Basic Health Program: Good or Bad for California?

The California Health Benefit Exchange board met earlier this week to discuss the possibility of setting up a Basic Health Program (BHP) as an alternative to one section of the exchange.

The BHP is an alternative to the exchange’s coverage for two sets of Californians — adults with incomes between 133% and 200% of the federal poverty level, and for legal immigrants with incomes below 133% of the poverty level.

Yesterday, a legislative briefing with a panel of experts was convened in the Capitol building to go over the idea. The briefing was co-sponsored by the Senate Committee on Health and by the California HealthCare Foundation. CHCF publishes California Healthline.

The rough idea is that a BHP would cover essential health benefits at a minimum cost, and the federal government would subsidize 95% of the cost. It’s pretty early to be discussing the alternative, but the earlier the better, according to Branch McNeal of Mercer, a health care consulting firm that developed an actuarial model to investigate the feasibility of the idea.

“There are countless uncertainties about the health care marketplace in 2014,” McNeal said, “So we tried to be extremely conservative with this, and it still came out looking really good.”

In case the state decides to pursue this new entity, SB 703 is the bill — currently in the Senate Committee on Appropriations — that would create a BHP in California.

“To the extent that it’s prepaid, and you can estimate what you’re going to pay out, the risk is next to nothing,” McNeal said, concluding, “It appears to be pretty low-risk for California.”

Charles Bacchi of the California Association of Health Plans wasn’t convinced.

“It’s a complicated issue for us,” Bacchi said. “Commercial plans don’t share all of these viewpoints. Right now, I’d say they are supportive, concerned and curious.”

Rick Curtis, president of the Institute for Health Policy Solutions, said he is worried that a BHP would undermine the success of the state exchange by shrinking the pool of patients using the exchange.

“If you have a greatly diminished exchange, it really changes the ball game,” Curtis said.

But to John Ramey, executive director of Local Health Plans of California, the numbers are too good to ignore.

“There’s a lot of daylight here,” Ramey said. “Even if the assumptions are off quite a bit … there are no state funds involved, so that would remove a significant obstacle for adoption,” he said. “I just don’t see the reasons that we shouldn’t do it.”

For more on the BHP option, the health exchange board’s discussion points are available online.

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