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Home > Obamacare > Affordable Care Act’s Basic Health Program

Affordable Care Act’s Basic Health Program

New York, Minnesota, and Oregon offer BHPs for low-income enrollees who earn too much to qualify for Medicaid

Author: Louise Norris | Date Posted: July 11, 2024
ACA Basic Health Program

In this article

Under the Affordable Care Act (ACA), most states have expanded Medicaid eligibility to people with income up to 138% of the federal poverty level (FPL). But people with incomes very close to the Medicaid eligibility cutoff frequently experience changes in income that impact their eligibility and result in switching from Medicaid to ACA’s qualified health plans (QHPs) and back.1 This “churning” creates fluctuating healthcare costs and premiums, and increased administrative work for the insureds, the QHP carriers, and Medicaid programs.2

(Note that during the COVID public health emergency, Medicaid disenrollments were paused from March 2020 through March 2023. But they resumed in April 2023, under the terms of the omnibus budget bill that was enacted in late 2022.)

The out-of-pocket differences between Medicaid and QHPs are significant, even for people with incomes just above the Medicaid eligibility threshold who qualify for cost-sharing subsidies.

What is the Basic Health Program?

The Basic Health Program (BHP) – section 1331 of the ACA – was envisioned as a solution, although most states have not established a BHP. Under the ACA (aka Obamacare), states have the option to create a Basic Health Program for people ineligible for Medicaid and with incomes up to 200% of FPL, and for legal immigrants who aren’t eligible for Medicaid because of the five-year waiting period.

A 2012 Health Affairs study found that if all states were to implement BHPs, 1.8 million fewer adults would churn between Medicaid and QHPs each year. A 2024 Urban Institute assessment concluded that implementation of a BHP by five additional states could make coverage more affordable while fully covering state costs with federal payments.3

How long have states operated Basic Health Programs?

The Basic Health Program was originally scheduled to begin January 1, 2014, but was postponed until 2015. To date, three states have implemented a BHP: Minnesota’s BHP was effective in January 2015 (see Minnesota’s BHP blueprint), New York’s took effect in January 2016 (see New York’s BHP blueprint), and Oregon’s took effect in July 2024 (see Oregon’s BHP blueprint).

New York received federal permission to expand its BHP to cover people up to 250% of the FPL. That change took effect April 1, 2024.4

Kentucky had been working on the creation of a BHP, but stopped that process in late 2022. It’s unclear whether the state will revive it at a later date, but  2024 legislation to create a task force in Kentucky to study the BHP model did not advance out of committee.5

Massachusetts has a program called ConnectorCare that supplements exchange subsidies for enrollees with incomes up to 500% of FPL. It’s not a BHP though. ConnectorCare was created as part of an 1115 Medicaid waiver and uses Medicaid funds to supplement the subsidies.

Why did Minnesota and New York establish BHPs?

At the time,  Minnesota and New York determined it made sense for them to establish BHPs. With a BHP, the federal government pays the state 95% of what it would have paid in cost-sharing subsidies and premium subsidies if the BHP enrollees had instead enrolled in the second-lowest-cost Silver health insurance plan in the exchange.6 The state contributes additional funding as needed and directs all the money to the managed care organizations (private insurance companies that contract with the state) that administer coverage under the BHP.

Coverage under the BHP is available to people who aren’t eligible for Medicaid, don’t have access to an affordable employer-sponsored plan, and whose household income doesn’t exceed 200% of the FPL (a little under $52,000 in the 48 contiguous states for a family of three in 2024). New York, however, increased its BHP eligibility limit to 250% of FPL as of April 2024, which was expected to result in 100,000 additional people becoming eligible for the program.4 BHP coverage is also available to lawfully present immigrants with income up to 138% of FPL (and those with income up to 200% of FPL) who aren’t eligible for Medicaid because of the five-year waiting period.

