Creation of state basic health programs would lead to 4 percent fewer people churning between Medicaid and exchanges

The Affordable Care Act gives states the option of creating a so-called Basic Health Program to provide health insurance coverage for individuals and families whose incomes are low but who do not qualify for Medicaid. The Basic Health Program is intended, in part, to decrease churning, or frequent movement between Medicaid and state-run health insurance exchanges, by increasing the income-based eligibility transition point between the two programs to 200 percent of the federal poverty level. We analyzed data from the 2008 panel of the Survey of Income and Program Participation and found that among adults likely to participate in Medicaid and exchanges, only somewhat fewer experienced a change in eligibility with a 200 percent federal poverty level eligibility threshold compared with the previous threshold of 138 percent. As a result, we found that a Basic Health Program would prevent churning for 1.8 million adults nationally each year-reducing by about 4 percent the expected churning of low-income Americans between Medicaid and exchanges within a year. Such programs would also decrease the risk that lower-income families would be subject to recouping of premium tax credits. But churning rates would remain very high, and additional policy steps would be required to minimize the effect of coverage disruptions.