Implementing Budget Cuts in the Basic Health Plan: A Case Study (A)

Abstract

Basic Health (BH) is a state-sponsored program providing health care coverage to low-income families. Because of a 43 percent budget cut, 40,000 members must be disenrolled. The problem of deciding who loses coverage fell to the Health Care Authority.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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Resources

A Snapshot of Basic Health’s Organization and Membership Demographics (2009)

At-a-Glance

Health Care Authority (HCA): A Washington state agency that oversees seven health care programs

HCA Administrator: Steve Hill

Basic Health Plan (BH): A state-sponsored program that provides health insurance to low-income families

BH Assistant Administrator: Preston Cody

Organizational Context

Funding: Basic Health is one of seven health care programs overseen by the Health Care Authority, a Washington state agency. Basic Health’s revenue comes from three sources: an administrative budget, state appropriations for subsidies, and members’ share of premiums. In 2009 BH received $337,000 for administration from the state ($592,000 was requested), and its appropriation for member subsidies was reduced by $255 million. BH expects to receive approximately $50 million in revenue from members’ share of premiums in 2010.

Health Plans: The Health Care Authority contracts with five health plans to offer Basic Health. The participating plans are Columbia United Providers, Community Health Plan of Washington, Group Health Cooperative, Kaiser Foundation Health Plan of the Northwest, and Molina Healthcare of Washington. At least one Basic Health plan is available in each of Washington’s 39 counties. In late 2008, four counties had a choice among three plans, 21 counties had two plans, and 14 counties had only one participating plan.

Advisory Committee: The 12-member Basic Health Advisory Committee (BHAC), which meets quarterly, is composed of “health care professionals, health providers, and those directly involved in the purchase, provision, or delivery of health care services, as well as consumers and those knowledgeable of health care policy.” BHAC, along with many other boards and commissions, will be eliminated on June 10, 2010, because of the state’s budget shortfall. The 2009 Boards and Commissions Report states the purpose and responsibilities of the BHAC:

Provides ongoing and ad hoc consultation and advice to the Health Care Authority Administrator to help ensure the continued and long‐term success of Basic Health, and that it fulfills its intended role in providing health care access to otherwise uninsured individuals and families. … [BHAC] shall develop, prioritize, and recommend short‐ and long‐term strategies for the continued success of Basic Health (p. 27).

Staff: As of January 2010, there were 80 full-time equivalent staff positions at Basic Health, including 56 Health Benefits Specialists, eight office assistants, and four management analysts.

Demographic Context

Basic Health eligibility criteria and enrollee demographics have changed over time. At the time of deciding how to implement the budget cut, BH was open to Washington residents who were not eligible for Medicare, not institutionalized, and not attending school full-time on a student visa.

The following tables list detailed demographics of the 94,767 Basic Health subsidized enrollees in July 2009. The federal poverty level (FPL) is adjusted annually and depends on family size. For a single adult in 2009, for example, FPL was $10,830; for a family of three, it was $18,310.

Gender

Female: 60.2%

Male: 39.8%

Ethnicity

Asian Pacific Islander: 4.7%

Black/African American: 0.6%

Hispanic Origin: 2.3%

Native American: 0.3%

White/Caucasian: 22.4%

Not Reported: 69.7%

Primary Language

Korean: 1.3%

Russian: 1.5%

Spanish: 17.4%

Vietnamese: 3.0%

Other: 20.3%

Not Reported: 56.5%

Income Band (Gross Family Income as a % of Federal Poverty Level)
  • Up to 65% FPL: 37.4%
  • 65–99% FPL: 21.7%
  • 100–124% FPL: 16.2%
  • 125–139% FPL: 8.1%
  • 140–154% FPL: 6.7%
  • 155–169% FPL: 5.0%
  • 170–184% FPL: 3.5%
  • 185–200% FPL: 1.3%
  • 201–250% FPL: 0.07%
  • 251–300% FPL: 0.02%
Age Distribution

Age 0–22 (dependents): 8.9%

Age 0–39 (all subscribers): 41.3%

Age 40–54: 32.0%

Age 55–64: 16.4%

Age 65+: 1.4%

Premiums (Sliding Scale) and Deductible (Flat Rate)

Mean share of premium (pmpm*) $36

Premium for lowest income band (pmpm) $17–$30**

Premium for highest income band (pmpm) $245–$281**

Average full cost per enrollment slot (pmpm) $245

Annual deductible per member $150

*Per member, per month (pmpm)

**Depending on age and county of residence

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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