Under the ACA, lawfully present non-citizens who are ineligible for Medicaid (because of the five-year waiting period) are eligible for premium subsidies in the exchange with income as low as $0.7 But starting in 2001, New York allowed low-income legal immigrants to enroll in state-funded (no federal matching funds) Medicaid. Since a BHP receives significant federal funding, switching to a BHP allowed New York to save money on the state-funded Medicaid the state provides for low-income immigrants.8

New York’s BHP (The Essential Plan) also presents a better deal for enrollees. In 2024, a single individual in New York City who earns $38,000 (about 261% of the 2023 federal poverty level) will pay about $140/month to enroll in a Silver plan through NY State of Health.9 But if that person earns $37,000 instead, they’ll be eligible for Essential Plan coverage with no monthly premium.10

The Essential Plan used to have a premium of $20/month for some enrollees, but that was eliminated as of 2021, and premiums are now $0/month for all eligible enrollees,11  including people with income up to 250% of FPL who became eligible starting in April 2024. Total enrollment in the Essential Plan stood at nearly 1.4 million people as of May 2024.12

Minnesota has operated MinnesotaCare since 1992.13  The program was funded by both the state and federal government,14  The eligibility threshold for MinnesotaCare extended as high as 275% of FPL for families with children, and 175% of FPL for adults without children.15 (Enrollment had been higher in mid-2023, reaching more than 109,000 people, but that was due to the pandemic-related pause on Medicaid disenrollments which also applied to MinnesotaCare. Disenrollments resumed in mid-2023, for people who were no longer eligible or who didn’t complete necessary renewal paperwork.).16

So, by implementing BHPs, New York and Minnesota can utilize federal funding to provide coverage for populations whose coverage was previously provided under programs funded solely by state revenue. And their residents can obtain coverage with lower premiums and lower cost-sharing than they’d get if they had to enroll in private health plans instead.

OHP Bridge: Oregon’s Basic Health Program

Oregon’s BHP – called OHP Bridge – became operational in July 2024.17 The federal government approved Oregon’s BHP blueprint in June 2024,18 and enrollment in the program began July 1, 2024.

Adults with household income up to 200% of FPL (in 2024, that’s $30,120 for a single adult).19 are eligible for OHP Bridge. Coverage under OHP Bridge is limited to adults, as children in Oregon could already enroll in coverage under the Children’s Health Insurance Program (OHP Plus, which is Medicaid and CHIP in Oregon) with household income up to 300% of FPL.20

OHP Bridge does not have any premiums or out-of-pocket costs. The state expects about 100,000 people to enroll in OHP Bridge. More than half of those individuals were already enrolled in OHP Plus via a transitional program that the state implemented during the “unwinding” of the pandemic-era Medicaid continuous coverage rule, and transitioned to OHP Bridge in July 2024. The rest were either uninsured or enrolled in an Oregon Marketplace plan via HealthCare.gov, and became eligible to enroll in OHP Bridge starting in July 2024.19

Millions could benefit, but most states keep the status quo

Before 2014, a Kaiser Family Foundation analysis projected that nationwide, approximately 34% of total projected exchange enrollment would be people with incomes between 138% and 200% of FPL.21 Of those, almost 7 million had income between 100% and 138% of FPL, while more than 6 million had income above 138% of FPL but not more than 200%.22

For 2024 coverage, ten states have not expanded Medicaid, which means they have a much higher percentage of enrollees with incomes from 100-138% of FPL (of the 6.9 million Marketplace enrollees with household income in that range for 2024, more than 5.8 million – about 85% – are in one of those ten states).23 In Medicaid expansion states, Medicaid covers people in that category as long as they’ve been lawfully present in the U.S. for at least five years, since eligibility extends up to 138% of FPL; in non-expansion states, Marketplace subsidy eligibility begins at 100% of FPL.

At least eight states were considering implementing a BHP in 2015, although Minnesota was the only state that moved ahead with its plans. New York joined Minnesota in offering a BHP starting in 2016 and received federal permission to extend eligibility to 250% of FPL starting in April 2024, allowing the program to cover more people. As of July 2024, Oregon will become the third state to operate a BHP.

The ACA requires states that operate a BHP to coordinate BHP eligibility and enrollment with Medicaid, CHIP (Children’s Health Insurance Plan), and QHPs in the exchange, but states are given plenty of leeway in designing their BHPs within the basic guidelines established by HHS. States can create BHPs that contract with Medicaid managed care organizations and jointly administer BHPs with Medicaid, effectively creating uniform coverage for everyone up to 200% of FPL, with continuity of benefits and providers.

