Pennsylvania Governor Outlines New Funding Mechanism For 'Cover All Pennsylvanians' Plan

Main Category: Health Insurance / Medical Insurance
Article Date: 12 Dec 2007 - 12:00 PDT

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Pennsylvania Gov. Ed Rendell (D) has proposed a new funding source for a plan that would provide health insurance for the nearly 800,000 uninsured adults in the state, the Pittsburgh Post-Gazette reports. According to the Post-Gazette, Rendell's Cover All Pennsylvanians initiative has "fallen flat" in part because of a proposed 3% tax on the payrolls of businesses that do not offer coverage to their employees. Although Rendell considered the tax a "fair share assessment," many state Republicans will not support the plan.

Rendell's new funding plan would use half of the revenue from the state's Health Care Provider Retention Account, which is projected to reach $414 million 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 costs for physicians and hospitals in an effort to keep doctors and specialists in the state. According to Rendell, fewer malpractice lawsuits and lower malpractice insurance premiums have led to a surplus in the account that the state can afford to use. Rendell also would pay for the coverage expansion through a 10-cents-per-pack increase in the state cigarette tax, which would generate an estimated $65 million annually, and a first-time tax on the sale of cigars and smokeless tobacco, which could generate $50 million annually. He also would use $40 million from a fund that pays for the care of people involved in catastrophic automobile accidents.

The Pennsylvania House Insurance Committee last week approved the bill (S 1137), and the full House is expected to vote on the legislation as early as Monday. Republicans criticized a provision of the bill that would end the state's $207 million in malpractice aid for doctors on June 30, 2008, if coverage is not ready within 90 days after the bill is approved. State Rep. Scott Boyd (R) is offering an alternative to Rendell's plan, which would provide tax credits for businesses that offer employees health savings accounts and tax breaks for those offering wellness programs (Barnes, Pittsburgh Post-Gazette, 12/9).

Small Businesses
In related news, the Pennsylvania General Assembly this week might vote on legislation that would prohibit insurers from using medical underwriting to determine member premiums, the Philadelphia Inquirer reports. The bill is intended to help small businesses provide health coverage to their workers, but insurers disagree over whether it will.

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

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

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