Expiring health insurance tax credits loom large in Pennsylvania

(The Center Square) – Expanded tax credits that make health insurance cheaper for 24.3 million Americans face expiration at the end of 2025, leaving many in the field fearful about the future of medicine for the working class.

In Pennsylvania, that means premiums for 500,000 residents enrolled through Pennie — the state’s health insurance marketplace — could nearly double. As enrollment drops, prices will rise even higher to fill the gap.

“We’re very concerned about what we have headed down the pike,” said Pennie Executive Director Devon Trolley during a roundtable discussion on Tuesday in Philadelphia.

People using the program aren’t eligible for Medicaid or employer-provided coverage but have benefited from more generous income thresholds that offer subsidies to middle-income residents making four times the poverty level – or $103,280 for a family of three in 2024.

The expansion first came in 2021 during the COVID-19 pandemic and helped double enrollment in the federal insurance marketplace over the ensuing four years. In Pennsylvania, the number of residents covered through Pennie increased by half.

That will change if Congress doesn't extend the subisidies before January.

Trolley said premiums will rise by an average of 82%, with those in rural areas more likely to double in cost. Those living above the modest income threshold could see premiums quadruple.

Costs will go up for hospitals, too. Sen. Sharif Street, D-Philadelphia, used Temple, whose patient base is made up almost entirely of those who receive Medicaid and Medicare coverage, as an example. If hospitals don’t receive reimbursement for procedures, costs will rise, and services will be cut, impacting care even for those with excellent private insurance.

Medical professionals looked back at the worst of the COVID-19 pandemic to inform what the health care landscape could look like after major cuts take place. Uninsured and underinsured people may put off care and defer routine checkups, creating circumstances where problems aren’t addressed until they’re acute and in the emergency room. Those disabled by disease would demand additional state resources, and underinsured children could inadvertently contribute to infectious disease outbreaks. People would need to learn to triage their own symptoms to determine when to see a professional, and clinics monitoring common chronic illnesses might need to be established outside of typical medical settings.

“It’s a moral outrage. It’s a human rights violation, and it doesn’t have to happen anymore because we have the Medicaid expansion - until we don’t,” said Dr. Cheryl Bettigole, professor of Clinical Family Medicine and Community Health at the Perelman School of Medicine.

The effect this would have on rural health care could be potentially devastating.

“Their elected officials are not speaking up for them, and they are going to be hurt dramatically,” said the event’s organizer, Sen. Vincent Hughes, D-Philadelphia, of those living in the rural regions making up most of the state's geography.

Secretary of the Department of Human Services Val Arkoosh said about half the state’s rural hospitals are already operating on negative margins. With less Medicaid reimbursement, even more of these facilities would be forced to close their doors. The existing care deserts would continue to expand, making it harder for those living in rural communities to access specialists and follow up on referrals.

They aren’t the only ones running on fumes. According to Zach Shamberg, president and CEO of the Pennsylvania Health Care Association, the average operating margin for nursing homes across the state is already -5.5%.

According to the Congressional Budget Office, permanently extending the subsidies would cost $335 billion over a decade. Letting them expire would leave an additional 3.8 million Americans uninsured and price healthy enrollees out of the marketplace, raising costs even higher.

President and CEO of LeadingAge PA, Gary Pezzano, said doing the latter would be “unconscionable and unimaginable” for the state’s aging population. He noted that 70% of patients in skilled nursing facilities are on Medicaid, while providers receive only 75% of costs in reimbursement. For in-home care, reimbursement is just 53%.

Those receiving this kind of care make up no small fraction of the commonwealth. Department of Aging Secretary Jason Kavulich, whose agency is funded largely through the Older Americans Act, reminded the group that older Pennsylvanians are the fastest growing segment in the state, poised to overtake minors and become one-third of the total population.

Cuts would force the state to find at least a billion dollars in additional revenue to cover the over $400 million in nursing facility taxes paid by providers and subsequent federal drawdown of over half a billion dollars.

“No state can absorb the cuts being made in Washington D.C.,” said Hughes.

The commonwealth’s insurance commissioner, Michael Humphreys, emphasized that many of the practices that could theoretically support the “fraud, waste, and abuse” the federal government looks for do not apply to Pennsylvania’s insurance market.

Arkoosh noted that the commonwealth is “laser focused” on efficiently using the dollars available to them and they are first in the country for pursuing fraud. The state uses a variety of methods to flag suspicious behavior, including AI technology, and in so doing has made it difficult for criminals to take advantage of the system.

The best solution available, many said, was to let congressional lawmakers know exactly how important health care funding is to their constituents and across the state. Part of that is informing constituents, many of whom, Arkoosh says, may not even realize that their coverage is through Medicaid.

Humphreys warned that people who have been putting off an appointment or surgeries like joint replacements should consider scheduling them now because, if the cuts go through, they may become unaffordable or inaccessible come 2026.

Former state senator and lobbyist Roy Afflerbach said that people need to work together across agencies and departments to survive the fallout.

“They want us fighting among ourselves,” said Afflerbach. “If we don’t all work together to stop this carnage that’s taking place in Washington, we will be picked off one by one by one, and that’s the last thing that we can afford to happen.”