Health care, gas drilling industries await Gov.-elect Wolf’s footprint
Gov.-elect Tom Wolf is expected to push for change affecting two high-profile industries in Pennsylvania — natural gas production and health care — when he takes office in two months.
The York County Democrat successfully campaigned on a number of policy differences with Republican Gov. Tom Corbett, including a pledge to extract more tax revenue from natural gas drillers and fully comply with the Affordable Care Act.
It looks likely that Wolf will prevail in achieving both goals, experts said, though it will probably involve some degree of compromise with the leaders in the General Assembly — where Republicans increased majorities in both chambers.
“The question has become, ‘What can he get through this legislature?’ ” said Sarah Battisti, a deputy chief of staff in former Gov. Ed Rendell’s administration, speaking of higher taxes on gas drillers. Battisti leads the energy practice at Bravo Group, a public and government relations firm.
Analysts expect Wolf to succeed in pushing through some form of increased tax on drilling, given its popularity in recent polls and value as a bargaining chip to get the Democrat governor to sign GOP-sponsored legislation.
“He has to be able to compromise and say, ‘What do you want … because I clearly want this. How do we work it out with the potential of a $3 billion budget hole?’ ” Battisti said.
Experts said Wolf doesn’t need the Legislature to approve a reversal of Corbett’s Healthy PA plan, which was presented as an alternative to expanding Medicaid, the health insurance program for the poor. But the timing of any changes could be complicated because Wolf will take office after the plan goes into effect.
Corbett, who opposed President Obama’s signature law, negotiated directly with the administration to get Healthy PA approved, a year after the optional Medicaid expansion started in about half the states. Wolf could do the same to undo it, said Robert Field, a professor of law and public health at Drexel University.
“He has to get permission from federal government to change it,” Field said. “I don’t doubt that the Obama administration would be happy to oblige.”
An estimated 500,000 to 600,000 low-income Pennsylvanians could become insured through Healthy PA or a traditional Medicaid expansion.
Wolf intends to abandon the Healthy PA reforms, and has asked Corbett not to proceed with the plan, Wolf spokesman Jeffrey Sheridan said. “The process to undo Healthy PA and transition to Medicaid is going to be a time-consuming and costly process,” he said.
Corbett policy director Jennifer Branstetter said Wolf should allow Healthy PA to play out and not risk possible disruption to people’s health coverage.
“There’s really no way for us to undo it. Open enrollment starts in 12 days,” she said, referring to the Dec. 1 start of enrollment for coverage that begins Jan. 1.
Meanwhile, a per-well impact fee on gas drilling collects about $200 million per year. Wolf predicted as much as $1 billion a year from a tax on up to 5 percent of production, without saying how he arrived at that figure.
The gas industry will continue to fight, and companies that are squeezed by depressed gas prices could cut back on drilling.
“The tax proposals that have been discussed to date, we believe will cost business development,” said David Spigelmyer, president of the North Fayette-based Marcellus Shale Coalition. The industry group will lobby lawmakers against raising taxes.
Beyond increased taxes, Wolf will have other opportunities to affect the state’s energy industry. He said during the campaign that he did not favor more gas drilling beneath state-owned lands, parks and forests. Corbett planned to restart signing leases to allow it in January.
Wolf has not indicated who he will choose to lead key agencies such as the Department of Environmental Protection, but one appointment gives the energy industry at least one friendly face in the Cabinet. Katie McGinty, his choice for chief of staff, has a good relationship with the industry despite former leadership roles with the DEP and EPA. She spoke at a Marcellus Shale Coalition meeting last year.
“She understands that killing business is not in the best interest of the environment,” Battisti said. “She understands we are an exporter of electricity, we have coal and gas, so let’s find a way to make them work together.”
Also up in the air is whether Wolf will push for the state to set up and run its own exchange, an online marketplace where people who don’t get health coverage through an employer can shop for insurance. The state is using the federal government’s exchange, Healthcare.gov.
Corbett didn’t establish an exchange because he was concerned about saddling the state with additional costly bureaucracy.
Wolf supports Pennsylvania setting up its own website, but experts said he’s likely waiting for the U.S. Supreme Court to rule in a case that could eliminate tax subsidies for low-income workers who buy through Healthcare.gov.
“If they do strike down subsidies, there may be more pressure for the state to set up its own exchange, and he may have an easier time getting it through,” Field said.