In the continuing effort to extend health coverage to all Oregonians, a Basic Health Program may just be what the doctor ordered.
Basic Health is an option that states have under the federal Affordable Care Act (which celebrates its third anniversary this March) to provide health insurance to low-income individuals. Basic Health may be able to do this at little or no cost to the state.
This and other advantages make a compelling case for Basic Health. That’s why Oregon lawmakers would do right by their constituents to evaluate how much Oregonians could gain by implementing Basic Health.
Issue Brief: The Basics of the Basic Health Program: How “Basic Health” Could Strengthen Oregon’s Health Reform Efforts, March 4, 2013
Why does Oregon need Basic Health, given that the state is planning to implement a federally-funded expansion of the state’s Medicaid program (the Oregon Health Plan) for Oregonians living on the edge of poverty and will launch a health insurance exchange (a marketplace) for others?
Because even after expanding Medicaid and creating a health insurance exchange, there likely will remain a substantial number of low-income Oregonians who won’t have health insurance.
Some low-income Oregonians won’t qualify for the Medicaid expansion because they earn too much to qualify, despite their limited means. Others won’t qualify because of their immigration status. Legal immigrants with less than five years of U.S. residency cannot participate in Medicaid, even if their earnings are so low that they meet the income criteria.
Next year when Oregon’s health insurance exchange, called Cover Oregon, opens for business, these Oregonians could struggle to purchase individual health coverage. It’s true that individuals, especially those with limited means, will receive federal tax credits to buy health insurance through Cover Oregon. But even with this federal help, many may still find the insurance sold through the exchange unaffordable.
For these folks, Basic Health could be the solution. Rather than have individuals purchase health insurance on their own, Basic Health would insure them as a group. The money to pay for this would come from the same federal tax subsidies that would otherwise have been used by these individuals to purchase their own health insurance in the exchange.
For all who qualify, Basic Health would provide their coverage. They would not be able to shop in the exchange.
Basic Health likely would offer a better deal than exchange plans, for two reasons. First, the state will be required to haggle with insurers over covered services and price — something that Cover Oregon has been reluctant to do. Second, insurers will be inclined to offer a good deal, because Basic Health guarantees them a large number of covered individuals.
How many Oregonians might Basic Health serve? The Urban Institute estimates that about 110,000 Oregonians would be eligible.
Basic Health would likely offer much more affordable health coverage than that found in an exchange, according to the Urban Institute. They estimate that the national average annual premium for a low-income adult purchasing a Medicaid-like benefit package with the federal subsidy in a state exchange will cost a consumer $1,218, compared to just $100 in a Basic Health Program.
Basic Health wouldn’t sacrifice quality. To the contrary, it potentially could offer better health coverage than Cover Oregon. For one, federal law requires Basic Health to include the same essential benefits that state exchanges must provide. And because the state must negotiate with insurers for a Basic Health contract, it likely would come up with a better bargain than plans in Cover Oregon.
Finally, as Oregonians leave Medicaid when their earnings increase enough to render them ineligible, Basic Health could help keep them insured. By coordinating with Oregon Health Plan provider networks, Basic Health could also help these Oregonians keep their doctor. That’s important, because continuity of care improves people’s health.
Basic Health, which states can launch in 2015, may be what the doctor ordered for Oregon. Lawmakers should quickly commission a study that would explore whether this promising program is right for Oregonians.
Janet Bauer is a policy analyst with the Oregon Center for Public Policy