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06-10-24

With Approval of Its 1332 Waiver, New York Expands Basic Health Program

by Hannah Doolittle

New York’s health insurance marketplace recently announced it received approval of its 1332 State Innovation Waiver to further expand its Basic Health Program (BHP).

What is the Basic Health Program, and how does it work?

Under the Affordable Care Act (ACA), states have the option to implement a BHP, which offers health coverage to residents whose incomes are too high for Medicaid but who are otherwise eligible to enroll in coverage through the health insurance marketplace. Under federal law, these plans are available to individuals and families with income up to 200 percent of the federal poverty level (FPL). In states that have expanded Medicaid, this means that the BHP covers residents with income between approximately 138 and 200 percent FPL. Currently, New York and Minnesota are the only two states that have adopted BHPs. These states did so to support a segment of the population that is more likely to fall into a “coverage gap” because they earn too much to qualify for Medicaid but struggle to afford private insurance. This is especially relevant as more individuals transition from Medicaid during the Unwinding period.

While all BHPs offer coverage that is as comprehensive as marketplace plans, states have flexibility on how their programs are administered. By offering an alternative program, the BHP aims to bridge a potential coverage gap and expand access to essential health care services.

New York’s Essential Plan

In New York, the BHP is known as the Essential Plan. Administered by the state’s Department of Health, the Essential Plan is a public health insurance program offered through the state-based marketplace, New York State of Health. The program provides comprehensive coverage with lower costs when compared to typical insurance plans. With the approval of the 1332 waiver, New York is leveraging state funds and federal funding that would otherwise be used to support individual’s traditional marketplace subsidies to extend the BHP coverage to more residents. This also lowers costs even more for new and existing enrollees.

Features of New York’s Essential Plan expansion:

Eligibility: Under the new 1332 waiver, New York will expand Essential Plan eligibility from 200 percent to 250 percent FPL, or up to $37,650 annual income for an individual. This is expected to expand program eligibility to over 100,000 additional New York residents. The program will also expand to cover the Deferred Action for Childhood Arrival (DACA) population.*
Affordability: The approval of the new 1332 waiver will eliminate the $15 monthly premium, resulting in $0 monthly costs for Essential Plan enrollees. This will build upon the existing $0 deductible and limited cost-sharing, eliminating financial barriers to accessing care. New York estimates that under the new waiver, enrollees will save an average of $4,700 each year on premiums and cost-sharing.
Health equity: Under the new waiver, more individuals who would otherwise qualify for a Qualified Health Plan with federal tax credits through the state-based marketplace will now be eligible for the Essential Plan. New York will use those savings, in part, for initiatives targeting social determinants of health, to establish grants supporting behavioral health services, and other equity initiatives.
Premium stability: Federal funding from the new waiver will also support an Insurer Reimbursement Implementation Plan (IRIP). The IRIP is designed to prevent an increase in premiums for consumers in the marketplace, given that more of these consumers will become newly eligible for the Essential Plan. The IRIP will also support stability with regard to carrier participation in the individual market.

New York is currently implementing its five-year waiver authority and began outreach in March to enrollees who will benefit from lower premiums and who may be eligible for the expanded program. With an emphasis on access to affordable coverage and care and on health equity, New York’s waiver offers an innovative model for states considering adopting a BHP.

*Under new federal regulations published in May, the definition of lawfully present for the purpose of determining eligibility for marketplace coverage and premium tax credits, and coverage through Basic Health Programs, has expanded to include DACA recipients. This regulation will go into effect on November 1, 2024.