Pennsylvania officials confronting tough issues in health insurance

Few current social or political topics stir the emotions quite as much as health care reform.  Whether you believe that the Patient Protection and Affordable Care Act (PPACA) is a sign of imminent and apocalyptic American socialism or an important step towards ensuring that all Americans have access to basic health care, nothing can ruin a tranquil Sunday dinner at Grandma’s house quicker than prodding Uncle Charlie into a debate about whether Uncle Sam is taking over our health care system.  But politics aside, if anyone was naïve enough to hope that the health care debate ended when President Obama signed the bill into law in March, 2010, they are facing the reality that 18 months later there still seem to be many more questions than answers when it comes to the future of health insurance in America.  And in Pennsylvania, while state government officials are busy deciphering how their citizens can get the most out of the PPACA, they are also distracted with having to deal with another potentially critical health care problem in the western half of the state - where an impasse between the area’s largest hospital system and the dominant health insurance company threatens access to doctors and hospitals for millions of patients who already have good insurance.

Amid Congressional rumblings about repealing the PPACA, and President Obama’s assurances that he would veto any such bill, numerous legal challenges to the law’s constitutionality are winding their way towards a seemingly inevitable showdown next year in the Supreme Court.  A federal judge in Pennsylvania recently became the latest to rule on the constitutionality of the law’s mandate that every American must purchase health insurance when Middle District Court Judge Christopher Conner issued a decision on September 13, 2011 that would strike down that provision.  While this ruling is likely to be appealed to the 3rd Circuit Court of Appeals, the same issue has already reached other federal circuit courts, with inconsistent outcomes.  This split among the circuit courts on such an important constitutional question, with implications for every American, significantly raises the already high stakes in the legal battle and virtually assures that the Supreme Court will need to resolve it.

Meanwhile, the PPACA remains the law of the land and Pennsylvania officials, like their state government counterparts across the country, are scrambling to meet its deadlines including the establishment of the health insurance “exchanges” that are to begin functioning in 2014.  The exchanges are considered a key component of the PPACA and are conceived as an online marketplace for one-stop shopping for health insurance, where individuals and small groups can compare prices and benefits from various insurers and choose the coverage that best suits their needs.  State governments have the opportunity to decide the details of how exchanges will operate and who will manage them in their state, but the federal government will step in and offer its own exchange to citizens of any state that either declines to establish one or fails to gain federal approval of its plan by January 2013.  This deadline may seem far off, but many basic details remain unclear and state legislation is still needed to establish them.  Thus, the pressure is building for states to make a number of critical decisions now, or face the possibility of ceding authority to the feds over a potentially significant aspect of its health insurance marketplace.  This challenge is made even more difficult given the limited and serially-issued guidance received from the feds thus far in the form of proposed Department of Health and Human Services regulations.

Adding further political intrigue to Pennsylvania’s decision-making regarding the PPACA is the fact that Governor Tom Corbett was among the first state officials in the country to launch a legal challenge to the law when he was serving as Pennsylvania’s Attorney General.  With that case still being resolved by the courts, Governor Corbett now finds himself with responsibility for implementing the law he thinks is unconstitutional.  While this may be ironic, the Governor has of course expressed his commitment to following the PPACA as long as it remains in effect.  Still, the pendency of various state lawsuits attempting to defeat the law only adds to the nearly palpable tension between the states and the feds, a tension that seems likely to continue to grow as deadlines approach and as court decisions against the law continue to pile up.

Whether or not Governor Corbett’s heart is in it, his administration is hard at work evaluating its options and responsibilities regarding health insurance exchanges in order to determine how they can help Pennsylvanians.  As part of this process, Pennsylvania Insurance Commissioner Mike Consedine recently held a series of public forums across the state to gather input from interested stakeholders, including health care providers, insurance companies and producers (agents), special interest groups and citizens.  Although Commissioner Consedine has indicated that no decision has yet been made regarding whether Pennsylvania will establish its own exchange, if it does, some key considerations will include:

• Will the state partner with the feds or perhaps with other states?
• Will it be run by a state agency or some other non-profit entity?
• Will multiple exchanges serve various state regions or types of groups?
• Will the exchange supplement or replace the existing health insurance market?
• What insurance companies will participate?
• What products will be offered?
• What role will insurance producers have?
• And of course, who will pay for it???

With these and many other questions remaining unanswered, much work remains in the months ahead before the concept of health insurance exchanges can become a reality.

As if health care reform issues were not enough, Pennsylvania officials are exploring their options and threatening to intervene in a standoff that has reached the boiling point in western Pennsylvania, where the largest hospital system has declared that it will soon stop allowing in-network access to the 3 million patients covered by the region’s dominant health insurance company.  The problem involves the University of Pittsburgh Medical Center Health System (UPMC) and its expiring contract with Highmark Blue Cross Blue Shield (Highmark).  Earlier this year, with negotiations to extend the contract already seriously strained between the two behemoth non-profits, Highmark made a game-changing announcement that it intended to enter the hospital business by acquiring the floundering West Penn Allegheny Hospital System.  In response, UPMC has forcefully declared that it would not enter into a new contract, asserting that since Highmark’s decision to purchase a hospital system made it a direct competitor as a health care provider, UPMC was no longer interested in partnering.

This standoff has serious implications for those 3 million Highmark subscribers, since out-of-network rates could cost them as much as 3 to 4 times more to access UPMC’s world-class network of 20 hospitals and 2700 doctors, effectively driving them out.  To make matters worse, existing state law provides little authority to force the parties into an agreement.  As a result, the State Senate and House have both recently convened hearings on the issue, compelling the company presidents, as well as the Insurance Commissioner and other stakeholders to testify in order to determine what legislative remedy might be needed to break the impasse.  With so much at stake, some sort of government intervention is likely inevitable, but in the meantime the uncertainty in the market is undoubtedly already causing ripple-effects as businesses and individuals make long-term decisions about their insurance choices and health care providers.