2.25.26 House Hearing w/ Pennsylvania Insurance Department & Pennie

Pennsylvania Insurance Department & Pennie: House Budget Hearing Summary

Overview & Structure

The committee convened its final hearing of the day with the Pennsylvania Insurance Department (PID) and Pennie (Pennsylvania’s ACA marketplace). Commissioner Mike Humphries and Pennie’s Executive Director were sworn in and delivered opening statements, followed by member questioning.

Chairman Harris and members acknowledged that PID is funded separately from the General Fund through fees deposited into the Insurance Regulation and Oversight Fund (IROF). However, members noted PID’s broader fiscal impact due to oversight of the state’s insurance markets.

Opening Statements

Pennsylvania Insurance Department (PID)

Commissioner Humphries emphasized that:

• PID is self-funded via licensing fees and other revenue.
• Over the past three years, PID’s IROF budget has hovered around $40 million annually.
• During that same period, PID transferred over $60 million annually to the General Fund.

Operational Highlights (2025 Activity)

• ~54,000 consumers assisted by the Bureau of Consumer Services.
• 14,000 complaints handled.
• $13 million recovered for consumers.
• 7,000 Pennsylvanians helped obtain nearly $140 million in life insurance proceeds.
• 80,000 producer license applications processed with average turnaround under three days.
• 12,000–13,000 rate and form filings reviewed, saving consumers an estimated $277 million by blocking unjustified rate increases.

Commissioner Humphries highlighted process efficiencies including paperless filings, licensing templates, and elimination of unnecessary fees.

Pennie (Pennsylvania ACA Marketplace)

The Executive Director reported:

• 2025 saw record enrollment of approximately 497,000 individuals.
• Congress did not extend enhanced federal premium tax credits.
• Premiums doubled for some enrollees without enhanced credits.
• Approximately 104,000 individuals ended coverage.
• Roughly 20,000 dropped coverage in February alone.
• Current enrollment is near 400,000.

Pennie warned of broader impacts:

• Estimated $715 million reduction in Pennsylvania GDP.
• Approximately 5,100 job losses.
• $49 million in lost state revenue if coverage losses continue.

Pennie referenced—but noted the absence of funding for—a proposed state-level affordability program to mitigate premium impacts.

Major Legislative & Policy Topics Discussed

1. Rate Oversight & Premium Increases

Question: How is PID protecting consumers from excessive or discriminatory rate hikes following the loss of enhanced premium tax credits?

PID Response:

• Insurers submit rate filings annually (May 15).
• PID reviews actuarial assumptions and pushes back on unjustified increases.
• 2026 premiums were approved at approximately 21.5%.
• Federal inaction compounded affordability impacts beyond state control.

PID also noted that approximately 3.5–4% of projected increases reflect worsening risk pools as healthier individuals exit coverage.

2. Maternal Health & Women’s Coverage

Representative Mays asked about essential coverage for women and survey results.

PID Response:

• Insurers will cover zuranolone (oral treatment for postpartum depression) beginning 2026.
• All companies covering PPD screenings and postpartum year care.
• Pelvic floor therapy coverage expanded.
• Doula coverage and surrogacy coverage improving but not universal.
• Breast milk storage and donor milk coverage increasing.
• 2027 filings will be reviewed for further improvements.

Pennie noted:

• Terminations primarily among older individuals not yet Medicare eligible and younger adults.
• No specific demographic analysis yet regarding mothers dropping coverage.

3. Public Adjuster Licensing Reform

The House unanimously passed legislation reforming the Public Adjuster Licensing Act (referenced during hearing).

PID supported key provisions:

• Fee caps on public adjusters (fees previously observed up to ~37–40% of recoveries).
• Prohibition on a public adjuster simultaneously acting as remediation contractor on the same claim (conflict-of-interest prevention).

PID described cases where high fees left homeowners unable to fully repair properties.

4. Navigator vs. Broker Licensing Standards

A member questioned why Pennie navigators/assisters are not required to hold producer licenses.

