NCPA - National Center for Policy Analysis


June 1, 2009

Steve Hill is about to decide how to eject some 36,000 people from Washington's Basic Health Plan, the popular state-subsidized insurance program for the working poor.  Because of the state budget crisis, the Washington Legislature has cut the program's two-year funding nearly in half.  As early as this week, Hill must render a decision on how to whittle the plan's 100,000 members down to a target of 64,000 by January.

Health policy experts call his dilemma one of the thorniest cases of rationing they've seen.  While several states have frozen or pared back enrollment in Medicaid by lowering income thresholds, Basic Health may be the first public-health plan to consider a wide range of arbitrary options in how to boot off members:

  • Unlike the state-federal Medicaid program -- which does not accept nondisabled, childless adults no matter how poor they are -- Basic Health is open to all state residents who earn less than twice the poverty level, or $36,620 for a family of three.
  • When it began as a pilot program in King and Spokane counties in 1988, it was the nation's first public insurance plan to subsidize premiums using only state tax dollars; even now, only five other states operate similar programs, in part because they're so expensive.
  • Over two decades, enrollment in Washington's plan has climbed as high as 140,000 people; it now has about 100,000, 57 percent of whom get by on poverty-level incomes or less (a majority are in their 20s, 30s and 40s; some are disabled or unemployed, but many work).
  • On average, members pay $36 a month toward their premiums and the state pays the rest -- $209 a month on average; the plan doesn't includes vision or dental benefits, but covers most everything else for a modest co-pay and an annual deductible of $150.
  • All told, the subsidies cost the state about $300 million a year, but because of the recession, the Legislature in April voted to slash Basic Health's budget by 43 percent between 2009 and 2011; that left $338 million -- enough, officials hope, for 64,000 slots, a reality that has prompted panicked members to beseech officials to spare their coverage.

After weeks of analysis led by Hill's deputy, Preston Cody, Basic Health officials have narrowed to five the potential options for "involuntary disenrollment," including a controversial lottery.

Random selections would shrink the insurance-pool size without altering its demographic mix.  Hill calls it an "elegant" fix and Cody agrees, even as both men acknowledge moral qualms.

But some patient advocates vehemently reject it as too capricious.  Daphne Pie, a health care benefits outreach educator with Public Health -- Seattle & King County, said health care is too important to leave to chance.

Source:  Editorial, "Lottery may be used to cut 36,000 from state health plan," Seattle Times, May 31, 2009.

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