Medicaid Expansion Under Obamacare Reaches PA
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Medicaid Expansion Under Obamacare Reaches PA

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Obamacare's continued push to expand Medicaid to nearly all poor adults nationwide got a boost Thursday as Pennsylvania was formally approved for its version of the program, which will provide health benefits to more than a half-million new people. The Keystone State in 2015 will join 26 other states and the District of Columbia, which already have adopted so-called Medicaid expansion, one of the primary goals of Obamacare.

Gov. Tom Corbett also becomes the ninth Republican governor to expand Medicaid benefits beyond traditional recipients such as poor children and pregnant women, some of parents of children under Obamacare—a step his national party vehemently opposes. The announcement comes as Corbett badly trails his Democratic challenger Tom Wolf, who would win by 25 percentage points if the election were held today, according to a recent poll.

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Pennsylvania's version of the expanded program will, beginning in 2016, require recipients who make over 100 percent of the federal poverty level to pay premiums for the coverage they receive, but also will cap those premiums at no more than 2 percent of household income. The state's version will also rely on an existing state-wide managed care program called Health Choice to provide coverage for the newly eligible.

Corbett's original bid to include work requirements as a condition for enrolling in the expanded program was not approved by federal officials. However, the state intends to fund and run a separate program to connect people getting coverage to job training and placement, although that will not be a condition for benefits.

As with other states that have agreed to extend Medicaid benefits to nearly all of their poor, the federal government will foot 100 percent of the costs of the newly eligible population through 2016. Their share will decline slightly over time, but is set, by law, to never fall below 90 percent of the costs of the newly eligible.

Under traditional Medicaid, the federal government and Pennsylvania split the costs of the benefits for recipients roughly 50-50.

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"With the agreements announced today, Pennsylvania will become the 28th statee, including the District of Columbia, to adopt the Affordable Care Act's Medicaid expansion, helping approximately 500,000 Pennsylvanians get the healthcare coverage they need," said Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services.

"Like we are doing in Pennsylvania, HHS and CMS are committed to supporting state flexibility and working with states on innovative solutions that work within the confines of the law to expand Medicaid to low-income individuals. But, unfortunately, millions of Americans are still without Medicaid coverage because their state has yet to act."

Under the ACA, expanded Medicaid benefits for nearly all poor adults was supposed to be available nationwide. But the Supreme Court in 2012, in a decision upholding other aspects of Obamacare, said that individual states would have to decide whether or not they wanted to expand Medicaid.

That decision lead to an odd situation, in some states that have not adopted expansion, of people earning one to four times the federal poverty level being eligible to receive federal subsidies to buy private insurance on government-run Obamacare exchanges, while adults who earn less than federal poverty level being ineligible for either those subsidies or Medicaid benefits. That's because when the ACA was written, subsidies were only issued to people earning more than the federal poverty level due to the assumption that people poorer than that would be newly eligible for Medicaid.

Those opposing Medicaid's expansion have largely been so-called "red" states lead by Republican governors. But some GOP governors have agreed to expand the program after hospitals and other medical providers in their states argued it would alleviate their costs of caring for the poor.

Josh Archambault, a senior fellow at the Foundation for Government Accountability, was critical of Pennsylvania's move to Medicaid expansion. "The Pennsylvania plan will also prove to be hugely expensive for state taxpayers," Archambault said. "Facing a large budget deficit in the state, and projections that the Pennsylvania Medicaid program will grow to $41 billion by 2022 without expansion, it is unclear how this is a wise fiscal consideration."

"The Pennsylvania plan will only add a vortex of budget uncertainty in future years," Archambault said.

This article originally appeared in CNBC.

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