The Basic Health Program
November 17, 2010
Stan Dorn, The Urban InstituteJanuary Angeles, Center on Budget and Policy Priorities
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 FellowThe Urban Institute
Washington, DC202.261.5561 [email protected]
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?
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WHAT IS THE BASIC HEALTH PROGRAM (BH) OPTION?
Part I.
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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)
Other federal rules for BH Form of coverage
State contracts with health plans or provider networkso Competitive bids, multiple options for consumers (if possible) o 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
o Statute: silver and gold actuarial value levelso 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
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HOW COULD STATES USE BH?
Part II.
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Key fact: for the average state, federal BH payments will exceed Medicaid costs for adults
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Sources: Urban Institute/KCMU estimated average Medicaid cost of non-elderly, non-disabled adult inFY 2007, trended forward based on CMS projections of average health spending per capita; CBOestimate of average federal premium and OOP subsidy costs in the exchange.
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 costso Slightly above Medicaid levelso Well below what BH consumers would be charged in the exchange
Provider payment slightly above Medicaid levels
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ISSUES FOR CONSUMERS AND STATES
Part III.
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Affordability for low-income households
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Sources: Commonwealth Connector (Connector) 2010; author’s calculations
Out-of-pocket cost-sharing under CommCare vs. examples of plans that meet ACA’s actuarial value standards, at various FPL levels: 2010
FPLCommCare Potential ACA plans
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%
coinsurance25% coinsurance
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Note: Office visit copays for specialty care in CommCare are $18 and $22, rather than the $10 and $15copays charged for primary care visits at the corresponding income levels shown here.
Sources: Lewin Group 2010; Peterson 2009; Snook and Harris 2009; Quincy 2009; Connector 2010
Consumer issues1. Affordability
BH could be much more affordable than subsidized plans in the exchange, increasing low-income adults’
o enrollment and o use of non-preventive care
Buto Without BH, state could use General Fund dollars to supplement federal
subsidies
2. Family unity With BH, more family members could enroll in the same plan But
o Not much solid evidence of impact
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Consumer issues, continued3. Continuity
BH helps consumers with fluctuating income stay in the same plan up to 200% FPL
Buto A state without BH could pursue other policies to promote continuity o With BH, still some discontinuity—just moves from 133% to 200% FPL
4. Health plan choices Fewer mainstream, commercial options in BH
5. Provider networks Biggest consumer problem with BH—provider payment, access But
o Can lessen the problem by raising payment above Medicaid levelso Low-income -friendly networks, supports in BH
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State issues
1. Can end optional adult Medicaid >133% FPL without making coverage and care less affordable to low-income consumers
2. 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
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What happens to leverage if a state moves consumers from the exchange to BH?
Leverage Potential quality
effectsPotential 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 exchangeFederal government
State-purchased coverage
More More quality gains for residents in state-purchased coverage
Costs may fall for state government
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More state issues3. Can build on current MCO contracts4. 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): o State must establish a trust fund for federal BH dollarso 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) > Medicaid But what about
o Banking for future use when BH payments may decline relative to cost?o Substituting for baseline state costs (e.g., payments to safety net providers)?
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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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