The New York Dept. of Financial Services on July 31 said a new insurance plan — dubbed the Essential Plan — would be available to people whose annual income is at or below 150% of the federal poverty level ($17,655 for an individual and $36,375 for a family of four).
The Essential Plan was created under the Basic Health Program (BHP) provision of the Affordable Care Act (ACA). New York and Minnesota appear to be the only states that intend to offer a BHP for the 2016 plan year. And BHPs might not make sense in other states.
“Those two states are unique at this point in time, and they have a set of circumstances where the BHP makes sense for them,” says Deborah Bachrach, a former New York Medicaid director who now is a partner in the law firm Manatt, Phelps & Phillips, LLP. Unlike most states, New York uses state funds to provide health coverage to low-income legal immigrants who have been in the country less than five years. Adding a BHP option will allow New York to substitute federal funds for state funds. In addition, New York’s Medicaid program, prior to the ACA, provided coverage to parents with incomes higher than 138% of the FPL. The BHP enabled the state to continue to provide affordable coverage to these individuals, but now with federal, rather than state dollars, she explains.
The ACA allows states to install a BHP for individuals earning between 133% and 200% of the federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children’s Health Insurance Program, other government programs or employer-sponsored insurance. Under New York’s BHP, people who earn up to 200% of the FPL ($23,540 for an individual and $48,500 for a family of four) will pay a $20 monthly premium.
While the BHP concept was outlined in the ACA, it wasn’t until last October that CMS issued a proposed notice on the rules. Final guidance followed in February 2015 for BHPs that would be offered for the 2016 plan year. Federal funding for a BHP equates to 95% of premium and cost-sharing subsidies that would have been provided to individuals through public exchange coverage, HHS said on Oct. 21.
New York’s Essential Plan will offer coverage similar to Qualified Health Plans (QHPs) sold through the state-run exchange, but will have no annual deductible and low copayments. A person who earns about $20,000 a year and uses moderate health care services, including an inpatient hospital stay, prescription drugs and doctor’s visits, will pay about $730 a year for premiums and out-of-pocket costs under the Essential Plan in 2016, compared to about $1,830 in 2015 if they were enrolled in a QHP, according to the New York Dept. of Financial Services.
Minnesota’s BHP entity, known as MinnesotaCare, has been in existence for more than 20 years, according to the state. State lawmakers spent much of 2014 bringing that program in line with federal BHP requirements. MinnesotaCare provides coverage to low-income residents through a state tax on Minnesota hospitals and health care providers, federal Medicaid funds and enrollee premiums. The federal government took over paying half the cost for most adults without children on MinnesotaCare in August 2011 as part of the bridge to the ACA and the BHP funding opportunity. Before that, there was no federal match for adults without children on MinnesotaCare. Moving some of those beneficiaries into a BHP allows federal dollars to cover 95% of the costs.
BHP services will be provided via managed care organizations. In 2015, eight managed care organizations and county-based purchasing plans provide services to MinnesotaCare enrollees. The total cost of MinnesotaCare for state fiscal year 2014 was $520 million. Of that, $242 million came from the federal government, $31 million from premiums and $247 million from the state.
For state fiscal year 2017 — the first full year of full BHP funding — projected MinnesotaCare enrollment is 121,155 individuals. The projected cost is $824 million ($351 million from the federal government, $34 million from premiums and $438 million from the state), according to the Minnesota Dept. of Human Services.
To qualify for MinnesotaCare, individuals must have household income at or below 200% of the FPL and not be otherwise eligible for Medical Assistance, the state’s Medicaid program. Individual MinnesotaCare premiums are on a sliding income-based scale and range from $0 to $80 per month. Children under age 21, some military families and families with an enrolled American Indian do not pay a monthly premium, according to the Minnesota Dept. of Human Services. Enrollees are responsible for copayments for certain services such as prescription drugs ($3/prescription), non-emergency visits to the emergency room ($3.50/visit), and eyeglasses ($25).
While other states might consider adding a BHP, Bachrach suggests they are more likely to restructure the subsidy after 2017 when states can apply for a 1332 waiver. Under a 1332 waiver, a state could develop a version of a BHP and receive 100% of the dollars, unlike the 95% allowed under a BHP, and might be allowed to expand the program to individuals who earn more than 200% of the FPL, she explains.
States are going to have to figure out the likely fiscal implications for implementing a BHP, says Matt Salo, executive director of the National Association of Medicaid Directors. “There will be fiscal implications, and they could be positive or negative, but there will be implications,” he says.
Some states that expanded Medicaid eligibility, as called for by the ACA, wound up with far greater enrollment than anticipated. But that enrollment could be indicative of a population that sought care through a fragmented system of emergency rooms and free clinics.
Kentucky, for example, saw higher-than-expected Medicaid enrollment, but determined that not expanding the program might cost more in the long run. Medicaid expansion is very hard to reverse.
At a June hearing, House Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) questioned HHS Sec. Sylvia Burwell about BHP programs. New York, he said, will spend an estimated $2.5 billion on the program, but he contended the funding had not been appropriated. Roskam’s office did not respond to AIS’s request for comment on BHP funding.
Excerpted from the 8/1/2015 issue of AIS’s Inside Health Insurance Exchanges
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