Gov. Wolf Commends Bipartisan Support for State-Based Health Care Reform

June 11, 2019

Harrisburg, PA – Governor Tom Wolf today thanked and commended House members for their overwhelming bipartisan support of House Bill 3, which creates a state-based health insurance exchange in Pennsylvania, increasing access to affordable care and saving money for both the state and taxpayers.

“It’s a good day when I can say that we have approached an issue in a bipartisan fashion and accomplished something that increases access to health care while saving Pennsylvanians money,” Gov. Wolf said. “Thank you to the House and Leaders Cutler and Dermody for their leadership in getting this important piece of legislation passed. It is my hope that the Senate send this to my desk.”

Since the passage of the Affordable Care Act (ACA), Pennsylvania has relied on the federal government to run the health insurance exchange in the state. The federal government pays to operate the exchange by charging insurers a 3.5 percent fee on premiums paid by ACA enrollees each month – a projected $94 million for Pennsylvania insurers in 2019. This user fee is expected to be cut to 3 percent beginning in 2020, which would equate to approximately $87 million dollars from Pennsylvania insurers.

In addition to providing the exchange platform for Pennsylvania, the federal government also subsidizes monthly premiums for on-exchange ACA enrollees in the commonwealth to the tune of nearly $2 billion each year.

With this legislation, Pennsylvania would join about a dozen states that have built and continue to operate their own state-based exchanges. Because of standardization and advancements in the IT platforms that underlie exchanges, what was once an extremely expensive platform can now be operated off-the-shelf for as little as $30 million per year.

Transitioning to a state-based exchange will save Pennsylvanians money because the user fee the federal government collects will be returned to the state, incrementally for the first year and then in full in 2021, totaling an estimated $88 million. These savings will be used as a re-insurance fund to offset the cost of higher premiums for people with more (and more expensive) health care needs. Removing high-cost individuals from the insured pool lowers premiums for other insured Pennsylvanians on the individual market. The state will apply for a federal waiver to create the re-insurance program.

“States with their own health care exchanges are already saving money and Pennsylvania can do the same,” Gov. Wolf said. “while ensuring all Pennsylvanians have access to full and affordable health care coverage. Let’s get this finished and in place with continued bipartisan support.”

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