By Sonya Schwartz, Georgetown University Center for Children and Families
While many of us have our focus on health coverage that begins on January 1, 2014, I am also keeping my eye on a new option for states to provide more affordable coverage to low-income parents and other adults that starts on January 1, 2015.
Right before Thanksgiving, we filed comments on the Basic Health Program (BHP) proposed rule. For states that choose to do it, BHP provides an opportunity to provide more affordable coverage to low-income parents and other adults between 138 and 200 percent of the federal poverty level than they currently have in the marketplace. Keep in mind that BHP is unlikely to provide coverage for children in the short term. Medicaid and CHIP currently provide coverage for kids up to 200 percent of the federal poverty level in nearly every state. The five states that do not currently provide kids coverage up to 200 percent of the federal poverty level—Alaska, Arizona, Idaho, North Dakota, and Oklahoma—have not yet indicated interest in creating a BHP.
States can design BHP to provide coverage with lower premiums, less cost-sharing, and more appropriate benefits for low-income parents and other adults than currently exists on the marketplace, and we know that better coverage for parents is good for kids.
Our comments offered support for many policies outlined in the proposed rule—such as prohibiting enrollment limits or waiting periods in BHP, and allowing open enrollment in BHP—and offered recommendations to improve BHP in a number of remaining areas. Some highlights include recommending that HHS:
- Support state efforts to reduce premiums and out of pocket costs for low-income families. The federal government would provide states 95 percent of the funding the state would have received if the individual had qualified for a QHP in the marketplace. The expectation is that states can efficiently manage these funds by negotiating standard plan premium rates that save at least 5 percent of the cost of commercial market plans. Under the proposed rule, cost-sharing in the BHP cannot be higher than it would have been in the marketplace, and states have to provide cost-sharing subsidies to the enrollees at least equivalent to what they would receive in a silver plan in the marketplace. In other words, states have to provide 100 percent of the cost-sharing reduction to enrollees, and states have no discretion (nor should they) to bargain down this amount. However, the proposed rule limits the federal government to paying 95 percent of the cost-sharing subsidies. Our comments suggest that the plain meaning of the statutory language indicates that Congress intended to offer states 100 percent financing for the cost-sharing reductions.
- Allow states to cover parents otherwise stuck in the family glitch. Now known as “the family glitch,” a drafting error in the Affordable Care Act leaves many children and spouses, who could have received premiums for coverage in the marketplace, without an affordable coverage option. The proposed rule required this group of low-income adults to be eligible for BHP but did not allow federal funds to finance their coverage. We suggested that HHS revise the rules to explicitly give states the option—but not require states—to cover this group, since the payment methodology does not adequately compensate states for this coverage. We also suggested that HHS allow states to use BHP trust fund carry over money to pay for coverage of this group.
- Create opportunities for states to mitigate churn. The proposed rules require BHP enrollees to report changes in circumstances, at least to the extent they would have to report such changes if they had been enrolled in the marketplace, and requires the state to re-determine eligibility at that time. The income of low-income workers served by BHP is uniquely variable because they are likely to receive an hourly wage rather than a salary. Twelve-month eligibility would help ensure levels of coverage stability common among higher income groups and reduce the administrative burden for the state.
- Include a meaningful opportunity for public input as states design and significantly change their Basic Health Program. The proposed rule requires a state to provide an opportunity for public comment on its BHP blueprint before submitting it to HHS, but offers no specific time period or process for accepting such input. Our comments suggest that the BHP blueprint follow the simple but effective steps that are now a routine part of the application requirements for Medicaid 1115 waivers and extensions of existing Medicaid 1115 waivers. We also suggest that CMS define the type of “significant change” that requires public input to include changes that affect: premiums or out of pocket costs, the benefit package, choice of plans or providers, the appeals enrollment, or renewal process, and the contracting process.
We do not yet know the detail of the formula HHS will use to make BHP payments to states, HHS has not yet published specific payment methodology. The proposed rule notes that in future years HHS will publish a proposed methodology in October and a final methodology in February.
Stay tuned for a future blog post on how the final rule looks when it’s out. In a recent call with stakeholders, HHS said that they hope to publish the final BHP rule along with final payment methodology by March of 2014.
Editor’s Note: This blog originally appeared on Georgetown University’s Center for Children and Families’ Say Ahhh! Blog.