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Pennsylvania Governor Tom Wolf signed into law a bill to establish a state-run health insurance exchange for Affordable Care Act (ACA) individual and small group plans. The new law also mandates the creation of a new health reinsurance program.

Gov. Wolf believes that House Bill 3 will increase access to affordable health insurance and save money for the state and taxpayers.

Since the implementation of ACA in 2010, Pennsylvania depended on the federal health insurance exchange. The federal government is charging insurers a 3.5 percent fee on the monthly premiums paid by ACA enrollees to cover its expenses in operating the health insurance exchange.  The Governor’s office estimated that Pennsylvania insurers paid a total of $98 million in fees this year.

Starting next year, the fee is expected to decline to 3 percent, which will equate to around $88 million for Pennsylvania insurers.

A big step towards making health insurance affordable for Pennsylvanians

In a statement, Gov. Wolf said, “This bill is a huge step toward making health insurance affordable and effective for all Pennsylvanians. It’s pretty rare for a program to come along where everyone pays less, but that’s exactly what this does.”

“And I’m so proud of my colleagues for recognizing this as a priority and moving it along quickly. I want Pennsylvania to be a leader on health care reform, and I want no Pennsylvanian worrying about affording the care they or their loved ones need,” he added.

Pennsylvania is joining several other states already operating their own health insurance exchanges. Technological advancements enable states to efficiently run their health insurance exchange for $30 million, significantly lower than the $98 million in fees paid by Pennsylvanians to the federal government.

Pennsylvania will use the savings from operating its own health insurance exchange to create a reinsurance fund that will directly pay for some of the health care expenses of high-cost individuals. As a result, insured Pennsylvanians on the individual market will pay lower premiums. It will also reduce the cost (approximately $2 billion) of health care premium subsidies for low-income individuals.

According to the Governor’s office, Pennsylvania consumers are expected to save up to $250 million in health insurance premiums. The state is set to start operating its own health insurance exchange as early as January 1, 2021.