As the Legislature wrapped up the 2009-10 session last week, the Assembly gave final approval to the BadgerCare Plus Basic Plan (SB 484), which provides an unsubsidized, bare bones health insurance option for low-income childless adults who are on the current BC+ Core Plan waiting list. It will be signed by the Governor soon, and implementation of the new option is expected in the next few months.
The bill was approved in the Assembly last week, by a vote of 50 to 47. The legislature adopted several amendments to the bill, which are described in an April 20 Legislative Council Memo. (Because the bill contains an appropriation – from the premiums, it can be item-vetoed by the Governor, and I won’t be surprised if he uses that authority to undo one or more of the amendments.)
It will be very interesting to see how many people enroll in the new plan during the first few months. My best guess is that it will be a relatively low number since about half the people on the waiting list have no income. Also, for those who do have some income, the $130 per month premium is still a substantial barrier, especially for a bare bones plan with substantial cost-sharing. I suspect BC+ Basic will mostly serve people who recently lost their jobs (or their COBRA coverage) but who have accumulated assets and understand the value of having insurance and protecting those assets.
Yet even if the Basic plan only serves a small fraction of the people on the waiting list, I think that could still be a success story – if it attracts enough healthy people to be a sustainable strategy for the next few years (until states are required in 2014 to expand MA coverage to 133% of the poverty level). The problem in creating a new insurance plan like this is to avoid having a large degree of “adverse selection” that would yield a relatively unhealthy pool of enrollees whose average costs exceed the $130 per month premium. That’s very difficult to pull off, especially when there’s no money available to subsidize the plan.
The Legislative Fiscal Bureau summary of the bill briefly discusses that potential problem and outlines the options available for DHS if the actual costs do exceed the premium revenue:
“(a) using federal funds from the HRSA grant to support the plan’s benefits; (b) decreasing the scope of benefits offered under the plan; (c) increasing premiums; (d) reducing rates paid to providers; or (e) some combination of these options. No legislation would be required for DHS to implement any of these options …However, all of these options have potential consequences. For instance, increasing premiums or reducing benefits may exacerbate the effects of adverse selection, as the plan’s remaining enrollees might be those with disproportionately high health care costs. In addition, using HRSA grant money to support the Basic Plan would reduce the amount of federal funding that would otherwise be available to support Core Plan benefits.”
In short, I think that serving a portion of the waiting list with an unsubsidized insurance plan will be an interesting experiment and an extremely difficult challenge. I have two hopes. First, that legislators and the general public don’t have an unrealistic expectation that BC+ Basic will serve a large percentage of the people on the Core Plan waiting list. Second, that the people it does serve are healthy enough that the new program can indeed be self-sufficient and can help fill a gap in coverage between now and 2014.
But whether BC+ Basic succeeds or becomes a relatively short-lived experiment, I hope policymakers will also explore the new option under the federal health care reform act to extend a benchmark Medicaid benefit to all childless adults up to 133% of the poverty level – as discussed in a recent letter to state officials from the Centers for Medicare and Medicaid Services. That would capture federal matching funds, improve the benefit package, reduce cost-sharing and make a much bigger dent in the current Core Plan waiting list.
