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New Laws Would Allow State to Take $200 Million from the JUA to Balance the Budget

Two bills signed into law on Oct. 30, 2017, would require the Pennsylvania Professional Liability Joint Underwriting Association (JUA) to pay $200 million to the state or face abolishment.

The legislature originally directed the transfer of the JUA's funds under HB 1605 (Act 85 of 2016). The JUA refused to consent to the transfer and, instead, opted to file a complaint in federal court.

Since then, the legislature has made three additional attempts to take the JUA's funds through proposed legislation, two of which are through House Bill (HB) 118 and HB 674.

There were slight differences in HB 118 and HB 674 regarding when the transfer must take place and which state department would manage those funds. Because HB 674 was signed into law after HB 118, the provisions regarding the JUA in HB 674 cancel out the provisions in HB 118.

Below is a summary of HB 674 (Act 44 of 2017):

  • It requires the JUA to pay $200 million by Dec. 1, 2017.
  • It specifies that the money taken from the JUA must be available "for expenditures in accordance with appropriations by the General Assembly to the Department of Human Services for medical assistance payments for capitation plans." 
  • If payment is not made by Dec. 1, the MCare Act that created the JUA will expire. The expiration of this provision would subsequently abolish the JUA.
  • It would transfer the JUA's funds to the Department of Insurance (the Department). The Department would be responsible for offering the medical professional liability insurance the JUA was responsible for providing. 
  • It would require the Department to transfer the $200 million to the state treasury for deposit into the General Fund as soon as practicable.
  • Annually, thereafter, the Commissioner of the Department of Insurance would be required to determine what is in excess of the money needed to administer the medical professional liability insurance funds. Any excess funds would be transferred to the state's General Fund.

PAMED will continue to track this issue and provide additional member updates as soon as possible. 

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Another example of governments inability to control spending and then turning to any real or imagined source of revenue to cover incompetence. Whether the Philadelphia soda tax or this seizure of monies, the theme remains the same. Funds were contributed by physicians to provide a resource of coverage for malpractice litigation. Contributions were required by law, in essence an additional tax on physicians for the right to practice in Pennsylvania. Now a prime target for legislative acquisition, a sophisticated transfer of revenue to cover excessive spending.

Thursday, November 9, 2017 11:20:13 AM