The Basic Health Program Option: “Skip Protection” for Insurance Coverage?

In the seemingly ancient days when portable CD players were ubiquitous, skip protection was a valued feature that helped ensure that your music didn’t miss a beat when the player was jostled. Similarly, the ACA’s Basic Health Program (BHP) option is intended to serve as “skip protection” for individuals who move in and out of Medicaid, by providing them with continuous health insurance coverage. The BHP option may also provide more affordable premiums and cost-sharing than those found in exchange plans and ensure better continuity of provider networks as individuals move across programs. A recent study conducted by the Urban Institute suggests that a BHP might achieve these benefits if it is structured to provide Medicaid-like coverage and a cost sharing structure similar to the Children’s Health Insurance Program (CHIP).
In order to be eligible for the BHP, individuals must have incomes below 200 percent of the federal poverty level and be ineligible for Medicaid (or be legal permanent residents below 133 percent of the federal poverty level). States that elect to establish a BHP will receive 95 percent of the federal funding that individuals would have received through premium tax credits. While the issues surrounding the BHP are complex, some states have already taken steps to decide whether to establish a BHP.

• Washington State, which already has a state Basic Health Plan, conducted an analysis of the ACA’s BHP option that discusses the advantages and disadvantages of pursuing it in the state.
• Rhode Island also conducted an initial assessment of the option.

For states that are just beginning to consider the BHP, there are tools available to aid the decision-making process. Deborah Bachrach and Melinda Dutton of Manatt Health Solutions haveoutlined a four-step approach that states can take when assessing whether or not to pursue to the BHP option:

• First, states should assess the financial feasibility of the BHP, by calculating the estimated costs of purchasing the BHP for the target population and assessing what funds would be received from the federal government.
• Second, states should explore the logistics of administering the BHP, including deciding what agency would operate the plan and what resources are available.
• Third, states should consider options for aligning with Medicaid, CHIP and/or the exchange, and assess delivery model options for the BHP, such as Medicaid managed care plans, qualified health plans, primary care case management, or accountable care organizations.
• Finally, states should assess the likely impact that establishing a BHP would have on the scale, financing, and risk adjustment within the exchange.

Although a couple of the key goals of the BHP are to reduce churning and maintain continuity of coverage, some experts have raised a few concerns. Findings from a newly released study in theNew England Journal of Medicine suggest that operating a BHP within Medicaid might increase churning between the BHP and exchange at the 200% FPL threshold. The authors warn that this churning could have significant implications on costs for enrollees, as they move from a Medicaid-like coverage to private coverage. There are also other factors to consider when weighing BHP options, such as: the effect on premiums for individuals in the exchange, administration costs for operating a separate BHP, and provider participation. Although these factors are of concern for the viability of the BHP, states can use analytical models, such as the one outlined by Manatt, to see if a BHP might be a good option for them.
Is your state considering whether or not to pursue the BHP option?  Has your state already decided? Tell us on your state’s BHP milestone discussion page or in the comments below!