North Carolina could use Sec 1331 of the ACA with the federal exchange

My white paper on health reform in North Carolina suggested that the state should run its own health exchange, move ahead with the Basic Health Plan option under section 1331 of the ACA, and expand insurance coverage via a “private” option using the section 1331 vehicle.

I have been asked whether North Carolina could develop a Basic Health Plan under Section 1331 using the federally run exchange? The short answer is yes; I confirmed this informally with several persons who work in the Obama Administration.

North Carolina could develop a BHP even if we don’t run our exchange. Further, a waiver is not needed to create a Basic Health Plan option that is allowed in Section 1331 of the ACA starting in 2015 for persons between 133%-200% of poverty (the waiver referred to in my white paper would be if we expanded insurance coverage via a private option, and not traditional Medicaid; essentially extending the BHP concept to 0% of poverty). The Basic Health Plan (BHP) allows a state to take 95% of the insurance and cost sharing subsidies that residents would qualify for individually, and bundle them together in a variety of ways. For example, persons in the BHP could be auto-enrolled into the lowest-cost private exchange plan in their county, expanding coverage. In addition to traditional insurance, organizations that were going to become Medicaid ACOs under the extand Medicaid reform plan could also bid for BHP individuals. The BHP could thus encourage competition in a state that has very little in the exchange, as well as to help accelerate the type of thinking that will be necessary for the regionalized Medicaid reform that seems likely to represent the way North Carolina will move.

While I think we should expand coverage to fill in the “coverage gap” using private insurance as the vehicle, developing a BHP for persons between 133-200% of poverty would be a reasonable step that could increase competition and expand insurance coverage in this income group next year.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

One Response to North Carolina could use Sec 1331 of the ACA with the federal exchange

  1. Brad F says:

    Don
    One of the advantages of a commercial carrier in an HIE, if they go the BHP route, is they can move patients through the cliffs, ie, at 201% of FPL they can keep patient and family in their network. Win win.

    However, a Mcaid ACO will have a much harder time serving the same function. The MCO will have to contract with the ACO at <2x FPL, then what if bene income grows?

    Brad

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