Pennie Response:

• Brokers must meet full licensing, CE, E&O requirements.
• Navigators/assisters cannot recommend plans.
• They focus on application assistance and eligibility (especially mixed Medicaid/Pennie households).
• ~54% of enrollments assisted by brokers.
• Fewer than 1,000 navigators; over 5,000 brokers.

5. Uninsurance & Downstream Health System Impacts

Members asked about fiscal and system impacts of coverage losses.

Responses from PID and Pennie:

• Uninsured individuals still seek care → uncompensated care increases.
• Providers chase bills; medical debt rises.
• Risk pool deteriorates as younger, healthier enrollees exit.
• Insurers price higher future premiums based on worsened risk pools.
• Economic modeling estimates:
  • $715M GDP reduction
  • 5,100 job losses
  • $49M lost state revenue

Example cited: New Mexico fully backfilled enhanced credits and saw a 14% enrollment increase.

6. Mental Health Access & “Any Willing Behavioral Health Provider”

Members raised network exits and access barriers.

PID described draft legislation:

• Requires insurers to accept any willing behavioral health provider who meets credentialing terms.
• Insurers could not deny participation if network adequacy is met but provider is willing.
• Reimbursement must be comparable to existing network rates.

Network adequacy review updates:

• Switched from “as-the-crow-flies” to turn-by-turn travel time analysis.
• 90% access benchmark target.
• Companies required to fill gaps where providers exist.
• If no provider available locally, cost-sharing must treat available provider as in-network.

7. Prescription Cost-Sharing & Accumulator Programs

Governor’s proposed legislation discussed to ensure:

• Direct consumer prescription payments (cash or credit) count toward out-of-pocket maximums.
• Addresses situations where consumers find lower-cost drugs outside insurer networks.

PID acknowledged federal uncertainty around accumulator rules but affirmed policy goal that actual consumer payments should count toward cost-sharing limits.

8. Pharmacy Benefit Manager (PBM) Oversight (Act 77 of 2024)

Members asked about enforcement status.

PID reported:

• Spread pricing study underway (national consulting firm engaged).
• Evaluating impact of $10.50 dispensing fee.
• PBM transparency reports due in April.
• Network adequacy reports required.
• Developing streamlined complaint form for pharmacies.
• ~80 PBM-related complaints received (many GLP-1 related).
• GLP-1 drugs generally not covered solely for weight loss.

9. Homeowner Insurance & AI Roof Surveillance

Representative Nelson raised concerns about AI/aerial imagery used to identify roof aging and threaten cancellation.

PID Response:

• Guidance issued last year regarding aerial surveillance use.
• Insurers reminded of obligations to notify and allow correction.
• PID saved policyholders ~$70 million over three years through rate pushback.
• Open to bipartisan legislation addressing:
  • Dispute rights
  • Replacement vs. actual cash value policies
  • AI-based underwriting transparency
• Encouraged complaints to build enforcement record.

10. Autism Classification & Coverage

A member questioned classification of autism.

PID Response:

• Autism classification referenced DSM guidance.
• Focus is on ensuring parity and robust coverage benefits.
• Emphasis placed on benefit coverage rather than classification terminology.

Additional Administrative Notes

• IROF returned ~$24M to the General Fund in FY 2023–24.
• No projected transfer included in 2025–26 executive budget due to timing of fee revenue.
• JUA board reconstitution underway (appointments pending).
• Annual complaint volume roughly mid-teens thousands, primarily auto and health.

Key Factual Takeaways

• Pennie Enrollment: Down ~104,000 following expiration of enhanced premium tax credits; premiums doubled for some enrollees.
• Economic Impact: Projected $715M GDP reduction, 5,100 job losses, $49M lost state revenue if trend continues.
• PID Consumer Protection: $13M recovered in 2025; $277M saved via rate review.
• PBM Reform: Enforcement ramping up; transparency reports forthcoming.
• Public Adjuster Reform: Fee caps and dual-role prohibition supported by PID; House passed unanimously.
• Mental Health Access: “Any willing provider” proposal introduced to expand networks.
• Homeowner AI Practices: PID issued guidance; potential legislative interest in dispute protections.