The Basic Health Program Option under Federal Health Reform

Under the Affordable Care Act (ACA), states have the option of implementing a Basic Health Program (BHP)—a state-run coverage program for low-income people who aren’t eligible for Medicaid and lack access to an employer-sponsored plan. Under the law, states can opt to devise a BHP and receive 95 percent of the federal subsidy that would have otherwise been offered through the health insurance exchange.

This report prepared for the Robert Wood Johnson Foundation-funded State Coverage Initiatives by the Urban Institute explores select approaches that states could take to implement a BHP. The paper also highlights reasons states may consider the BHP, including:

  • A state-purchased plan could provide richer benefits to those eligible under the exchange;
  • A BHP could be designed to reduce the negative effects of churning (when people switch frequently from eligibility and ineligibility for Medicaid and the exchange); and
  • BHP could specifically address the needs of low-income people in its selection of providers and add-on services, such as transportation or mental health benefits.

Author Stan Dorn concludes that, even at this early stage, the BHP option deserves serious consideration from state officials seeking to provide their low-income residents with affordable and continuous coverage, while improving state fiscal circumstances in 2014 and beyond.