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January 2007

Pennsylvania Builds on Prior Expansion for Children and Proposes Comprehensive Reforms

Children’s Coverage: In January 2006, Governor Ed Rendell (D) announced a major initiative to expand Pennsylvania’s Children’s Health Insurance Program (CHIP) through his Cover All Kids initiative. In October 2006, enabling legislation passed the legislature and the Governor signed the legislation into law on November 2, 2006.

The expansion will make CHIP coverage available to all children in Pennsylvania, except children with higher household incomes who can obtain coverage through the private market at reasonable prices and undocumented children. Families with incomes no greater than 200 percent of the federal poverty level (FPL) will still be enrolled in free CHIP or Medicaid, depending on income level.  The expanded program offers CHIP to families with incomes greater than 200 percent FPL, but no greater than 300 percent FPL through a subsidized program with average premiums ranging from $38 per member per month (PMPM) to $60 PMPM and sliding scale co-pays based upon income. Families with incomes above 300 percent FPL will be able to purchase CHIP benefits by paying the state’s full negotiated rate, if they are excluded from coverage in the commercial insurance market for a pre-existing condition, or the premium for commercial insurance exceeds 10 percent of household income or is more than 150 percent of the premium for CHIP.

This expansion will be implemented approximately 30 days after the federal Centers for Medicare & Medicaid Services approves the Commonwealth’s State Children’s Health Insurance Program State Plan Amendment describing the new program. More information on the CHIP expansion is available at

Cover All Pennsylvanians:  On January 17, 2007, the governor unveiled the “Prescription for Pennsylvania” plan to increase access to affordable health care coverage for all Pennsylvanians, improve the quality of care available in the state, and bring health care costs under control for employers and employees.  Full time students attending 4 year colleges and universities will be required to have health care coverage. The Governor will consider requesting an individual mandate if the number of uninsured in Pennsylvania does not significantly decline over the next few years.

To increase coverage for the uninsured, Governor Rendell’s proposal calls for the creation of Cover All Pennsylvanians (CAP).  The CAP program is a new health insurance product, delivered via the private market, that will provide a new option for the uninsured.  Businesses may participate in CAP if they have not offered health insurance to their employees in the past six months, if they have fewer than 50 employees and if, on average, those employees earn less than the state’s average annual wage. Businesses that choose to join the program will pay approximately $130 per employee per month, and their employees will pay on a sliding scale, ranging from $10 to $70, depending on income; the state and federal government will subsidize the remainder. 

Uninsured adults who earn less than 300 percent of the federal poverty level and employees of eligible small businesses will get help paying CAP premiums through discounts and subsidies. Uninsured adults who earn more than 300 percent FPL can participate in CAP by paying the full cost of the premium, which will be approximately $280 per month.

To pay for this coverage expansion, the Governor has identified several funding sources including:

  • A fair share assessment will be levied on all companies that do not insure their employees, That assessment will help pay for the cost of the CAP program;
  • Taxes on smokeless tobacco, cigars, and an increase in the cigarette tax;
  • Federal matching funds; and
  • Redirecting existing health care dollars that currently fund adultBasic, uncompensated care, and the Community Reinvestment fund. 

This health reform requires approval from both the Pennsylvania legislature and the federal government. The financial aspects of the plan will be part of the Governor’s budget proposal due to the legislature in February 2007.