How N.C. Could Expand Insurance Coverage via the Basic Health Plan
February 7, 2014 3 Comments
In my white paper on health reform in North Carolina, I suggested that we could use authority granted under Section 1331 of the ACA to develop a Basic Health Plan (BHP) through which we could greatly expand health insurance coverage for persons between 0 and 200% of poverty . This BHP could achieve health insurance expansion without adding persons to the traditional Medicaid program, and newly covered persons could enroll in plans offered on the state’s Health Insurance Exchange. Several clarifying points, responding to questions I have received, and due to my looking more closely at the final rules for BHP (more on proposed financing of BHP).
- In my white paper Don Taylor NC Health Reform Proposal 1 14 14, I proposed that North Carolina should set up its own exchange. However, the BHP option under Section 1331 can be implemented even with a federally run exchange, I have learned.
- The BHP allows for persons who are not eligible for Medicaid, but who make less than 200% of poverty to receive coverage via a BHP. Under the initial ACA, this would have meant persons from 133%-200% of the federal poverty level (FPL), but in North Carolina we have not expanded Medicaid, so that means all childless adults, for example, from 0-200% FPL meet this definition (as do parents with a job from 49%-200% of FPL, and those without one from 39%-200% FPL).
- The financing that a state would receive for a BHP is 95% of the premium tax credits and 95% of the cost share subsidies for the second lowest cost silver plan in an individual’s geographic area, to which individuals would be entitled based on their income. Even though premium tax credits are not available to persons making less than 100% of the FPL, the BHP financing rule put out of December 23, 2013 identifies income cells for calculation of how much premium money states may receive per capita, for a BHP. The figures include persons from 0-50% FPL, as well as 51-100% (see p. 77404, in Federal Register, first column). This means that North Carolina could develop a BHP for those not eligible for Medicaid without seeking a Medicaid waiver (I said in my white paper we’d need one. Update: a few writing with reasons why they think a waiver would be needed below 100% poverty; it is possible. The key is to develop an idea and then ask HHS; they want to get to yes). The premium amount that could be paid by the household is capped at 2.0% of modified adjusted gross income from 0-133% of poverty; essentially extending the exchange rules downward to 0% for purposes of the BHP; see top p. 77408). However, if the State wanted to move beyond the newly covered–for example, seek to move those currently covered by Medicaid into a BHP down the road, I am fairly certain this would require a Medicaid waiver.
- Offerors of BHP coverage to individuals can include a private insurance company (like BCBS NC, Coventry, or any other), or a network of providers (for example, CCNC working in conjunction with other providers to deliver the full benefit package, or a large integrated delivery system like UNC Health Care, ECU/Vidant, Duke Health System, Carolinas Medical, etc; See page 59128, right column in Federal Register). Providers or insurers would not have to offer coverage in all counties, allowing a geographically relevant approach.
- States are eligible for planning grants to assist with implementation issues related to the ACA and health exchanges. Simply taking such a grant does not mean you have to follow through with a BHP, or set up an exchange, but some may feel that taking a planning grant is a politically charged signal they do not wish to send. North Carolina could create a non governmental health reform planning group that could receive such financing, and these monies could be used to answer the questions that the executive branch, legislative branch and stakeholders in North Carolina would have about a BHP and/or other reform activities. This would help provide good information to drive our decisions.
- There are several aspects of what I propose that dovetail nicely with the reform plan proposed by Senator Burr on January 27, 2014. First, his proposal of a per capita Medicaid cap for those below 100% of poverty (to grow at CPI + 1% point) is reminiscent of the BHP providing 95% of the premium and cost share subsidies that would flow to individuals one at a time, meaning the federal government would spend less if we did a BHP than they would by default if each BHP person otherwise got covered. Further, this is proposing to expand coverage via private insurance or private providers taking on the insurance function, and not the traditional Medicaid program. Finally, Senator Burr proposed allowing States to auto-enroll persons (sec 204, page 4) who are eligible for a tax credit (in his proposal from 100%-300% of poverty) into the lowest cost plan in their county, with them having a right to change plans if they wish. Auto-enrollment is a great idea that Senator Burr pioneered with his 2009 Patients’ Choice Act, and I suggested in my white paper that North Carolina should seek auto-enroll authority within our BHP.
- What are the downsides of a BHP? The BHP likely does not make sense for a State with an exchange (whether state or federal run) that has lots of competition and relatively low premiums, because you would worry about destabilizing the exchange. North Carolina has low competition (only BCBS NC sells in all 100 counties, and only one other insurer sells at all) and relatively high premiums, so the BHP may be the most realistic means of jump starting competition and choice in the State.
North Carolina could enroll 350,000-500,000 North Carolinians into private insurance in 2015 or 2016 by using the flexibility provided in section 1331 of the ACA to create a Basic Health Plan, and it is an approach that I think we should strongly consider.