Research & Commentary: Medicaid Expansion and Healthy PA

Published February 24, 2014

Pennsylvania has yet to approve an expansion of Medicaid under the Patient Protection and Affordable Care Act (aka Obamacare), but in September 2013 Gov. Tom Corbett released a proposed reform to Medicaid that would accept federal funds to expand the state’s Medicaid program by around 500,000 individuals and move them into the Obamacare federal health insurance exchange. Like several other programs now being considered in other states, Corbett’s proposal, known as “Healthy PA,” emulates Arkansas’ premium assistance model. 

Healthy PA would create a “private option” for which new Medicaid recipients created by the expansion could apply. One hundred percent of premium costs would be covered for the first three years, and 90 percent thereafter. Medicaid recipients choosing the private option would face many of the same requirements as traditional Medicaid, including those governing co-pays, premium-sharing, and work search. Under the plan, participants would be required to pay a portion of their premium, up to $35 per month. 

According to the Commonwealth Foundation, Healthy PA would make several changes to the current Medicaid program, such as lowering the payment cap on certain medical services. The plan would include a reduction of the funds managed care organizations use to pay doctors; a cut in the number of traditional Medicaid benefit packages from 14 to 2; a premium-sharing requirement based on a sliding scale of $1 to $25 month; new co-pays for doctor visits; and a job search requirement. 

Like the Arkansas “private option,” Healthy PA has several shortcomings. First, despite the private-market feel of the program, it still represents an expansion of Medicaid, where multiple aspects of the insurance plan, such as cost-sharing, are dictated by the federal government, and the beneficial aspects of real market competition are lost. Second, once expansion occurs, it will be extremely difficult to roll back. Critics of the Arkansas expansion note there is no guarantee the federal government will allow the program to continue once it is up for renewal, and could replace it with a less market-based system. 

In addition, Medicaid expansion is an expensive endeavor. According to the Kaiser Family Foundation, expansion in Pennsylvania would add $43 billion to the federal deficit over the next ten years. The Commonwealth Foundation also notes a premium assistance plan does not create any real savings and may in fact cost more. Although the true cost of an Arkansas-style plan is not yet known, the Congressional Budget Office has estimated a plan like Arkansas’ and Healthy PA could cost taxpayers an additional $3,000 per enrollee. 

Without significant reforms, Medicaid will continue to be fiscally unsustainable. Instead of expanding a flawed model that is overly costly, delivers subpar health care, and shifts more power to the federal government, state lawmakers should focus instead on reform options like those piloted in Florida that reduce costs and offer better care to patients in the existing system. 

The following articles examine Medicaid expansion and Healthy PA from multiple perspectives.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Healthy PA Can’t Cure Obamacare Disease
Elizabeth Stelle and Nathan Benefield of the Commonwealth Foundation argue the Healthy PA proposal falls short of providing meaningful reform in exchange for putting more people and more money into Obamacare’s house of cards. 

The Empty Promises of Arkansas’ Medicaid Private Option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Medicaid Private Option—using supporters’ direct quotes from sources including media interviews, floor speeches, and social media posts—and rebuts them point by point. 

Policy Tip Sheet: Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform their fiscally unsustainable programs in ways that will offer better care at lower costs to taxpayers. 

Research & Commentary: The Medicaid “Cure”
The Heartland Institute’s Kendall Antekeier examines the Medicaid Cure, a pilot program established in five large Florida counties by Gov. Jeb Bush, a premium support model in which 290,000 Medicaid recipients are given a range of premiums and plans from which to choose. 

A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Governmental Accountability gives insight into the Medicaid Cure’s success, stating, “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.” 

The Private Option: Medicaid Expansion by Another Name
Americans for Prosperity’s state policy manager, Nicole Kaeding, breaks down what could be in store for Arkansas after the vote to expand Medicaid in the state.

Pennsylvania Would Pay a High Price for Medicaid Expansion
Grace-Marie Turner of the Galen Institute outlines 12 reasons why Pennsylvania should not expand Medicaid and should instead demand from Washington greater control over spending to better fit coverage expansion with the commonwealth’s needs, resources, and budget. 

Pennsylvania’s Poor and Taxpayers Deserve Better
Matthew J. Brouillette, president and CEO of the Commonwealth Foundation, argues against implementation of Gov. Tom Corbett’s Healthy PA initiative, saying the proposal will neither serve the neediest citizens better in the short term nor reduce taxpayer costs in the long run. 

Should Pennsylvania Expand Medicaid?
In testimony before the Pennsylvania House of Representatives Health Committee, Michael Cannon of the Cato Institute recommends Pennsylvania not burden taxpayers with the additional expense of Medicaid expansion. It should instead refuse to implement either the expansion or a health insurance exchange.

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington greater control over spending to better fit coverage expansion with their states’ needs, resources, and budgets.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

If you have any questions about this issue or the Heartland Institute Web site, contact Heartland Institute Government Relations Director John Nothdurft at [email protected] or 312/377-4000.