New York: CMS considering 1332 waiver to extend BHP to 250% FPL

As I wrote about back in March and updated in May, New York's implementation of the ACA's Basic Health Plan provision (Section 1331 of the law) is called the Essential Plan. It currently serves over 1.1 million New Yorkers, or over 5x as many residents as ACA exchange plans do.

Whenever I write about BHPs I always throw in a simple explainer about what it is, with an assist from Louise Norris:

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

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.

The Basic Health Program (BHP) – section 1331 of the ACA — was envisioned as a solution, although most states did not establish a BHP. Under the ACA (aka Obamacare), states have the option to create a Basic Health Program for people with incomes a little above the upper limit for Medicaid eligibility, and for legal immigrants who aren’t eligible for Medicaid because of the five-year waiting period.

In short:

  • If you earn up to 138% FPL, you enroll in Medicaid.
  • If you earn 138 - 200% FPL, you enroll in a Basic Health Plan policy (BHP).
  • If you earn 200% FPL or higher, you enroll in a Qualified Health Plan policy (QHP).

Federal funding for BHP programs is supposed to be equal to 95% of the total amount of advance premium tax credits (APTC) and cost sharing reduction (CSR) assistance that the enrollees would otherwise have been eligible for had they otherwsie enrolled in a QHP using the ACA exchange.

Of course, the state itself can also throw in additional funding to make the BHP plans more generous if they wish...which is a key point to keep in mind. The coverage has to be at least as affordable and at least as good as a benchmark silver plan with Cost-sharing reduction benefits applied.

Given a massive budget surplus for the program and the ongoing Medicaid Unwinding process, New York has decided to pursue expanding the population eligible for the Essential Plan up the income scale:

The New York State Department of Health today announced it has submitted a proposal to the federal government to expand the Essential Plan, a public health insurance program offered through NY State of Health, the state’s official health plan Marketplace.  The application for a final Section 1332 State Innovation Waiver, which was submitted to the U.S. Departments of Health and Human Services and Treasury, requests that eligibility for the Essential Plan be extended to New Yorkers with incomes between 200 and 250 percent of the Federal Poverty Level (FPL). Presently, eligibility is limited to New Yorkers with incomes up to 200 percent of the FPL who are ineligible for Medicaid.

The Essential Plan currently covers over one million New Yorkers.  It provides comprehensive benefits with no deductible and minimal cost sharing, for those who qualify. If the waiver application is approved, nearly 100,000 additional New Yorkers are expected to gain access to the Essential Plan.

...If approved, the 1332 Waiver will expand upon the existing Essential Plan by providing newly eligible consumers (with incomes between 200 percent and 250 percent of the FPL), health insurance with no deductible and low out-of-pocket costs, for a $15 monthly premium, which is significantly more affordable than what is available to them today.  Current Essential Plan enrollees (with incomes up to 200 percent of FPL) will continue to have no premiums, no deductibles, and current maximum out-of-pocket contribution levels.

Today, Amy Lotven of Inside Health Policy provides some updates on where things stand on the BHP expansion, including some additional details:

CMS is taking comments through Wednesday (July 5) on New York’s request for a five-year Section 1332 waiver that would allow the state’s Basic Health Plan, dubbed the “Essential Plan,” to cover residents earning up to 250% of poverty, up from the current 200% of poverty threshold for the program, which the state says would affect about 90,000 residents in 2024, including more than 20,000 who were previously uninsured.

...Officials aim to implement the waiver by January, and stress that the enhanced BHP will help smooth coverage transitions during the Medicaid unwinding; the state intends to automatically move eligible residents into the plan once it is in effect.

...Residents who earn from 200% to 250% of poverty will no longer be eligible for exchange coverage, and current exchange enrollees in that income range will be moved into an Essential Plan administered by the same insurer, unless they pick another option, according to the waiver. Of the 90,000 enrollees in that income range, only 300 have a carrier that does not participate in the program, the waiver adds.

In other words, New York's ACA exchange QHP enrollment would likely drop from roughly ~210,000 to around ~120,000, give or take, starting in 2024.

New York says that the waiver will increase the scope of coverage, with 21,602 residents expected to be newly insured in 2024, although the state also expects to lose 3,020 consumers from the off-exchange market due to the 0.5%% to 2.2% premium impact of moving the 200% to 250% population out of the individual market risk pool. Overall, the state predicts that enrollment in health coverage will increase by 2.1% in 2024 and by 2% a year through 2028.

As far as affordability, the state expects the population that moves from an exchange plan to the Essential Plan will save $4,200 a year or $1.4 billion over the life of the waiver. Premiums for enrollees earning more than 250% of poverty who are ineligible for subsidies or buy off-exchange would increase by about $259 per year or $129 million over the life of the waiver.

This would presumably be on top of the already steep 20% rate hikes NY carriers are asking for. Of course, New York carriers are notorious for submitting dramatic rate increase requests initially only to see them slashed down by equally dramatic amounts by state regulators, so this may not mean much.

There would be no changes to the comprehensiveness of coverage. The waiver is expected to meet the deficit-neutral guardrail and would generate savings of $9.8 billion in 2024 --$53 billion over the five-year waiver -- which would be used to fund the program.

New York says that during the state comment period most stakeholders expressed support for the program...New York intends to make it available to the Deferred Action Childhood Arrivals (DACA) population once HHS finalizes the rule extending ACA coverage to DACA recipients.