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The Basic Health Program

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Title: The Basic Health Program


1
The Basic Health Program
Stan Dorn, The Urban InstituteJanuary Angeles,
Center on Budget and Policy Priorities
  • November 17, 2010

2
The Basic Health Program Option Under the
Affordable Care Act Issues for Consumers and
States November 17, 2010 Webinar
  • State Coverage Initiatives
  • A national program of the Robert Wood Johnson
  • Foundation, administered by AcademyHealth
  • Stan Dorn, Senior Fellow
  • The Urban Institute
  • Washington, DC
  • 202.261.5561 ? sdorn_at_urban.org

3
Topics
  • What is the Basic Health Program option in the
    Affordable Care Act (ACA)?
  • How could states use it?
  • What are the main issues for consumers and
    states?

4
What is the basic health program (BH) option?
  • Part I.

5
Who can get BH?
  • Citizens and lawfully present immigrants who
  • Are ineligible for Medicaid
  • Have incomes at or below 200 percent of the
    federal poverty level (FPL) and
  • Lack affordable access to comprehensive
    employer-based coverage, as defined by the ACA.
  • In other words, two groups
  • Adults between 133 and 200 percent FPL
  • Lawfully present immigrants below 133 percent FPL
    who are ineligible for Medicaid (e.g., legalized
    within the last 5 years)

6
Other federal rules for BH
  • Form of coverage
  • State contracts with health plans or provider
    networks
  • Competitive bids, multiple options for consumers
    (if possible)
  • Innovation
  • BH-eligible people may not use the exchange
  • Premiums no more than what consumers would have
    paid in exchange
  • Out-of-pocket (OOP) cost-sharing at or below
    certain levels
  • Statute silver and gold actuarial value levels
  • HHS may say that OOP costs may not exceed levels
    in the exchange
  • At least minimum essential benefits
  • MLR at least 85
  • Federal payments 95 of federal subsidies if BH
    enrollees had been in the exchange

7
How could states use bh?
  • Part II.

8
Key fact for the average state, federal BH
payments will exceed Medicaid costs for adults
Sources Urban Institute/KCMU estimated average
Medicaid cost of non-elderly, non-disabled adult
in FY 2007, trended forward based on CMS
projections of average health spending per
capita CBO estimate of average federal premium
and OOP subsidy costs in the exchange.
9
Possible approaches to BH
  • Many approaches are possible this webinar
    examines two limited variants
  • Variant 1 Medicaid look-alike
  • Benefits, consumer costs, health plans, providers
  • Variant 2 CHIP for adults
  • Consumer costs
  • Slightly above Medicaid levels
  • Well below what BH consumers would be charged in
    the exchange
  • Provider payment slightly above Medicaid levels

10
Issues for consumers and states
  • Part III.

11
Affordability for low-income households
Sources Commonwealth Connector (Connector) 2010
authors calculations
12
Out-of-pocket cost-sharing under CommCare vs.
examples of plans that meet ACAs actuarial value
standards, at various FPL levels 2010
FPL CommCare CommCare CommCare Potential ACA plans Potential ACA plans Potential ACA plans
FPL General Deductible Primary Care Visit Copays Prescription Drug Copays General Deductible Office Visits Prescription Drugs
150 None 10 10, 20, 40 None 20 copays Copays of 10, 25, 45
175 None 10 10, 20, 40 250 15 copays 25 coinsurance
200 None 10 10, 20, 40 250 15 copays 25 coinsurance
225 None 15 12.50, 25, 50 1,000 25 coinsurance 25 coinsurance
Sources Lewin Group 2010 Peterson 2009 Snook
and Harris 2009 Quincy 2009 Connector 2010
Note Office visit copays for specialty care in
CommCare are 18 and 22, rather than the 10 and
15 copays charged for primary care visits at the
corresponding income levels shown here.
13
Consumer issues
  • Affordability
  • BH could be much more affordable than subsidized
    plans in the exchange, increasing low-income
    adults
  • enrollment and
  • use of non-preventive care
  • But
  • Without BH, state could use General Fund dollars
    to supplement federal subsidies
  • Family unity
  • With BH, more family members could enroll in the
    same plan
  • But
  • Not much solid evidence of impact

14
Consumer issues, continued
  • Continuity
  • BH helps consumers with fluctuating income stay
    in the same plan up to 200 FPL
  • But
  • A state without BH could pursue other policies to
    promote continuity
  • With BH, still some discontinuityjust moves from
    133 to 200 FPL
  • Health plan choices
  • Fewer mainstream, commercial options in BH
  • Provider networks
  • Biggest consumer problem with BHprovider
    payment, access
  • But
  • Can lessen the problem by raising payment above
    Medicaid levels
  • Low-income -friendly networks, supports in BH

15
State issues
  • Can end optional adult Medicaid gt133 FPL without
    making coverage and care less affordable to
    low-income consumers
  • Leverage effects of BH
  • Fewer covered lives in the exchange, hence less
    leverage to cut costs and improve quality
  • More covered lives in state-purchased coverage,
    hence more leverage to cut costs and improve
    quality

16
What happens to leverage if a state moves
consumers from the exchange to BH?
  Leverage Potential quality effects Potential cost effects
Coverage in the exchange Less Fewer quality gains for residents covered in the exchange Costs may rise for Residents buying coverage in the exchange Federal government
State-purchased coverage More More quality gains for residents in state-purchased coverage Costs may fall for state government
17
More state issues
  • Can build on current MCO contracts
  • What to do with the BH surplus?
  • BH payments based on subsidies in exchange, which
    may decline after 2014, relative to health care
    costs
  • ACA Section 1331(d)(2)
  • State must establish a trust fund for federal BH
    dollars
  • Trust shall only be used to reduce the premiums
    and cost-sharing of, or to provide additional
    benefits for BH enrollees
  • Can raise BH PMPMs (hence provider payment) gt
    Medicaid
  • But what about
  • Banking for future use when BH payments may
    decline relative to cost?
  • Substituting for baseline state costs (e.g.,
    payments to safety net providers)?

18
Conclusion
  • Since HHS has not yet provided guidance,
    conclusions are necessarily somewhat tentative
  • For this particular population, the affordability
    advantages of BH (using a Medicaid-look-alike
    or CHIP for adults approach) probably outweigh
    the net disadvantages of a Medicaid/CHIP delivery
    system
  • Depending on state circumstances and federal
    guidance, BH may allow meaningful (but probably
    not enormous) General Fund savings
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