To be eligible for certain federal funds during the COVID-19 public health emergency, states had to suspend dropping beneficiaries from Medicaid programs. The end of the COVID-19 public health emergency will lead to the resumption of Medicaid eligibility redeterminations, leading many individuals to be ineligible for Medicaid.
For many, that means their options are buying relatively expensive plans on the Affordable Care Act (ACA) health insurance exchanges or joining the ranks of the uninsured. As a result, some states have investigated a little-used component of the original Affordable Care Act, Basic Health Programs.
The Affordable Care Act envisioned Basic Health Programs as filling that niche. Congress designed Basic Health Programs to deliver a more affordable insurance option for those whose income fluctuated between Medicaid eligibility and the qualified health plans available to purchase on the health insurance exchanges. States would receive federal funds to cover much of the cost. The federal government would theoretically save money because they wouldn’t be paying subsidies available in the ACA health insurance exchanges.
Those with incomes between 133% and 200% of the federal poverty level are eligible for Basic Health Program plans. The program also enables states to offer plans to legal immigrants. Those immigrants are generally ineligible for Medicaid because of the five-year waiting period.
Here’s a look at what states have created Basic Health Programs, how states fund them, premiums, cost-sharing, and more:
What states have Basic Health Programs?
Today, just New York and Minnesota have Basic Health Programs. New York’s program went live in 2016 while Minnesota transitioned its MinnesotaCare program to a Basic Health Program in 2015. Both New York and Minnesota had previous state-funded programs that covered low-income residents that were ineligible for Medicaid. It made sense for both states to transition to Basic Health Programs to access federal funds. Kentucky and Oregon both recently passed bills to establish Basic Health Programs and both may begin operations next year.
Who funds the Basic Health Program?
The federal government funds the majority of the Basic Health Program. The Centers for Medicare and Medicaid (CMS) makes payments equal to 95% of the premium tax credits and cost-sharing reductions enrollees would have received had they enrolled in a plan on a health insurance exchange. The federal government pays states in advance and then reconciles those payments against actual enrollment.
According to a recent MinnesotaCare report created by the Minnesota House Research Department, the program paid $452.6 million for enrollee medical services in 2020. The federal government paid for 87% of that cost and the state paid 6%. Enrollees paid 7% through premium payments and other cost-sharing. The state funds its 6% of the cost by taxing health care providers 1.8% on gross revenues. It also taxes nonprofit health plan companies 1% of their premiums.
Do enrollees in Basic Health Programs pay monthly insurance premiums?
In some cases, yes. In mid-2021, New York eliminated all enrollee premiums. As a result, Basic Health Program enrollees pay no monthly premiums in New York. In Minnesota for the 2022 calendar year, the monthly premium ranges from $4 for those with income at 160% of the federal poverty level to $28 for those at 200% of the federal poverty level. The state mails premium invoices to enrollees about 30 days before the month of coverage. Enrollees make payments via mail, online, or in person. Failure to pay a premium leads to disenrollment.
How many individuals enrolled in a Basic Health Program plan?
As of August 2021, nearly 1 million New Yorkers were enrolled in one of the state’s Basic Health Program plans, called Essential Plans. In Minnesota, nearly 110,000 individuals were enrolled in MinnesotaCare as of May 2022.
What services do Basic Health Programs cover?
States must offer the same Essential Health Benefits that the ACA requires of plans in the ACA exchanges. Those benefits include care like diagnostic services, inpatient and outpatient hospital services, lab and X-ray services, and more. Plans also include additional cost-sharing. For example in Minnesota, there’s a $75 copay for ER visits, a $25 copay for non-preventive visits, and $250 per inpatient hospital admission, among other cost-sharing. In New York, that cost-sharing varies based on income, with most cost-sharing only applicable to those with income above 150% of the federal poverty level.
Who administers the insurance in a Basic Health Program?
States contract with health insurers to offer the plan. Typically, those health insurers are paid a monthly payment for each enrollee. The health plan then negotiates specific rates with health care providers. Basic Health Programs are required to offer enrollees a choice of at least two participating health plans in a given county. As a result, today Minnesota has 7 different Managed Care Organizations (MCO) while New York has 16 different MCOs.
Certifi helps states with Section 1115 Medicaid waivers or Basic Health Programs bill, collect payments and reconcile capitated payments thanks to a premium billing and collections module that is R3 certified for Medicaid.