Policoff Questions PABC and The Governor's Numbers
By Jerry Policoff

Read Jerry's statistical analysis...

Last week the Governor Rendell's office released numbers for PA Access to Basic Care (PABC) in an effort to persuade the Pennsylvania Legislature to pass his latest healthcare “reform” initiative. The media continues to repeat the Governor’s bogus estimate of 767,000 uninsured Pennsylvania adults (based on an incredibly flawed survey commissioned by the Insurance Bureau). The media does not question why the Governor is still touting numbers based on a study that is now four years old. In fact, the Governor has recently taken to rounding his own numbers down to 700,000 in his public appearances. The media reports his numbers as if they were factual even though they are contradicted by virtually every other source including the much more statistically valid Census estimates which are substantially higher than the Governor’s.

There are a number of questions raised by the spread sheet just released by the Governor, including:

• The plan shifts much of the cost of the plan to enrollees. Under Adult Basic, the current program that PABC would replace, enrollees between 100% and 150% of poverty pay $30 per month for coverage. That goes to $39 per month the first year of PABC. Enrollees at 150-200% of poverty go from $40 per month under Adult Basic to $50 under PABC year one. People at 200-300% of poverty can enroll at the full cost to the state. People above 300% of poverty can enroll at full cost if they can “prove” that they cannot obtain affordable insurance elsewhere. The Todd Eachus Amendment which introduced PABC, and which has already passed in the House, indicated that these rates were only locked in for the first year, implying that they could increase further in subsequent years. Given the precarious financial situation confronting Adult Basic enrollees, even the $9 and $10 increases would appear problematical. But under PABC the cost of the program increases every year, and every year a greater percentage of the burden is shifted to enrollees. The average enrollee is projected to pay $51 per month in 2008-09 (presumably that includes some people over 200% of poverty who are paying the full unsubsidized premium). The average monthly cost to the enrollee increases to $78 per month in 2009-10 and then increases by approximately $4 per month in each successive year. Is it reasonable to assume that people and households already at or close to poverty will be able to afford these premiums increases?

• The spreadsheet includes both total costs and Administrative costs (greatest in year one). By backing out the Administrative costs I arrived at what I believe is the projected cost of the private-sector insurance the State plans to deliver to enrollees of PABC. The numbers appear to me to be suspiciously low. Year one per capita cost is only $266, increasing to $303 in year two, and then actually decreasing to $301 in year three. Thereafter the projected per capita cost seems to assume approximately 4% increases per year. This seems incredibly low given the insurance industry’s history of double-digit annual percent increases.

• There are currently about 55,000 people enrolled in Adult Basic. PABC projections increase that number by about 230,000 by the third year of the plan, and thereafter the increases are only in the area of 2-3,000 per year. The latest press release emphasizes that this is not a mandate, so it is “extremely unlikely” that the program will encounter the budget problems encountered by other states (presumably they are referencing Massachusetts). In the event that the costs come in over projection the State will simply cut off enrollment when the budget is spent. That is all well and good during the first three years, but what about years four through ten? Given the fact that the budget includes only small annual enrollment increases after the third year it would appear that the State would be forced to actually remove enrollees from the plan in order to bring it in at budget after year three if costs come in above projection.

My own analysis of PABC is that it is far worse than “Cover All Pennsylvanians” because it threatens to actually deprive the poorest among us of insurance they currently enjoy under Adult Basic. I also can’t see how they can possibly add 230,000 Pennsylvanians to the insurance rolls within the budget they have proposed. Even if they do, as Chuck Pennacchio points out, more Pennsylvanians will likely lose their insurance than will gain it. If one extrapolates national trends to Pennsylvania, 4,000 Pennsylvanians per month can be expected to lose their insurance. Since we have an older population, and hence a higher Medicare enrollment let’s only assume 3,000 Pennsylvanians per month will lose their insurance. That would translates to 360,000 currently insured Pennsylvanians losing coverage within the next ten years, so even if PABC meets its enrollment goals we would experience a net decline of 130,000 insured Pennsylvanians.

Perhaps what the Governor and his surrogates mean when they advocate an “incremental” approach to health care reform is that it will take many more years for the rest of us to lose our insurance.

Read Jerry's statistical analysis...