Oregon is the third U.S. state to seek federal approval for a basic health program, offering free healthcare to adults earning 138-200% of the poverty level, in alignment with the Affordable Care Act. The Oregon Health Policy Board unanimously endorsed the program, advancing the state’s move toward universal health coverage. This initiative is set to launch in July 2024 and aims to cover around 100,000 Oregonians. Funding will largely come from federal sources, with the potential for shifting individuals from the state’s individual marketplace, potentially affecting premium costs. Complex logistics accompany the program’s implementation, including migrating thousands of people to Oregon’s benefits system.
Oregon has become the third state in the nation to seek federal approval for a basic health program, as a group of volunteer advisors to the Oregon Health Authority voted in favor of providing free healthcare to adults whose incomes fall between 138% and 200% of the poverty level. This initiative, established under the Affordable Care Act, enables states to offer insurance directly to individuals who earn slightly too much to qualify for Medicaid.
The Oregon Health Policy Board unanimously approved Oregon’s blueprint application, marking the final step in the extensive policy-making process required for state endorsement of the plan, following a recommendation from a task force the previous year.
This move represents another step towards achieving universal health coverage in the state, following measures such as allowing children eligible for Medicaid to remain enrolled until their sixth birthday without annual re-evaluations, permitting adults to maintain their enrollment for two years at a time, and extending coverage to undocumented youths and adults.
Scheduled to launch in July 2024, the basic health program will cover individuals earning between 138% and 200% of the federal poverty level, with approximately 100,000 people in Oregon expected to qualify, according to the state health authority.
The basic health plan (BHP) will provide services akin to those offered by the Oregon Health Plan, the state’s version of Medicaid, including free healthcare without copayments, managed by Coordinated Care Organizations. However, the BHP will not expand the pool of individuals eligible for long-term services, including publicly funded nursing home care, as eligibility for such programs involves complex criteria based on both income and assets.
Interim OHA director Dave Baden expressed confidence in the plan’s ability to improve health outcomes, enhance care quality, and reduce costs before the vote.
The Affordable Care Act introduced the option for states to establish a basic health program to provide more affordable coverage for low-income residents and address the issue of “churn,” where people’s income fluctuates above and below Medicaid eligibility thresholds. In practice, individuals who earn too much for Medicaid often struggle to maintain continuous coverage, despite being eligible for federal tax credits to purchase insurance through the federal marketplace.
New York and Minnesota were the first two states to implement basic health programs. Unlike Oregon’s proposal, these programs generate some revenue through co-pays and cost-sharing.
Oregon Health Authority officials believe they can fund the BHP primarily with federal dollars. While Oregon contributes 40% of funding for its Medicaid program, the BHP is projected to be more than 99% federally funded. The federal government calculates funding for states with BHPs based on the cost of tax credits and subsidies for individuals who transition to the BHP.
However, the program’s cost to the state may fluctuate from year to year, as federal funding depends on changes in premiums in the marketplace. Without additional state revenue or copays, the program may struggle to pay providers at rates higher than Medicaid.
Launching the BHP will also shift individuals and federal funding away from the state’s individual marketplace, potentially leading to higher monthly premiums for those who do not qualify for the BHP and purchase marketplace insurance. This shift occurs because insurance companies will reduce spending on discounted plans required for low-income individuals in the marketplace, leading to lower premium subsidies and higher costs for consumers.
The Oregon Health Authority has yet to identify a strategy to mitigate these premium increases, and it remains unclear if state-funded subsidies will be provided to offset the difference.
The timeline for launching the basic health plan is complex and time-sensitive. Approximately 55,000 individuals eligible for the BHP are currently enrolled in Medicaid through a temporary expansion. If the BHP does not launch on schedule in July, these individuals may lose Medicaid coverage unless additional state funds are allocated.
Additionally, when the BHP becomes available, it must be open to all eligible individuals based on income. State and federal officials must prepare to transition tens of thousands of people from the federally run healthcare.gov exchange site into Oregon’s benefits system and assign them to coordinated care organizations.
State legislation (HB 4035) originally authorized the BHP with a provision allowing participants to opt out of the program and maintain their private insurance. However, this conflicts with federal program rules, as BHP-eligible individuals no longer qualify for tax credits on the exchange.
According to the Oregon Health Authority, some individuals currently enrolled in marketplace plans may continue to qualify for tax credits for a year or two if they use the healthcare.gov autoenrollment function but will eventually lose access to subsidized plans on the federal exchange. This change will affect individuals in Oregon with incomes ranging from 138% to 200% of the federal poverty level who actively participate in the open enrollment process.