The Affordable Care Act (ACA) employs two main strategies for expanding health insurance coverage—first, by extending Medicaid to millions of additional low-income people, and second, by allowing better-off people to purchase private health insurance with federal subsidies through new state-based health insurance exchanges. But the law also provides for additional means of expanding coverage, including allowing states to run a so-called Basic Health Program beginning in 2014.
Under such a program, states could offer public health insurance to people whose incomes are too high to qualify for Medicaid but are also below 200 percent of the federal poverty level (in 2012, that means less than $46,100 for a family of four). To help pay for this program, which would probably resemble Medicaid, states could draw on a portion of the federal dollars that would otherwise go to subsidizing the purchase of private insurance coverage for those people through exchanges.
Proponents of the Basic Health Program idea maintain that it would make coverage more affordable for low-income people and save money for some states. But others worry that the program could undermine the viability of the new state insurance exchanges and, rather than saving money, expose states to financial risk. Meanwhile, federal officials have not yet provided many details for states about how the program will be operated.
This policy brief explores the issues surrounding the Basic Health Program and outlines options for states.