New Funding Mechanism To Cover All Pennsylvanians

Armen Hareyan's picture

Pennsylvania Gov. EdRendell (D) has proposed a new funding source for a plan that would providehealth insurance for the nearly 800,000 uninsured adults in the state, the PittsburghPost-Gazettereports. According to the Post-Gazette, Rendell's Cover All Pennsylvanians initiative has "fallenflat" in part because of a proposed 3% tax on the payrolls of businessesthat do not offer coverage to their employees. Although Rendell considered thetax a "fair share assessment," many state Republicans will notsupport the plan.

Rendell's new funding plan would use half of the revenue from the state'sHealth Care Provider Retention Account, which is projected to reach $414million by Dec. 31. The account, funded by 25 cents of the state's$1.35-per-pack cigarette tax, was created to offset medical malpractice costsfor physicians and hospitals in an effort to keep doctors and specialists inthe state. According to Rendell, fewer malpractice lawsuits and lowermalpractice insurance premiums have led to a surplus in the account that thestate can afford to use. Rendell also would pay for the coverage expansionthrough a 10-cents-per-pack increase in the state cigarette tax, which wouldgenerate an estimated $65 million annually, and a first-time tax on the sale ofcigars and smokeless tobacco, which could generate $50 million annually. Healso would use $40 million from a fund that pays for the care of peopleinvolved in catastrophic automobile accidents.

The PennsylvaniaHouse Insurance Committee last week approved the bill (S 1137),and the full House is expected to vote on the legislation as early as Monday. Republicanscriticized a provision of the bill that would end the state's $207 million inmalpractice aid for doctors on June 30, 2008, if coverage is not ready within90 days after the bill is approved. State Rep. Scott Boyd (R) is offering analternative to Rendell's plan, which would provide tax credits for businessesthat offer employees health savings accounts and tax breaks for those offeringwellness programs (Barnes, Pittsburgh Post-Gazette, 12/9).


Small Businesses

In related news, the Pennsylvania General Assembly this week might vote on legislationthat would prohibit insurers from using medical underwriting to determinemember premiums, the Philadelphia Inquirer reports. The bill is intended to help small businesses provide healthcoverage to their workers, but insurers disagree over whether it will.

The measure would ban insurance firms from basing premiums on the health of anemployee, but it would allow them to adjust premium rates based on age, regionand the insurers' market share.

Independence Blue Cross officials say the bill is fairerfor all groups. However, Aetna opposes the bill, saying the legislation willmake it difficult for the company to compete with Blue Cross insurers that dominatethe state's health care market. Aetna said thelegislation would neither reduce premium rates nor increase the number ofinsured residents (Von Bergen, Philadelphia Inquirer, 12/9).

Reprinted with permission from Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat The Kaiser Daily HealthPolicy Report is published for, a free service of The HenryJ. Kaiser Family Foundation.