The Pennsylvania House voted 181-1 on Tuesday to pass House Bill 3, legislation to run its own state health exchange. The bill will next be considered by the state Senate, where it is expected to face similar broad levels of support. Governor Tom Wolf (D) also supports the measure, and his administration claims it would lower premiums by five percent to 10% for more than 400,000 Pennsylvanians. If signed into law, it will make the Keystone State the 16th state to run its own marketplace under the ACA.
House Majority Leader Bryan Cutler (R), prime sponsor of the bill, reported that Pennsylvania pays the federal government approximately $94 million per year to run the state’s marketplace, claiming that “We can run it more efficiently, and then use those savings to further save money on premiums.” The bill also includes a reinsurance program, which, according to Cutler, would “allow insurers to price their products lower by limiting their exposure to very high, unpredictable medical expenses incurred by their members by covering some of those expenses when they exceed a certain threshold.” Analysis strongly supports the benefits of reinsurance in state-run exchanges as well; healthcare consulting firm Avalere estimates that states with their own reinsurance programs were able to reduce premiums by an average of 19.9% the first year they were introduced.
Research shows that state-based exchanges have performed well; according to the Kaiser Family Foundation, states running their own exchanges are better at controlling premium costs and attracting new enrollment. In fact, premiums in state-based exchanges averaged less than half of what consumers in federally financed marketplaces were paying between 2014 and 2019. Even the largest premium increases in state-based exchanges, such as in California and Washington, were only 39% compared to an 85% increase in federally financed marketplaces.
The Pennsylvania Association of Health Underwriters (PAHU) supports this measure and had the opportunity to testify in front of the state House last month. Jessica Waltman, legislative chair of PAHU, testified that while “not all states have had a positive experience with their [state exchanges], many states have seized the opportunity to build a marketplace that genuinely addresses the unique needs of their citizenry and now provides a very positive experience for their individual market consumers.” Waltman noted that the only potential problem with the idea is ensuring there will be enough initial state-level investment. “Due to our association’s vast experience of working with state-based risk spreading mechanisms over the years,” Waltman wrote, “We know that funding stability is the key ingredient to a successful state-level reinsurance pool.”
There is a sense of urgency to sign the bill into law in order to lower premiums as quickly as possible, and Republican Senate Majority Leader Jake Corman’s office noted that they were looking forward to reviewing the bill. Governor Wolf has vetoed several bills that have been passed by the Republican-controlled legislature, including a recent $100 million private schools bill. However, that is highly unlikely to be the case if H.B. 3 lands on his desk.