Consultants at Oliver Wyman have given Hawaii insurance regulators explaining the risks that could be involved with using the “Basic Health Program Option” to provide health coverage for moderately low-income residents.
The Hawaii Insurance Division commissioned the report to look into the possibility of using a Basic Health Program — one of the many new types of health coverage entities created by the Patient Protection and Affordable Care Act of 2010 (PPACA) — to expand access to coverage.
The basic plans
PPACA drafters included the basic plan options to please Democrats who wanted to give each state the option of setting up a government-run, “single-payer” health insurance program.
A state with a basic plan would set up a big, state-run, Medicaid-style health insurance program for residents with incomes of 100 percent to 200 percent of the federal poverty level, instead of sending those same people to a health insurance exchange, or Web-based insurance supermarket, to buy commercial health coverage.
A state could either provide the health plan itself or hire a commercial insurer to run the plan, but the state would be in charge of negotiating with the insurer and designing the benefits package.
PPACA calls for the federal government to give moderate-income individuals new, income-based tax credits they can use to pay for health coverage.
The federal government would help a state pay for its basic plan by sending the state 95 percent of the PPACA health insurance purchase subsidy tax credits set to go to the basic plan enrollees.
Sen. Maria Cantwell, D-Wash., recently asked at a Senate hearing whether HHS would keep the plan program from falling between the regulatory cracks. She suggested that HHS officials might be afraid that letting the basic plans start up could hurt the PPACA exchange system.
Jonathan Blum, the director of the Center for Medicare, told her that HHS officials hope to get the basic plan program running in 2015.
What the consultants said
The consultants at Oliver Wyman – a unit of Marsh & McLennan Companies Inc. (NYSE:MMC), an insurance broke — told Hawaii insurance regulators that offering a basic plan might be more affordable for the enrollees than sending those people to a health insurance exchange.