Why the ACA's Basic Health Program hasn't taken off

Affordable Care Act highlighted
The states most likely to set up their own Basic Health Program are those that have expanded Medicaid and operate their own state-based marketplace. (Getty/Ellenmck)

Though two states have taken advantage of the Affordable Care Act’s Basic Health Program (BHP) to help them cover low-income individuals, a variety of barriers stand in the way of other states following suit.

Both New York and Minnesota operate BHPs, which provide health coverage options for individuals who are just above the Medicaid cutoff as well as low-income legal immigrants who are not yet eligible for Medicaid. Often, the health plans offered through these programs are even more affordable than subsidized individual marketplace coverage.

The states most likely to set up their own BHP are those that have expanded Medicaid and operate their own state-based marketplace, Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation, told MedPage Today. In addition to New York and Minnesota, 10 other states meet these criteria.

One reason so few states set up BHPs in the first place was because the Obama administration issued its guidance on them after many had already made key decisions about setting up their exchanges, the article notes. Now that the exchanges have been established, some states may be wary of moving people out of their individual market risk pool.

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In addition, a more recent concern is uncertainty about the future of federal funding for ACA subsidies. States aren’t at risk financially for the cost of providing premium tax credits and cost-sharing reduction (CSR) payments for exchange enrollees, as both are funded by the federal government. But with BHPs, the cost of subsidizing coverage “does shift somewhat to the states,” Tolbert said, so they may have to make up the difference if federal funding stops.

In fact, the fate of the CSR program is currently in limbo. The Trump administration has refused to commit to funding the subsidies long term as it decides how to proceed with a federal court case concerning their legality. That uncertainty is leading some insurers to pull out of the ACA exchanges next year or hike premiums.