State Should Move Forward with Basic Health Program
In a recent turn of events, the Governor’s office announced that it will suspend implementation efforts on the Federal Basic Health Program, citing lack of guidance from the federal government and technology development issues. Last year the Legislature passed HB 2319 which directed the state to move forward with design and implementation of the Federal Basic Health option.
The option in the health care reform law has the potential to provide better quality and more affordable health insurance to more than 160,000 low-income individuals and families. (1) Such a plan would allow us to build upon our state’s own Basic Health Plan which was established in 1987 to provide affordable health coverage for low-income, working adults.
Explanations of how health care reform will expand insurance coverage to millions of Americans often focus on two elements of the law: the expansion of the Medicaid program and the Health Benefit Exchanges.
But there’s another element that often gets less attention: the Federal Basic Health program, an option that states can choose starting in 2014. It is designed to serve people who will earn too much to qualify for Medicaid under the new health care reform law but who may still struggle to afford insurance in the exchanges – even with the help of tax credits available in the Exchange.
Specifically, the Federal Basic Health Program would be offered in lieu of the Exchange for households with incomes between 138 and 200 percent of the Federal Poverty Level, or between about $26,300 and $38,000 for a family of three.(2) Legal immigrants with low incomes would be eligible as well.(3)
The figure below illustrates how a Federal Basic Health Program will help give low income Washingtonians access to health insurance.
A study by the Urban Institute estimated the cost of the Federal Basic Health Program insurance plans using two different scenarios. As the table below shows, Federal Basic Health Program recipients could save significant amounts of money each year on premiums and cost-sharing in comparison to what they would for pay for Exchange coverage.
Federal funding for the Basic Health Program could help states further improve affordability, benefits, and access. States offering a Basic Health option receive 95 percent of what the federal government would have spent on premium tax credits and cost-sharing reductions for individuals who would otherwise be enrolled in the Exchange.(4) Federal payments could exceed costs by $1,250 to $1,350 per enrollee, which can improve the program in various ways, including reducing premiums and cost-sharing, increasing rates paid to health care providers, or covering additional health benefits.(5)
Decisions made now will set the course for the future of health care in Washington state. Any hurdles must be addressed with adequate attention and resources, so that we can move forward with full implementation of health care reform. Washington State should continue following the clear policy direction to move forward with Federal Basic Health Option implementation as laid out by the Legislature last session.
1. Actual enrollment is estimated to be between 75,000 and 111,000.
Matthew Buettgens and Caitlin Carroll, The ACA Basic Health Program in Washington State (The Urban Institute, August 2012). http://www.urban.org/UploadedPDF/412572-The-ACA-Basic-Health-Program-in-Washington-State.pdf
2. Eligibility for Medicaid is up to 133% FPL. In addition, there is an income disregard of 5 percent, effectively increasing eligibility up to 138% FPL. The increased Medicaid eligibility results in eligibility for Federal Basic Health at incomes greater than 138% FPL.
3. Legal immigrants under 138% FPL are eligible if they do not have an affordable offer from an employer and are ineligible for Medicaid because they have been a resident less than five years.
4. Federal guidance on the Federal Basic Health Program has not been released, so there are many unanswered questions about how states will receive payments and whether or not the 95 percent applies to cost sharing subsidies as well as the premium tax credits.
5. Matthew Buettgens and Caitlin Carroll, The ACA Basic Health Program in Washington State (The Urban Institute, August 2012). http://www.urban.org/UploadedPDF/412572-The-ACA-Basic-Health-Program-in-Washington-State.pdf
Exact projections on increased provider rates must wait until we have more guidance from the federal government, but estimates show that Washington should be able to adjust cost sharing so that provider rates are substantially higher than Medicaid.