Pennsylvania's adultBasic Program

Pennsylvania’s low-cost health insurance program for adults, called adultBasic, is in jeopardy. AdultBasic was established by Governor Tom Ridge using funds from Pennsylvania’s share of the national settlement with big tobacco companies and began insuring Pennsylvanians in 2002. As pressure on the tobacco settlement increased, another source of funding was found to fund the popular program. In 2005, the Pennsylvania Blue Cross/Blue Shield plans agreed to contribute to adultBasic in order to satisfy the charitable obligation they have in return for their tax-exempt status. That agreement expires December 31, 2010. Unless renewed or unless another funding source is found by the end of the year, 45,927 Pennsylvanians will lose their health insurance.

This crisis comes amid continued growth in the ranks of Pennsylvania’s uninsured and renewed scrutiny of the large and growing surpluses held by the nation’s and the Commonwealth’s non-profit Blue Cross/Blue Shield plans.

AdultBasic can serve as an important bridge until federal healthcare reform goes into effect in January 2014. Without an extension, enrollees will be forced to go without insurance, or pay significantly higher premiums for three years.

The Pennsylvania General Assembly should take action this fall to continue the program. Legislation sponsored by House Majority Leader Todd Eachus would continue the Community Health Reinvestment (CHR) Agreement until December 2013, providing continuing coverage for 45,000 enrollees.

While CHR funds are currently used to support adultBasic, they were negotiated to resolve a different problem: public outcry over explosive growth in surpluses accumulated by the state’s four Blue Cross/Blue Shield plans (the Blues). The Blues’ surpluses have grown from $3.5 billion in 2002 to $5.6 billion in 2009. At the same time, the Blues have undergone a “quiet conversion,” moving much of their business from the non-profit parent company to for-profit subsidiaries. Although companies pay a 2% premium tax on for-profit business, rates of for-profit insurers are not subject to rate approval by the Pennsylvania Insurance Department, a motivating factor in the conversion activities.

When enacted, the CHR Agreement was hailed as a model for the nation, and it continues to serve as a standard to establish appropriate community benefit contributions for other non-profit Blue Cross/Blue Shield plans. Extending these agreements supports the Blues’ charitable obligations and maintains access to affordable insurance for low-income working Pennsylvanians.

Learn more:

AdultBasic Sings the Blues, a report by the Pennsylvania Budget and Policy Center and Pennsylvania Health Access Network

AdultBasic Enrollment By County
June 2010
(click on image for PDF)

Waiting List By County (click on image)