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Pennsylvania evolving to a better health care plan

Republican state lawmakers and the Wolf administration don’t agree on much, so when they do agree, we take notice. This week they both said Pennsylvanians can soon save millions when it comes to the cost of health care.

Harrisburg claims it can run the Affordable Care Act-affiliated online exchange better — meaning more inexpensively — than the federal government can. On Wednesday, the state House Insurance Committee unanimously approved legislation that would establish a state health care exchange. The federal exchange has been marketing ObamaCare-approved health plans to Pennsylvanians since Jan. 1, 2014.

The state says its plan will lower premiums 5 to 10 percent for the roughly 400,000 residents with health care through the exchange.

Here’s how: Pennsylvania pays the federal government about $94 million each year to run the exchange at healthcare.gov.

That calculates to about $2,000 a month, or $24,000 a year for every individual participant.

The state says it can provide the same coverage for $30-$35 million.

At $30 million, the unit cost would be $625 a month, or $7,500 a year. These calculations do not take into account deductible discounts or other factors.

The plan is to use the $50-$60 million difference the state saves in federal costs to create a reinsurance program to reimburse insurance companies for high-cost claims.

“The reinsurance program would allow the (insurers) to lower their prices because this would address the issue of their highest and least predictable cost. So then hopefully the premiums would drop statewide,” said Bryan Cutler, R-100th, House majority leader, in a prepared statement.

The Wolf administration wants the legislation passed by the end of June and in partial effect by 2029. This would defang health insurance as a presidential campaign issue in our political battleground state — and would do so with the apparent blessings of both parties.

Pennsylvania would not be the first state to operate its own exchange. Twelve states already have done so. But it would be the first state to take this approach, to apply the savings to a high-cost reinsurance fund.

Seven other states have started reinsurance programs, and evidence shows these programs help lower premiums. Most other states have imposed an assessment on hospitals or insurance companies, Corlette said.

But researchers at the Center on Health Insurance Reforms at Georgetown University said Pennsylvania would be the first state to pay for the state share of the reinsurance program by capturing savings from running their own exchange.

While states at first struggled with running their own exchanges in 2014, operating them has become cheaper and simpler as information technology systems have improved and become standardized, Corlette said.

To which you might add: And once the states realized how much they were losing in payment of federal administrative fees.

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