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Oregon Basic Health Program Study Oregon Basic Health Program Study October 29, 2014 Oregon Health Authority, Oregon Health Policy Research Prepared by: Wakely Consulting Group The Urban Institute Tim Courtney, FSA, MAAA Matthew Buettgens, Ph.D. Senior Consulting Actuary Senior Research Analyst Julia Lerche, FSA, MAAA, MSPH Stan Dorn, J.D. Senior Consulting Actuary Senior Fellow Patrick Holland Jay Dev Managing Director Research Assistant Karan Rustagi, ASA, MAAA Hannah Recht Consulting Actuary Research Assistant Wakely Consulting Group and The Urban Institute Table of Contents EXECUTIVE SUMMARY ........................................................................................................... 1 Background ............................................................................................................................................... 1 RESULTS ................................................................................................................................ 2 BHP Eligibility and Enrollment .................................................................................................................. 2 The Number of Uninsured ........................................................................................................................ 3 Consumer Effects ...................................................................................................................................... 4 Churning .................................................................................................................................................... 4 State Fiscal Effects .................................................................................................................................... 5 Oregon’s Marketplace .............................................................................................................................. 8 Care Coordination ..................................................................................................................................... 9 1) INTRODUCTION ............................................................................................................... 10 ACA Implementation in Oregon .............................................................................................................. 10 BHP Background ...................................................................................................................................... 10 Scope of Work ......................................................................................................................................... 14 General Approach ................................................................................................................................... 14 Scenarios Modeled ................................................................................................................................. 14 2) BHP ELIGIBILITY, ENROLLMENT AND CHURN .................................................................... 16 Background ............................................................................................................................................. 16 Methodology ........................................................................................................................................... 16 Results ..................................................................................................................................................... 17 Oregon Health Authority Basic Health Program Study October 2014 Page i Wakely Consulting Group and The Urban Institute 3) PROJECTED BHP REVENUES AND COSTS ........................................................................... 30 Background ............................................................................................................................................. 30 Key Assumptions and Methodology ....................................................................................................... 30 Results and Considerations ..................................................................................................................... 32 4) BHP ENROLLEE AFFORDABILITY ........................................................................................ 39 Background ............................................................................................................................................. 39 Results ..................................................................................................................................................... 39 5) BHP IMPACT ON OREGON MARKETPLACE AND INDIVIDUAL MARKET ............................... 42 Background ............................................................................................................................................. 42 Risk Pool Effects ...................................................................................................................................... 42 Attractiveness to Carriers and Options for Consumers .......................................................................... 48 Capacity to Cover Administrative Costs .................................................................................................. 50 Potential Instability ................................................................................................................................. 52 6) BHP OPERATIONAL CONSIDERATIONS .............................................................................. 55 7) BHP STRATEGIC CONSIDERATIONS ................................................................................... 59 Potential state budget savings ................................................................................................................ 59 Coordinated Care .................................................................................................................................... 62 Longer-term transitions .......................................................................................................................... 65 8) MODEL UPDATES ............................................................................................................. 66 Differences in Urban Estimates of BHP Eligibles ..................................................................................... 66 Differences in Urban Estimates of Churn ................................................................................................ 66 Oregon Health Authority Basic Health Program Study October 2014 Page ii Wakely Consulting Group and The Urban Institute Differences from Oregon Medicaid Advisory Committee (MAC) Report ............................................... 67 9) RELIANCE AND LIMITATIONS ........................................................................................... 70 APPENDIX A – DETAILED METHODOLOGY APPENDIX B – FEDERAL BHP PAYMENT METHODOLOGY APPENDIX C – URBAN INSTITUTE HEALTH INSURANCE POLICY SIMULATION MODEL APPENDIX D – FISCAL EFFECTS OF VARIOUS ADJUSTMENTS TO SCENARIOS 1A AND 1B APPENDIX E - IMPACT OF BHP ON INDIVIDUAL MARKET DETAILS APPENDIX F – COMPARISON OF EHB AND OHP PLUS BENEFITS Oregon Health Authority Basic Health Program Study October 2014 Page iii Wakely Consulting Group and The Urban Institute EXECUTIVE SUMMARY Background Section 1331 of the Patient Protection and Affordable Care Act (ACA) gives states the option to operate a Basic Health Program (BHP) to cover certain consumers with incomes up to 200 percent of the federal poverty level (FPL) through state-contracting “standard health plans,” rather than Qualified Health Plans (QHPs) offered through the Health Insurance Marketplace. BHP-eligible consumers include citizen and lawfully present immigrant adults between 138 and 200 percent FPL; and lawfully present immigrants under 138 percent FPL whose immigration status makes them ineligible for federally matched Medicaid (usually because of lawful residence for less than five years). BHP enrollees must receive coverage no less generous and affordable than what they could have obtained from subsidized QHPs. The federal government provides states with funding equal to 95 percent of the subsidies BHP enrollees would have received in the Marketplace, but that funding cannot be used for program administration or operations. In March 2014, the Oregon Legislature passed House Bill 4109, which directed the Oregon Health Authority (OHA) to commission an independent study of the costs and impacts of operating BHP in Oregon. OHA contracted with Wakely Consulting Group (Wakely) and The Urban Institute (Urban) to produce this report, which analyzes BHP’s potential effects on consumers, the Oregon Marketplace, state- funded health care costs, and other topics. The following illustrates our general method for identifying the most important financial impacts of the BHP on the State of Oregon in 2016: Identify Estimate Estimate Model Compile Eligible program program take-up results Population costs revenue We analyzed two basic approaches to BHP implementation (table ES 1): • Scenario 1 involves BHP coverage like Medicaid, with provider reimbursement significantly below commercial levels, and without any premium charges or copayments. • Scenario 2 has BHP furnishing “hybrid” coverage. Providers receive commercial reimbursement. Consumers at or below 138 percent FPL are not charged premiums or copays. Those between Oregon Health Authority Basic Health Program Study October 2014 Page 1 Wakely Consulting
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