In 2014, CMS established rules that require BHPs to be separate from a state’s individual market risk pool, and prevent BHPs from being included in the federal risk management programs.24 But Oregon uses the federally run HealthCare.gov Marketplace platform, and that will continue to be the case until the fall of 2026. (At that point, Oregon will switch to a state-run Marketplace platform.)25 Until then, Oregon residents who are eligible for OHP Bridge can enroll via benefits.oregon.gov.

How a BHP may lower costs for enrollees

A BHP must limit premiums and cost-sharing to no more than the amounts that insureds would otherwise have paid in the exchanges with the regular premium subsidies and cost-sharing subsidies. But in reality, they’re likely to be far lower since BHPs are generally modeled on Medicaid and CHIP.

This is certainly the case in New York, Minnesota and Oregon, where BHP enrollees face far less in out-of-pocket spending and premiums than they would if they had to purchase even heavily subsidized QHP coverage in the exchange. Lower premiums and out-of-pocket costs in BHPs can lead to higher enrollment and coverage retention among the population with incomes up to 200% of FPL (versus enrollment and retention if this population had to enroll in subsidized QHPs instead).

  • In New York, there’s no Essential Plan premium. (This is a change that took effect in 2021. Previously, some enrollees paid $20/month for their coverage, and paid additional premiums for dental and vision coverage. New York had initially intended to impose a $15/month premium for Essential Plan enrollees with income between 200% and 250% of FPL, under the eligibility extension that took effect in April 2024.26 But the final implementation eliminated this premium requirement, so everyone eligible for the Essential Plan can enroll without a premium.)27
  • In Minnesota, some individuals don’t pay premiums for MinnesotaCare, and that has been temporarily expanded (through 2025) to people earning up to 160% of FPL as a result of the American Rescue Plan (ARP) and Inflation Reduction Act, which enhanced Marketplace subsidies. The normal sliding scale premiums range as high as $80/month.28 (but average about $16/month), and that scale will once again be in use after 2025. Under the reduced premium scale, premiums range from $0 to $28/month.29
  • In Oregon, the OHP Bridge program, which became available starting in July 2024, does not have any premiums or cost-sharing.19

New rule prohibits lock-out period for failure to pay BHP premiums

Under rulemaking that the federal government finalized in 2024, states that have a BHP that includes premiums cannot impose a waiting period before a person can re-enroll after being disenrolled due to failure to pay premiums (“lock-out period”).30

As of 2024, the BHPs in New York and Oregon do not charge premiums. And while MinnesotaCare does require premiums for some enrollees, there is no lock-out period if a person is disenrolled for failure to pay premiums.31 But any states that create BHPs in the future will also be subject to the rule that prohibits lock-out periods after an enrollee fails to pay their premiums.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

 

Footnotes

  1. “Ensuring Continuous Eligibility for Medicaid and CHIP: Coverage and Cost Impacts for Adults” Commonwealth Fund. Sep. 26, 2023 ⤶
  2. “Implementing a Basic Health Program” Urban Institute. Jan. 2024 ⤶
  3. “Implementing a Basic Health Program” Urban Institute. January 2024 ⤶
  4. “Governor Hochul Announces Federal Approval to Expand Access to High-Quality, Affordable Health Insurance” New York State Governor Kathy Hochul. March 4, 2024. ⤶ ⤶
  5. “Kentucky HB734 and Kentucky SB34” BillTrack50. Accessed March 7, 2024. ⤶
  6. “Basic Health Program” Medicaid.gov. Accessed June 19, 2024 ⤶
  7. “Affordable Care Act Section 1401(c)(1)(B)” Page 113. Accessed June 19, 2024 ⤶
  8. “The Basic Health Program: Considerations for States and Lessons from New York and Minnesota” Urban Institute. April 2023 ⤶
  9. “Health Insurance Marketplace Calculator. KFF.org. Accessed June 19, 2024 ⤶
  10. “Press Release: New York State Department of Health and NY State of Health Announce the Essential Plan Expansion Increasing Access to Affordable Health Insurance Begins Today” NY State of Health. Apr. 1, 2024 ⤶
  11. “Essential Plan At a Glance” NY State of Health. Accessed June 17, 2024. ⤶
  12. “Recipients Enrolled in QHP or EP – as of May 5, 2024 by County and Issuer” NY State of Health. Accessed June 17, 2024. ⤶
  13. “MinnesotaCare Basics; History” Minnesota Department of Human Services. Accessed June 17, 2024 ⤶
  14. “MinnesotaCare: Key Trends & Challenges” ruralmn.org. Accessed June 17, 2024] but only state funds were used to provide MinnesotaCare coverage to residents who were recent immigrants and weren’t eligible for Medicaid because they had been in the U.S. for less than five years.[efn_note]“Health Care for Noncitizens” Minnesota Department of Human Services. June 30, 2008 ⤶
  15. “MinnesotaCare: Key Trends & Challenges” ruralmn.org. Accessed June 17, 2024] By converting MinnesotaCare to a BHP as of January 2015, the state was able to take advantage of the much more generous federal funding that goes with a BHP.

