Oregon aims to take advantage of a little-used provision of the Affordable Care Act that enables states to establish Basic Health Programs to cover residents who earn too much to qualify for Medicaid.
The Oregon Health Authority voted Tuesday to seek approval from the Centers for Medicare and Medicaid Services to join the Basic Health Program. Only Minnesota and New York have such benefits in place—and those predated the Affordable Care Act of 2010. Kentucky hopes to join them in November.
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The Basic Health Program would stabilize coverage and promote continuity of care for Oregonians with fluctuating incomes who otherwise may have to switch back and forth between Medicaid and private insurance, said Vivian Levy, interim deputy director of the Oregon Health Plan, the state's Medicaid program. In April, CMS approved a short-term expansion of Medicaid eligibility to 200% of the federal poverty level while Oregon prepares to implement the Basic Health Program.
"We are trying to maintain a lot of the coverage gains that were made during the public health emergency," Levy said.
The program allows states to provide coverage to people with annual incomes between 133% and 200% of the federal poverty level, or $19,391 to $29,160 for a single person. Under the program, the federal government redirects to states 95% of what it would have spent to subsidize exchange plans for this population. Oregon plans to begin enrollment in July and expects 102,000 people to sign up.
Oregon's push to temporarily expand Medicaid and create a Basic Health Program coincides with the Medicaid redeterminations process that began in this spring. Federal COVID-19 relief for states required them to pause eligibility checks, which led to higher enrollment. But states began unwinding continuous Medicaid coverage when the public health emergency declaration lapsed in April.
“There are a lot of folks losing Medicaid eligibility right now and the [Basic Health Program] really helps as a smooth transition to private coverage,” said Sabrina Corlette, co-director of the Georgetown University Center on Health Insurance Reforms. “But there are complex tradeoffs. It's not a universal win for everybody involved.”
Establishing this new benefit could have negative consequences for the state's exchange, the Oregon Health Insurance Marketplace. Providers may balk at lower reimbursements tied to Medicaid rather than higher rates from private insurers, for instance. And insurance companies contend the Basic Health Program could reduce sign-ups, worsen the risk pool and drive up costs for exchange customers.
“We have significant concerns that establishing a [Basic Health Program] in Oregon would do more harm than good through its impact on enrollment, premiums and provider rates,” Kaiser Permanente Senior Vice President of Government Relations Anthony Barrueta wrote in a letter to the state in December. Kaiser Permanente declined to comment.
Oregon anticipates the Basic Health Program would cause monthly marketplace premiums to rise $25 and that 35,800 exchange enrollees would opt for the new plan.
"I feel confident that we have ended up in the best possible place that we can from a policy perspective," Levy said. "We've been looking at, and are going to continue to monitor what the impact is on the individual market, but we are taking a step in the right direction."
Oregon should instead apply for a federal waiver and use state funding to offer similar coverage to lower-income residents and stabilize exchange premiums, Regence BlueCross BlueShield of Oregon Director of Public Affairs and Government Relations Mary Anne Cooper wrote to the state in June. “We are concerned about the state dismissing these options because of the financial risk to the state, while effectively passing the financial risk to individual Oregonians, who may lose or reduce coverage as a result,” she wrote. Regence declined to comment.
After more than a decade since the ACA offered the Basic Health Program to states, others may follow Oregon, Levy said. Officials have consulted with their counterparts elsewhere about Oregon's plans, said Levy, who declined to identify which states.
Kentucky is awaiting CMS approval for its Basic Health Program, which the state aims to launch in time for open enrollment in November. The West Virginia Senate is considering legislation to create one and the Illinois Healthcare and Family Services and Insurance departments issued a report in 2021 naming the Basic Health Program as an option to promote affordability.
In May, New York asked for CMS approval to expand eligibility for its Essential Plan to 250% of the federal poverty level and to enable undocumented immigrants to enroll.
