A group of volunteer advisers to the Oregon Health Authority voted Tuesday to make the state the third in the nation to seek federal approval for a basic health program.
It’s an option, established in the Affordable Care Act, that allows states to provide insurance directly to some people who make too much money to qualify for Medicaid.
The Oregon Health Policy Board voted unanimously to approve Oregon’s plan request. It was the last step in a long policy-making process needed for state approval of the plan, after a task force last year recommended moving forward with it.
It’s the latest in a series of incremental steps taken by lawmakers that move the state toward universal health coverage, including allowing all children in Oregon who qualify for Medicaid to remain enrolled without annual reassessments until their 6th birthday, allowing that adults remain enrolled for two consecutive years and extend coverage to undocumented youth and adults.
The basic health program, scheduled to launch in July 2024, will cover people earning 138% to 200% of the federal poverty level.
In Oregon, about 100,000 people will be eligible, the state health authority estimates.
The basic health plan, or BHP, will provide essentially identical services to the Oregon Health Plan, the state’s version of Medicaid: free, no-copay health care administered by Coordinated Care Organizations.
The BHP will not, however, expand the population of people in Oregon who qualify for long-term services, including care in publicly funded nursing homes. Eligibility for these programs is more complex and is based on a person’s assets and income.
“I think we have a strong, well-thought-out plan that will lead to better health, better care and lower costs,” OHA Interim Director Dave Baden said before the vote.
The Affordable Care Act gave states the option of establishing a basic health program to provide more affordable coverage to low-income residents and to address the problem of turnover, people whose income fluctuates above and below Medicaid eligibility levels. .
In theory, people who earn too much to qualify for Medicaid can get federal tax credits to buy insurance on the federal marketplace. In practice, many end up uninsured, cycling in and out of Medicaid.
It’s a particular problem for low-wage workers, whose work hours and earnings are not consistent.
In Oregon, for example, up to a third of people enrolling in Medicaid are not new enrollees, but rather people who returned to the program after less than a year, according to OHA.
New York and Minnesota were the first two states to offer basic health programs. Unlike Oregon’s proposal, its programs generate some revenue through copayments and some degree of cost sharing.
Oregon Health Authority officials believe they will be able to fund BHP almost exclusively with federal dollars.
Although Oregon provides 40% of the funding for the state’s Medicaid program and the federal government contributes 60%, the Health Authority says BHP will be funded more than 99% by the federal government.
The federal government provides funding to states with BHPs based on a different formula.
The federal government calculates how much it would spend on tax credits and subsidize private insurance for people who are switching to BHP instead. It then gives states with BHPs 95% of that amount.
The 2023-25 state budget provides for up to $533.5 million in federal funding from these tax credits diverted to the BHP trust fund.
Oregon will need to contribute $1 million in ongoing funding for two program costs that are not allowed under federal rules: $800,000 for administrative costs at OHA and $200,000 to provide abortion care, which is a benefit required by state law , but banned from federal funding by Hyde. Amendment.
State officials initially worried that the Centers for Medicare and Medicaid Services would not allow federal BHP dollars to cover behavioral health treatment, which Oregon bills separately from other Medicaid services. This would have significantly increased BHP’s state funding requirement. But the federal government recently said Oregon can use federal dollars for behavioral health treatments that coordinated care organizations bill separately.
How much the program costs the state may look different from year to year, since federal funding for the program is tied to the value of market tax credits and may increase or decrease in response to changes in market premiums.
Without additional state revenue or revenue from copays, the program will not have enough money to pay providers higher rates than Medicaid, a goal the legislature included when it first authorized the BHP.
The launch of the program also brings with it significant compensation. This will shift thousands of people and millions in federal funding – out of the states’ individual market.
This will increase monthly payments for some people who earn too much to qualify for the basic health plan and purchase marketplace insurance.
This effect will happen, perversely, because insurance companies will start to spend less on the type of plan with deep discounts that they were forced to offer to low-income people who shop at the market. This will lead them to cut premiums on silver plans. This sounds good, but the federal government attributes the value of its subsidies to the cost of a silver plan, so the net result is a reduction in subsidies and a higher monthly cost for many consumers.
The Oregon Health Authority has not yet identified any viable strategy to mitigate these premium increases. A spokesperson for Gov. Tina Kotek did not answer whether the governor supports a state-funded grant to make up the difference.
The logistics of launching the basic health plan are also exceptionally complex and urgent.
Oregon currently has about 55,000 people who would qualify for BHP enrolled in Medicaid through a temporary Medicaid expansion.
If BHP doesn’t launch on time next July, these people will either be kicked out of Medicaid or the Oregon Health Authority will need to find many more state dollars to keep them enrolled.
At the same time, when the BHP is launched, the state is required to open it to anyone who qualifies based on their income.
That means state health officials and their federal counterparts will have to prepare to move tens of thousands of people from the federally run health.gov exchange site to Oregon’s benefits system and assign them to health care organizations. coordinated assistance.
The state and the Centers for Medicare and Medicaid Services have spent months negotiating how this transition will work.
The state legislation, HB 4035, that originally authorized BHP stated that it should allow participants to opt out of the program and maintain their private insurance.
This, however, conflicts with federal program rules. People considered eligible for a BHP no longer qualify for tax credits on the exchange.
According to the Oregon Health Authority, some people currently enrolled in marketplace plans who do not wish to switch to BHP next year will be able to remain in those plans and continue to qualify for tax credits for a year or two if they use the marketplace plan. health. .gov auto-enrollment function.
However, people found eligible for the BHP will no longer be eligible for the federal tax credits that make individual plans on the exchange more affordable.
This means that in the coming years, anyone in Oregon who earns between 138% and 200% of the federal poverty level and actively participates in the open enrollment process on health.gov will lose the ability to choose a subsidized plan on the federal exchange.
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