    Enrollees in MinnesotaCare also have far lower out-of-pocket exposure and premiums than they’d pay if they were enrolled in a private, subsidized plan through the exchange. MinnesotaCare’s copay for an inpatient hospitalization is $250 in 2024,.[efn_note]“2024 Managed Care Summary of Coverage, Cost Sharing and Limits for MinnesotaCare” Minnesota Department of Human Services. Accessed June 17, 2024] and copays for prescriptions are $10 or $25, depending on the drug, up to a maximum of $70 per month. MinnesotaCare had more than 104,000 enrollees as of June 2024.[efn_note]“Managed Care Enrollment Figures” Minnesota Department of Human Services. Accessed June 17, 2024 ⤶

  16. “Background: Resuming public health care program renewals” Minnesota Department of Human Services. Accessed March 7, 2024 ⤶
  17. ”Oregon Health Plan (OHP) Bridge” and “Oregon Health Plan (OHP) Bridge – Frequently Asked Questions” Oregon Health Authority. Accessed July 22, 2024 ⤶
  18. “Approval letter for Oregon’s Basic Health Program (BHP) Blueprint” U.S. Department of Health & Human Services. June 7, 2024 ⤶
  19. “Oregon Health Plan (OHP) Bridge – Frequently Asked Questions” Oregon Health Authority. May 3, 2024 ⤶ ⤶ ⤶
  20. “Medicaid, Children’s Health Insurance Program, & Basic Health Program Eligibility Levels” Centers for Medicare & Medicaid Services. Dec. 1, 2023. ⤶
  21. “The Role of the Basic Health Program in the Coverage Continuum” KFF.org. March 2012]

    Among people who purchased private plans through the health insurance exchanges/Marketplaces for 2024, about 61% – roughly 13 million people – had income between 100% and 200% of FPL.[efn_note]“2024 Marketplace Open Enrollment Period Public Use Files” (Columns BX and BY, compared with Column H) CMS.gov, Mar. 22, 2024 ⤶

  22. “2024 Marketplace Open Enrollment Period Public Use Files” (Column BW compared with the sum of Columns BX and BY) CMS.gov, Mar. 22, 2024 ⤶
  23. “2024 Marketplace Open Enrollment Period Public Use Files” Column BW in the state-level public use files. CMS.gov, March 22, 2024 ⤶
  24. “Rules and Regulations” Federal Register. March 12, 2014] Both New York and Minnesota have made their BHPs available through their state-run exchanges, and both have opted to have BHP enrollment run year-round, like Medicaid, rather than having defined open enrollment periods like QHPs.

    Oregon is also allowing year-round enrollment in its new OHP Bridge program.[efn_note]“Oregon Health Plan (OHP) Bridge – Frequently Asked Questions” Oregon Health Authority. May 3, 2024 ⤶

  25. “Oregon Health Plan (OHP) Bridge – Frequently Asked Questions” Page 10. Oregon Health Authority. May 3, 2024 ⤶
  26. “New York proposal to extend Essential Plan eligibility” New York Department of Health. May 12, 2023. ⤶
  27. “New York: State Innovation Waiver under Section 1332 of the ACA” Centers for Medicare and Medicaid Services. March 1, 2024. ⤶
  28. “MinnesotaCare Premium Estimator Table” Minnesota Department of Human Services. Effective January 1, 2025 through December 31, 2025. ⤶
  29. “MinnesotaCare Premium Estimator Table” Minnesota Department of Human Services. Effective January 1, 2024 through December 31, 2024. ⤶
  30. “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes” Centers for Medicare & Medicaid Services. Apr. 2, 2024 ⤶
  31. “MinnesotaCare Premiums” Minnesota Department of Human Services. Accessed June 17, 2024 ⤶

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