The Basic Health Program

Implementation of the ACA’s Basic Health Program (BHP) in New York and Minnesota have been successful in increasing access to affordable care for low-income consumers, but efforts to replicate the program in other states may not be so straightforward.

The Issue

The Affordable Care Act offers states the option to create a Basic Health Program to replace subsidized coverage on the Marketplace for individuals with incomes up to 200 percent of the Federal Poverty Limit. However, federal funding may not be sufficient to cover all costs of the program, depending on the state.

Key Findings

• Implementation of the BHP in New York and Minnesota succeeded in helping low-income consumers by increasing affordability and reducing administrative complexity.
• The BHP led to stable markets with ample insurer participation, but both states reported challenges predicting and pricing the health risk of the population enrolling in BHP and Marketplace plans.
  
• Both premiums and cost sharing for BHP enrollees have generally been lower than they are for individuals enrolled in the Marketplace at the same income level in other states.
  
• Financially, New York and Minnesota have had different experiences. New York’s BHP is fully funded by federal payments even after eliminating premiums and expanding benefits. Minnesota has had to allocate state funds in addition to federal funding to finance the program.
  

Conclusion

While preliminary findings indicate the success of BHPs in improving affordability for low-income consumers, it is unclear if the efforts of New York or Minnesota can be replicated in other states. State-specific factors, including the difference in provider reimbursement rates between Medicaid and the commercial market, play a role in the success of implementation.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.