Basic Health Programs: An Alternative to Public Options? (Commonwealth Fund)

Summary: “Public option” health plans, particularly as enacted in Washington State, have had difficulty meeting their goals of improving affordability for patients and reducing overall health care costs. Some states have instead created a Basic Health Program (BHP), an alternative form of coverage authorized by the Affordable Care Act that replaces marketplace coverage for residents with low incomes who are eligible for premium subsidies. This policy brief analyzes the evolution of Washington’s public option and policy changes made in other states in response to initial rollout challenges and compares these with the policy goals and outcomes of BHPs.

Findings: Washington’s public option initially struggled with provider network participation and price competitiveness. Without sufficient network participation and robust enrollment, public options have few means to improve affordability or lower health care costs. BHPs are unlikely to face the same challenges. They contract with safety-net providers at Medicaid-like rates to cover all households with incomes between 138 percent and 200 percent of the federal poverty level who would otherwise be eligible for marketplace subsidies. A BHP can provide robust affordability with minimal out-of-pocket spending at a low cost to states and the federal government.

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• External Policy Brief: Basic Health Programs: An Alternative to Public Options?