Pennie and ARPA: What they mean for Pennsylvanians

The Affordable Care Act (ACA), activated under the Obama Administration in 2010, was hailed as a major breakthrough in healthcare reform. Eight years later, however, the ACA experienced confusion in the marketplace and increasing problems with affordability largely due to the Trump administration’s efforts to weaken and eventually destroy the program. Pennsylvania enrollments in the federal exchange (healthcare.gov) declined from 426,059 in 2017 to 365,868 in 2019. People hit hardest by higher costs were those not eligible for subsidies.

Pennsylvania was among a handful of states that began developing their own exchanges partly in response to the sabotage efforts at the federal level, but also to take advantage of new information technologies to help reduce operating costs through their efficiencies. In addition, state-run exchanges can target local needs better and create solutions based on their own demographics. Pennie, Pennsylvania’s recently launched state exchange, benefits from the best practices gained from other states’ experiences. The leaders in this effort projected a 5-10 percent savings in health insurance costs in the first few years of the new marketplace.

The name “Pennie” stands for “Pennsylvania Insurance Exchange.” A bipartisan effort, Pennie promises to be another signature healthcare achievement of the Wolf administration. (The first was the expansion of Medicaid, which Governor Wolf set in motion by executive action when he first took office in 2015.) Wolf’s administration recruited Zachary Sherman to be Pennie’s Executive Director and to head the implementation team. Sherman had been a member of the original implementation team for Rhode Island’s successful state exchange, HealthSourceRI. Since its establishment in 2011, Sherman held several positions there, including Chief Financial Officer, Chief of Staff, and, since 2015, Director. Under his leadership, HealthSourceRI’s enrollment increased 11 percent in 2017-2019, a period during which enrollment through the federal marketplace fell by 9 percent.

The overarching goal of Pennie is to improve the accessibility and affordability of the healthcare insurance market for individual Pennsylvanians and their families who do not have insurance through their employer. Pennie abides by all the rules of the ACA in terms of coverage of essential benefits and cost-sharing reductions. It is the only source for financial assistance in Pennsylvania’s individual health insurance market. Pennie’s rollout (November 2000 through January 2021) went smoothly. By the end of March, 338,000 individuals had coverage through Pennie for 2021.

Largely due to job losses during the pandemic, the number of uninsured in the Commonwealth grew to 703,300 by late March. According to the Pennsylvania Health Access Network (PHAN), 232,700 of these people are now eligible for Medicaid, potentially leaving 470,500 uninsured. Pennie’s “no wrong door” enrollment policy ensures that those who are Medicaid-eligible can gain access to either traditional Medicaid or the Expansion by calling Pennie (844-844-8040).

Response to COVID-19. Long before he was elected, President Joe Biden began making plans to shore up the ACA, on which he had worked extensively as vice president during the Obama Administration. Bigger and better healthcare reform became particularly urgent as COVID-19 hit the U.S., leaving many people not only without jobs, but also without their employer health insurance. The situation had worsened by the time Biden assumed the Presidency and he shifted his attention to drafting the American Rescue Plan. This $1.9 trillion economic stimulus bill or act (abbreviated as ARPA) was passed by Congress and signed into law by the President on March 11, 2021. Its purpose is to speed up our recovery from the economic and health effects of the pandemic and the ongoing recession.

ARPA has been called the biggest expansion of healthcare since 2010, when the ACA was passed. Many of ARPA’s health benefits are for COVID-related services, so that people with or without healthcare insurance can get tested and vaccinated at no cost to themselves and without states having to pay for vaccines or the financial burden of their administration, especially in rural, hard-to-reach areas. Let’s look at ARPA’s key provisions for lowering healthcare insurance costs in the individual marketplace, which will make healthcare accessible to many more people. The hope is that Congress will make permanent most of these provisions, which are now set to expire within two years.

ARPA increases the value of the Premium Tax Credit to lower or eliminate health insurance premiums for policies on ACA marketplace exchanges and ensure that enrollees will pay no more than 8.5% of their income for coverage. Here are a few diverse examples of what this might mean for Pennie customers. The examples are all non-smokers. 1. A single 40-year-old male with an annual income of $19,140 (150% of the Federal Poverty Level or FPL) has been paying a monthly premium of $66, or $792/year (4.14% of his income). Under ARPA, he would pay no monthly premium, with an annual savings of $792. 2. A 64-year-old married couple with an annual income of $77,580 (FPL 450%) would see their monthly premium drop from $2,462 to $550, saving them $22,949 annually. 3. A family of four with an annual income of $52,400 (200% FPL) would see their monthly premium go from $285 to $87, for an annual savings of $2,376. 4. A recently unemployed 30-year-old had had an annual income of $51,168 (401% FPL) and was now receiving unemployment compensation. Under ARPA her monthly premium would drop from $364 to 0, saving her $4,373/year.

ARPA provides two options for people who lost their employer insurance during the pandemic: Through September 30, 2021, they can keep their current private insurance via COBRA, receiving a 100% subsidy for its high-cost premium. For longer lasting coverage, they may sign up for a Pennie plan, as in example 4 above. In either case, they are not penalized for receiving unemployment compensation.

The “no more than 8.5% of income rule” also ends the onerous “subsidy cliff,” whereby many people lost their subsidy when their income increased even slightly above a certain level. Now, for example, single individuals who earn above $49,960/year or a family of four whose annual income is above $103,000/year will receive financial assistance limiting their contribution to no more than the 8.5% of their income. While ARPA allows more generous tax credits at all income levels, it is not a giveaway to the very rich. As income goes up, someone continues to contribute more toward their insurance until the subsidy is no longer needed.

While subsidies and cost reductions are based on costs of the silver plan on all ACA exchanges, some people might find that they could now pay affordable monthly premiums and achieve a more reasonable deductible with a bronze or gold plan. Bringing down a deductible (what you pay providers before your insurance kicks in) is especially important for people with chronic or major health issues.

The special COVID enrollment period for all ACA exchanges ends August 15. If you are uninsured or looking to reduce your costs, or if you are a Pennie subscriber who enrolled before the ARPA and want to reapply to capture its benefits sooner rather than later, find help ASAP to navigate your options. First visit pennie.com. Then call Pennie’s customer service at 844-844-8040 (M-F, 8 am to 6 pm), or call an experienced community Pennie “navigator” via Pennsylvania Health Access Network at 877-570-3642.

Jeanne Duffy, Ph.D., has served as a college professor, an analyst and project manager for several large companies, and a college administrator in charge of foundation and government support. She is current chair of Gettysburg Democracy for America’s healthcare taskforce.