In an effort to control costs and get people covered by health insurance, the Affordable Care Act offers a number of options for covering low-income people. Among those options is the Basic Health Program, which some say will save money and others say will kill health insurance exchanges.
In a new health policy brief from Health Affairs and the Robert Wood Johnson Foundation released last week, author Amanda Cassidy, from Meitheal Health Policy, discusses the issues surrounding the Basic Health Program and some options states have going forward.
Beginning in 2014, states could offer the Basic Health Program to people whose incomes are too high to qualify for Medicaid but are also below 200 percent of the federal poverty level (in 2012, that means less than $46,100 for a family of four).
To qualify for the Basic Health Program, residents must be under age 65, cannot be eligible for Medicaid and cannot be offered employer-sponsored coverage that is considered affordable (that is, costing no more than 9.5 percent of household income).
To help pay for the Basic Health Program, the federal government would give a state 95 percent of the federal premium tax credits and cost-sharing subsidies that would have been spent on individuals had they been enrolled in a plan through a state exchange.
On one hand, a Basic Health Program might reduce a state's costs, said Cassidy, but there is also potential financial risk for the states. The existence of a Basic Health Program in a state could mean that fewer people would receive coverage through a state's exchange, possibly threatening the overall viability of that exchange.
"This could put states at risk to have to provide state money if the federal coverage does not end up being enough. States could end up owing money," said Cassidy. "It shifts risk from the individual to the state, which could encourage people to get coverage, which would help. But we don't have experience with this, so for the government to confidently predict this will end up helping states – with tight budgets in the current environment – the states may not want to add their money into this," said Cassidy.
Cassidy added that the two biggest complicating factors in each state's decision to opt into the Basic Health Program are that the Department of Health and Human Services (HHS) hasn't released a lot of guidance surrounding the program's implementation, and states are already busy preparing for the other ACA mandatory implementations.
"Until states know the details and parameters surrounding this program, it's difficult for them to make good plans going forward. If there's more guidance, many states may go ahead with it," Cassidy said. But, she noted, "Because this is a voluntary program, many states may not have the capacity to set up another program like this and tackle all the administrative work that goes along with it."