Estimating Federal Payments and Eligibility for Basic Health Programs: An Illustrative Example

In some states, policymakers and stakeholders are considering adoption of the Basic Health Program (BHP) option permitted under the ACA. Through BHP, consumers with incomes at or below 200 percent of the federal poverty level (FPL) who would otherwise qualify for subsidized qualified health plans offered in health insurance marketplaces instead are offered state-contracting standard health plans that provide coverage no less generous and affordable than what have been provided in the marketplace. This paper reviews the federal BHP payment methodology; explains how state officials can use information about the characteristics of BHP-eligible consumers to estimate average federal payment amounts; and places the federal payment estimates in context, showing what they can and cannot contribute to a state’s analysis of BHP’s overall fiscal effects.