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Basic plans to get tough love

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States that want to show that public health insurance is a better deal than the commercial alternative will have to spend some of their own cash and shoulder a fair amount of risk.

Officials at the Centers for Medicare & Medicaid Services talk about the nuts and bolts of how a state “Basic Health Program” could work in two batches of regulations set to appear in the Federal Register.

Drafters of the Patient Protection and Affordable Care Act created the program to win support from health policy specialists who wanted Congress to create a new single-payer program, or true government-run health insurance system.

A state that sets up a BHP is supposed to bargain for a health plan deal with one or more carriers and offer working poor enrollees a menu of two or more “standard health plans.”

A state BHP is supposed to get 95 percent of the subsidy cash enrollees would have if they’d signed up for commercial health plans through a public exchange.

CMS officials note that a BHP will have to spend all of the tax-credit money it gets on health care.

“The statute does not permit states to use BHP trust funds for any activity beyond the expenditures related to the provision of the standard health plan except for lowering premiums and cost sharing and/or providing additional benefits,” CMS officials write in a preamble to proposed regs.

Elsewhere, officials say they’ve decided to keep BHP enrollee information out of state individual market risk pool data because the standard health plans operating inside the BHPs will not be eligible for the PPACA risk-management programs.

CMS is developing the regulations to help states that want to set up BHPs in 2015.

If a state organizes a BHP, the standard health plans could end up covering workers who don’t get what the government classifies as affordable health coverage from their employers as well as other uninsured people with incomes ranging from 133 percent to 200 percent of the federal poverty level. 

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