Basic Health Programs are one of several options in the Affordable Care Act for states to further expand affordable health coverage to low and modest-income residents. Basic Health Programs can be more affordable than marketplace coverage, making care accessible to people who may otherwise forego coverage and care. Our blog series describes how Minnesota and New York are launching Basic Health Programs.
How Basic Health Programs work
The Basic Health Program allows states to create an alternate public coverage program for consumers with incomes at or below 200 percent of poverty. To finance this program, states can use 95 percent of the funds that the federal government would otherwise allocate to provide consumers in this low-income group with premium assistance and cost-sharing reductions for marketplace coverage.
The Basic Health Program offers state governments many potential benefits. While extending access to health care to low-income residents, the program can help the state financially, simplify administration of health coverage, and build on and improve the state’s existing public coverage system.
Benefits of Basic Health Programs:
- Charge lower costs to enrollees
- Provide vital coverage to lawful immigrants who do not yet qualify for Medicaid
- Help people maintain continuous coverage as their incomes fluctuate
- Reduce the “churn” (frequent switching between Medicaid and private plans as income changes)
- Encourage innovations that better coordinate and deliver care
Nine requirements Basic Health Programs must meet
To operate a Basic Health Program, states must meet the following main requirements. (For more details, see 42 Code of Federal Regulations, 600.1 et seq.):
- States must adhere to eligibility requirements: Basic Health Programs must serve two populations of state residents age 64 and younger: The people served by Basic Health Programs cannot have access to other minimum essential health coverage, including Medicare, full Medicaid benefits, Tricare, etc. They also may not be offered affordable job-based coverage.
- People with incomes between 133 and 200 percent of poverty ($15,521 to $23,340 for an individual in 2014); and
- Non-citizens with incomes between 0 and 200 percent of poverty who are lawfully present but do not qualify for Medicaid or CHIP, such as immigrants who have lived in the United States for less than five years.
- Basic Health Program premiums and cost-sharing must be affordable: States can decide to charge Basic Health enrollees less in premiums and cost-sharing than they would be charged in the marketplace. However, Basic Health premiums and cost sharing can never exceed what enrollees would pay if they enrolled in marketplace plans with premium tax credits and cost-sharing help. The ability to make plans more affordable is the primary reason consumer advocates urge states to consider Basic Health.
- Maximum premiums: In 2015, the maximum premium a Basic Health plan may charge an enrollee ranges from 2.01 percent of income for people with incomes up to 133 percent of poverty to 6.34 percent of income for people up to 200 percent of poverty.
- Maximum cost-sharing: For people with incomes up to 150 percent of poverty, plans must cover at least 94 percent of the health care expenses of a typical population. For people with incomes between 150 and 200 percent of poverty, plans must cover at least 87 percent of the health care expenses of a typical population. (Note: American Indians and Alaska Natives enrolled in federally recognized tribes are not charged any cost-sharing. Nor are people charged when they use the Indian Health Service, tribal programs, or Urban Indian health programs.
- The application/enrollment system must be streamlined, following rules similar either to Medicaid or the marketplace. The marketplace must use a single application to determine eligibility for Medicaid, Basic Health, or marketplace coverage with premium assistance. If people apply directly to a state agency for Basic Health, the agency must coordinate with Medicaid, CHIP, and the marketplace to ensure that people can promptly enroll in the proper program. As they can with Medicaid and marketplace plans, states may use certified application counselors to help people enroll in Basic Health plans. States can follow either Medicaid or marketplace rules for:
- Timely eligibility determinations
- Effective dates of enrollment
- Enrollment periods (e.g., enroll any time of year like in Medicaid, or at open and special enrollment periods like in the marketplace)
- Appeals systems
States with restricted open enrollment periods for Basic Health must provide enrollees the same grace periods to pay past-due premiums as are available to Marketplace enrollees. States that accept enrollment year round must provide a 30-day grace period for consumers to pay past-due premiums. In those states, people who fail to pay premiums cannot be locked out from re-enrolling for longer than 90 days.
- States must use health plans to provide Basic Health Program services: Health care can be provided by licensed HMOs, licensed insurers, networks of providers, or non-licensed HMOs that participate in the state’s Medicaid or CHIP program. In any case, the state must consider enrollees’ health needs, select plans through a competitive process, and negotiate with the plans to provide innovative features such as:
- Care coordination and care management, especially for patients with chronic conditions
- Incentives for the use of preventive services
- Ways to maximize patient involvement in health-care decisionmaking
Contracts with plans must include standards for network adequacy, quality, enrollment and disenrollment, notices and appeals.
- The plans must at least cover essential health benefits: Plans can cover additional services, but they must cover the 10 essential health benefits required under the Affordable Care Act.
- Applicants must have a choice of health plans: Basic Health enrollees must be able to choose between at least two health plan offers (unless the state is unable to obtain two health plan offers and has received an exception to this requirement from the federal government).
- Health plans must operate statewide with no enrollment caps: Basic Health Programs must operate statewide, and must accept all applicants who are eligible, with no waiting lists or enrollment caps. (States may get federal approval for transition plans for 2015 only.)
- States must keep funding for Basic Health separate from other funds: States hold the money that they get from the federal government to operate Basic Health in a separate trust fund. It can only be used to reduce premiums or cost-sharing for enrollees or to provide additional benefits.
- States must first submit a blueprint to establish Basic Health: States that want to operate a Basic Health program must draft a blueprint which explains the state’s operational plans and policy decisions, offer an opportunity for public comment, and then submit the blueprint to the federal Centers for Medicare and Medicaid Services for certification. States must consult with any Indian tribes located in the state in developing and executing the blueprint.