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Will Basic Health Program Hurt, Help Exchange?

An analysis of a proposed Basic Health Program and its impact on the Health Benefit Exchange offers a mixed bag of pros and cons for exchange leaders and legislators.

The nascent Basic Health Program, if passed by the Legislature, would target a large percentage of possible exchange participants. So the question lawmakers have been wrestling with is: Would that be a good or a bad thing for the exchange, and for Californians?

That’s the question tackled by the exchange itself. On Monday, it released an independent analysis by the UC-Berkeley Labor Center and the UCLA Center for Health Policy Research, which was commissioned by the exchange board.

The analysis made four main points:

  • The BHP would siphon between 720,000 and 950,000 participants from the exchange, which could limit the exchange’s bargaining power.
  • BHP would not affect the risk mix in the exchange.
  • The number of Californians with health coverage would  rise under the BHP, with a bump in covered individuals reaching between 60,000 and 120,000 Californians, in a base scenario.
  • The analysis assumes BHP premium costs for individuals would be set at $20 per person per month.

“A smaller exchange (720,000 to 950,000 fewer enrollees by 2019) would have reduced market power,” the analysis said. “This could affect the bargaining power of the Exchange in the insurance market and reduce its ability to drive reforms in the delivery system that can serve to reduce costs over time.”

The analysis also pointed out that instituting a BHP system would likely increase churn between BHP and the exchange: “If individuals are required to re-enroll as their income changes between BHP coverage and Medi-Cal on the one side and BHP coverage and the Exchange on the other, it could create an additional administrative barrier to continuous coverage,” according to the analysis.

All of those results still do not answer a fundamental and more philosophical question facing the exchange, though: Do the benefits of increasing enrollment in BHP outweigh the disadvantages of pulling so many people out of the exchange pool?

That likely will be debated if and when SB 703  by Ed Hernandez (D-West Covina) hits the floor of the Legislature in the next couple of weeks. It’s the bill that would establish the BHP, and it is currently in the Assembly Committee on Appropriations.

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Capitol Desk Insurance The Health Law