below the poverty line, who have no room in their budgets for new expenses and often lack access to banking.  Premiums and premium reductions are expensive and burdensome to administer, stressing DPW’s already-understaffed County Assistance Offices. 
  • Premium reductions that are available only to people who can show that they are working or have applied for a certain number of jobs per month.
    • The proposal:  To reduce their premium payment obligations, all newly eligible and many current recipients would be required to work at least 20 hours per week or complete a certain number of work search activities via Pennsylvania’s online JobGateway system.  People working 30 hours per week would reduce their premiums by 40%.  People working 20 hours per week would reduce their premiums by 25%.  People enrolled with JobGateway would reduce their premiums by 15%.
    • The problem:  Congress appropriated Medicaid dollars to provide health insurance coverage for low-income people, not to fund Pennsylvania’s job development program.  Tying work or work search activities to premium reduction is unfair to Medicaid recipients who are too sick or disabled to work.  Medicaid recipients may struggle to navigate the complex JobGateway system, especially if they lack computer access or literacy.  Moreover, it is unlikely that JobGateway has the capacity to serve up to one million new users.
  • Punitive “lockout periods” of up to nine months for people who lack the means to pay premiums.
    • The proposal:  If Medicaid recipients are unable to afford their premiums for three months, they will lose their coverage for three months the first time, six months the second time, and nine months the third time.
    • The problem:  The lockout periods would cut off necessary health insurance coverage to vulnerable Pennsylvanians, many of whom have disabilities.  And hospitals will be stuck with unpaid bills for people who require emergency treatment while they are locked out of coverage.
  • The elimination of the Medical Assistance for Workers with Disabilities (MAWD) program, which provides life-saving coverage to people working despite significant disabilities.
    • The proposal:  MAWD allows people with long-term disabilities to work without fear of losing Medicaid benefits that meet their health care needs.  DPW’s proposal would dismantle MAWD and move lower-income recipients into commercial insurance plans. 
    • The problem:  While commercial plans may meet the needs of some MAWD recipients, many recipients are severely disabled and require Medicaid benefits packages designed for individuals with disabilities.  Other MAWD participants would lose Medicaid coverage altogether, and would be faced with financially ruinous medical costs and expenses with no way to pay for them.