Cantwell Announces Federal Basic Health Plan Timeline

Obama Administration: Federal Basic Health to launch January 2015, open enrollment to begin October 2014

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) announced the details of the Obama Administration’s new timeline for guidance on implementation of the Federal Basic Health Plan Option (FBHPO). Cantwell thanked the Administration for the release of the detailed timeline during a U.S. Senate Committee on Finance hearing yesterday with Department of Health and Human Services (HHS) Secretary Kathleen Sebelius.

Cantwell received the timeline and a letter from Sebelius on Friday, prior to her April 15 deadline. The announcement of this timeline was the first step in an Administration blueprint sent to Cantwell in March to guide the implementation of the cost-cutting health care program.

The new timeline laid out the following benchmarks:

  • April-May 2013: State and stakeholder engagement
  • May 2013: Establish collaborative of interested states
  • September 2013: Release of proposed regulations
  • November 2013: Completion of 60 day comment period
  • March 2014: Final rule publication
  • March-May 2014: States submit Basic Health  plans
  • August 2014: Centers for Medicare and Medicaid Services (CMS) completes review of state Basic Health plans
  • October-December 2014: Open enrollment
  • January1, 2015: Federal Basic Health Plan operational

“This timeline is an important step toward the launch of the Federal Basic Health Plan,” said Cantwell. “I thank Secretary Sebelius for this guidance that gives states a clear picture of when they must act to take part in the plan. I’m encouraged by the release of this information and remain committed to seeing the Federal Basic Health Plan launched in January 2015.”

Cantwell wrote the FBHPO into the Patient Protection and Affordable Care Act of 2010 and has advocated for its timely implementation. The FBHPO was supposed to launch in 2014, but HHS delayed its start for one year by failing to provide implementation guidelines to states for 2014.

The Urban Institute projected in 2011 that there could be $1.3 billion per year in health care savings if states implement the FBHPO, by shifting eligible consumers above 138 percent of the federal poverty level to the program and saving their share of costs associated with lack of insurance. The study projected that Washington state could save $173 million per year.

Compared to the exchange, a consumer would pay far less in average annual out-of-pocket costs under the FBHPO: $96 compared to $434, according to 2011 estimates by the Urban Institute. Premiums would also be significantly cheaper: $100 under the FBHPO compared to $1,218 on the exchange. See related chart. The FBHPO could provide coverage to over 75,000 Washingtonians, according to 2011 estimates by the Urban Institute, and could also reduce the number of uninsured in the state by 15,000 more people than the exchange, due to its greater affordability.

The FBHPO gives states the option of providing coverage to a small segment of the population: those ineligible for Medicaid with incomes between 138 and 200 percent of the federal poverty level. Consumers with incomes between 200 and 400 percent of the federal poverty level would be eligible for insurance coverage on the state exchange. For states that choose not to implement the FBHPO, consumers with incomes between 138 and 400 percent of the federal poverty level would be eligible for insurance coverage on the exchange.

In recent months, Cantwell has pushed Administration officials to explain why the program will not be implemented at the same time as state exchanges, as the law advises.

On February 13th, during a Finance Committee hearing, Cantwell questioned President Obama’s Treasury Secretary nominee and former White House Chief of Staff, Jacob Lew, about the delay and urged him to help expedite its implementation. The following day, February 14th, during another Finance Committee hearing, Cantwell questioned an HHS official on the agency’s support of the program. Earlier this month, CMS nominee Marilyn Tavenner reaffirmed the Administration’s commitment to release the timeline by Monday. In response to questioning by Cantwell, Tavenner also stated that the FBHPO is “innovative and it’s obviously a cost-effective strategy as well.”

Modeled after Washington state’s successful Basic Health Plan, the FBHPO enables states to negotiate directly with health insurers to provide high-quality health care coverage at a lower cost to those ineligible for Medicaid but unable to afford the cost of private insurance. Support that would otherwise go to these individuals for cost-sharing and subsidies on the exchange would go to cover the FBHPO-eligible population. Washington’s state-funded program has successfully operated for more than two decades, providing quality and cost-effective managed care to qualified participants.