MALPRACTICE FUND COULD HELP FUEL COVERAGE IN PENNSYLVANIA

Volume 29, Issue 512 March 31, 2008

Matthew Gever

In 2007, Governor Ed Rendell introduced his “Prescription for Pennsylvania,” a plan to provide universal health coverage. The proposal would control costs through a variety of prevention efforts, as well as expand public programs and subsidies for the uninsured. After much debate, the General Assembly concluded that the state could not afford to implement Rendell’s plan. Now, the Legislature is considering a number of scaled-down efforts for expansion of coverage—but those too are raising some of the same criticisms that were leveled at the Governor’s plan.

The House recently passed SB 1137, which would establish the Pennsylvania Access to Basic Care (ABC) program. This effort seeks to cover some of the 800,000 uninsured Keystone-staters, most of them low-income workers. “We are helping people who get up and go to work everyday, but aren’t offered health insurance by their employers and who can’t afford coverage on their own,” said Representative Todd Eachus, who says the program would cover about 250,000 residents, which legislators recognize would fall short of covering all uninsured residents.

The ABC program would expand the state’s adultBasic program, which provides health insurance to Pennsylvanians aged 19 to 64 who cannot afford private insurance on their own but do not qualify for Medicaid. The state contracts with four insurance companies to provide the benefits, which currently include physician visits, preventive care and hospitalization. The state subsidizes some of the cost, and patients pay a $30 monthly premium as well as small co-pays for services. The program currently has an 80,000 person waiting list, which SB 1137 would seek to eliminate through new funding streams.

Tapping the Malpractice Fund

AdultBasic is currently funded by the state’s share of the tobacco settlement fund. The state would continue to use this money, as well as the monthly premiums, federal Medicaid dollars (if the Centers for Medicare & Medicaid Services grants a waiver) and—in an unusual twist—money from Mcare, the state’s malpractice insurance fund, to expand coverage.

Pennsylvania established the Mcare fund in 2002 to help doctors remain in the state by easing the burden of soaring malpractice insurance premiums. “Department of Health data show that from 2004 to 2006 we lost 1,632 active-practice physicians in Pennsylvania,” said Dr. Peter Lund, president of the Pennsylvania Medical Society. Also, many doctors had been giving up high-risk procedures or retiring early.

Mcare supplements physicians’ existing insurance by covering any damages over $500,000. Thus, doctors have to buy no more than $500,000 in liability coverage. The state funds Mcare through an assessment on doctors, as well as by taking a portion of the damages paid out to claimants. As part of its malpractice reforms, the state also limited award damages and shortened the length of time a plaintiff could wait to file a suit.

Overall, results from the malpractice reforms have been positive, said Representative Eachus. “We’ve put an end to jury shopping and reduced the number of frivolous lawsuits and we’ve already given doctors $1 billion to help cut medical malpractice bills,” he said. Some disagree. “Research shows that caps on pain and suffering are unfair to patients with the most severe injuries, to women, to elderly persons and to children,” said a recent report from the Pennsylvania Bar Association. The report also claims “while caps reduce the amounts of payments to negligently injured patients, research does not support the proposition that caps reduce the liability insurance premiums of doctors.”

As a result of fewer lawsuits and smaller payouts, the fund has generated a surplus. The Governor and legislators hope to use this surplus—currently estimated at $500 million—to help fund Access to Basic Care.

Some doctors and other providers are concerned about the prospect of phasing out Mcare. “Not only is it inappropriate to take money from this fund, but this is also a short-term funding stream for the ABC program,” said Representative Bryan Cutler.

But supporters of the bill say that Mcare has served its purpose by providing subsidies to physicians at the height of the recent malpractice crisis, and they believe that the fund is no longer necessary. “We’re confident we’ll continue to see more and more doctors setting up shop in the Keystone State,” said Representative Eachus.

Other Cost Concerns

Eliminating the adultBasic waiting list is projected to cost $1.1 billion by 2012, at which point ABC should cover 270,000 people. Under the new program, those below 200 percent of poverty would pay premiums based on a sliding scale, with the poorest paying nothing. Additionally, anyone with an income above 200 percent of poverty could buy into the plan at full price, currently $311 a month. Additionally, the bill would expand ABC benefits to include prescriptions, behavioral health and chronic disease management. Employers could also receive state money to help offset the costs of providing insurance if the employer currently does not offer insurance and pays an average salary of less than $32,000 per person.

Some lawmakers question the accuracy of the cost and enrollment figures, while others worry about the sustainability of funds. “The bill’s fiscal note suggests their program will be running the state $1 billion within three years…We only have a quarter of that, about $250 million, in recurring revenues,” said Representative Sam Smith.

“It seems ill-advised to me to approve such an expensive program when funding is contingent on federal approval and relies on funding streams, such as the tobacco settlement and cigarette tax, which are set to end or expected to decline,” said Representative Cutler.

“This General Assembly cannot, in good conscience, consider this type of extensive and highly complicated proposal without having all of the details in place—especially the funding,” added Senator Don White.

Debate over these and other plans for reform will likely continue for some time. The bill now moves to the Senate, where both parties plan to introduce health reform proposals of their own. If the legislature ends up passing SB 1137, Governor Rendell has indicated he would sign the bill into law.