By Meg Murray and Jenny Babcock, Association for Community Affiliated Plans
The Basic Health Program could bring more affordable,
more reliable coverage to millions of adults–and improve access to care for
For all the attention devoted to the Affordable Care Act,
scant consideration has been paid to a little-known part of it called the Basic
Health Program. It’s an option for states that could, if implemented
nationwide, make health care coverage more affordable and accessible for more
than 5 million adults and bring health coverage to more than 600,000 who would
not otherwise have it. Because
many of these adults are likely parents of Medicaid- and CHIP-eligible
children, the Basic Health Program could improve coverage and access to care for
low-income children as well.
Most Say Ahhh! readers likely know how it works, but
here’s a quick recap of the Basic Health Program: under health reform,
low-income people without health coverage will receive federal subsidies
starting in 2014 to buy health insurance through Exchanges. States that implement
the Basic Health Program in addition to an Exchange would contract with health
plans or networks of doctors and hospitals to provide health care to people
with incomes up to twice the Federal poverty line–just under $22,000 for a
single adult–who don’t qualify for publicly-financed programs such as Medicare
or Medicaid. The Basic Health Program would replace subsidized coverage through
Exchanges for this lower-income population. Washington would pitch in by
providing states with 95 percent of the tax credits and subsidies that would
have otherwise been provided through health reform.
According to an Urban Institute paper commissioned
by our organization, the Association for Community Affiliated Plans, costs for
subsidized health coverage through the Exchange are projected to cost
low-income individuals more than $1,650 per year in premiums, copays and
deductibles. For most people, that’s a terrific deal. But for someone making
$22,000 a year, $1,650 is nearly a month’s pay. Many could well forgo coverage
through the Exchange, pay a tax penalty of up to $700 and apply the difference
to food, rent, or electricity. While health reform goes a long way towards
making coverage more affordable through Exchanges and subsidies, health
coverage may remain out of reach for some people with low incomes.
But if states were to implement the Basic Health Program
to provide coverage modeled on Medicaid and CHIP, the Urban Institute estimates
that annual premiums and out-of-pocket costs for adults would drop from a
combined $1,650 to just under $200. At that level of affordability, paying the
tax penalty makes no sense. The Urban Institute estimates that 600,000 people
who would otherwise not purchase insurance would do so if all states ran a
Basic Health Program. That’s reason for cheer on its own.
Better still, the Basic Health Program could help more
children access coverage and care in two ways. First, covering more adults will
help children. While the Basic Health program would primarily cover adults in
2014 (Medicaid and CHIP handle low-income children), the lower premiums and
reduced cost-sharing that could happen under BHP for adults would help
children, as research has suggested a link between parents’
insurance status and their children’s access to care.
It could also serve as a backstop: should Congress not
authorize new funding for CHIP in 2015, the Basic Health Program could serve as
a bridge program for children, providing them with CHIP-like coverage rather
than coverage through an Exchange. Finally, children who are prohibited from
receiving Medicaid or CHIP coverage because of the ‘five year bar’ could be
covered by the Basic Health Program. CHIPRA in 2009 gave states the option of
covering these kids, but only six states had done so as of January 2011.
The Basic Health Program remains a work in progress, and
there’s work yet to be done: the Department of Health and Human Services must
provide states guidance on several issues that will affect how states tailor
their Basic Health Programs–notably, clarification of the mechanisms for
calculating and delivering Federal funds. States must ensure that reimbursement
levels for health plans and providers are high enough to attract an adequate
number of participating physicians to meet demand for services generated by the
program. While some analysts have questioned whether the Basic Health Program
could adversely impact Exchanges, policy solutions could be found to address
these impacts if they do occur.
The Basic Health Program represents the best health
reform has to offer: more affordable and accessible care for millions of
Americans, including parents and their children, and up to 600,000 fewer
Given the financial pressures felt in statehouses across
the country–and the professed desire by leaders on both sides of the aisle for
affordable health options–the Basic Health Program deserves a long, close look.
Governors, Medicaid directors and state legislatures across the country owe it
to the people they serve to give Basic Health Program serious consideration.
Because this program is simply too promising to be kept a