The ACA’s Basic Health Program Option: Federal Requirements and State Trade-Offs
BHP offers prospects of improved affordability for low-income residents, fiscal gains for some states, and reduced churning. Structured carefully to attract good risks and share them with the rest of the individual market via state-administered risk-adjustment systems, BHP could improve the individual market’s overall risk level, modestly lowering marketplace premiums. On the other hand, BHP would reduce marketplace size, potentially narrowing the range of QHP options and raising marketplace administrative charges.
In the coming years, some states may investigate a range of approaches to improving affordability of coverage for their low-income residents. Which approach is best—BHP, state supplementation of marketplace subsidies, or bolder alternatives permitted under state reform waivers that begin in 2017—will depend greatly on the unique circumstances facing each individual state.
The authors are grateful to Jessica Schubel of the CMS Center for Medicaid and CHIP Services, Christopher J. Truffer of the CMS Office of the Actuary, and Matthew Buettgens of the Urban Institute for their careful review of and comments on earlier drafts of this paper.