42 U.S.C. § 18051 — State flexibility to establish basic health programs for low-income individuals not eligible for medicaid

(a) Establishment of program The Secretary must create a "basic health program." Under it, a state can contract with insurers to offer one or more "standard health plans," covering at least the essential health benefits, to eligible people, instead of sending them to an Exchange. A state can only start this program if it proves to the Secretary, and the Secretary certifies, two things: for each eligible person, their monthly premium for the standard plan cannot be more than what they would have paid, after tax credits, for the "second lowest cost silver plan" on the Exchange in their area, and their cost-sharing cannot be more than what a platinum plan would charge for people at or below 150 percent of the poverty line, or what a gold plan would charge for everyone else; and the standard plans cover at least the essential health benefits. For the premium comparison, both amounts are calculated after subtracting any tax credits and cost-sharing reductions that would apply. (b) Standard health plan A "standard health plan" is a plan the state contracts for that: only eligible individuals, defined below, can join; covers at least the essential health benefits; and, if it is insurance sold by an insurer, spends at least 85 percent of premiums on medical care, known as its medical loss ratio. (c) Contracting process The state must run a competitive process to pick standard health plans, including negotiating premiums, cost-sharing, and any extra benefits. In that process, the state must at least: negotiate for innovative features like chronic-care coordination, incentives for preventive care, and stronger patient-provider relationships, without this permitting discrimination based on preexisting conditions; consider differences in health needs and provider availability across enrollees; try to contract with managed-care systems or systems with as many managed-care features as the local market allows; and set performance standards on care quality and outcomes, require plans to report on them, and make that information available to enrollees in a usable way. The state must try to offer multiple standard plans so people have a real choice, and may join a regional compact with other states to cover eligible people across state lines. The state must also try to coordinate this program with its Medicaid program, its CHIP program, and other state health programs, to run efficiently and keep care continuous. (d) Transfer of funds to States If the Secretary decides a state's program meets the requirements, the Secretary must send the state money each year that a standard plan is running there. The state must put this money in a trust fund used only to lower premiums and cost-sharing, or add benefits, for people in standard plans; this money does not count as the state's own funds for meeting other federal matching requirements. The amount is 95 percent of what the premium tax credits and cost-sharing reductions would have cost the federal government if these same people had instead enrolled in an Exchange plan. The Secretary calculates this per enrollee, considering age, income, family size, geographic cost differences, health status as it would affect risk-adjustment and reinsurance payments, and whether reconciliation of the credit would have applied, drawing on other states' Exchange experience, especially for people below 200 percent of poverty. The CMS Chief Actuary, working with Treasury's Office of Tax Analysis, must certify that the calculation method meets these requirements, based on sufficient state data. The Secretary must correct any calculation errors from prior years in later payments. The special rules in section 18023 apply to this program and its standard plans the same way they apply to qualified health plans. (e) Eligible individual An "eligible individual" is someone who: lives in the state; does not qualify for Medicaid covering at least the essential health benefits; has household income between 133 percent and 200 percent of the poverty line, or, for a lawfully present immigrant, income at or below 133 percent of the poverty line but is ineligible for Medicaid because of immigration status; is not eligible for other minimum essential coverage, or is only eligible for employer coverage that is not "affordable" under the tax-code test; and has not turned 65 by the start of the plan year. This excludes anyone who would not be a "qualified individual" eligible for an Exchange plan anyway. An eligible individual cannot also be treated as a qualified individual eligible to enroll in an Exchange plan; it is this program or the Exchange, not both. (f) Secretarial oversight Each year, the Secretary must review every state's program to make sure it meets eligibility-verification requirements, rules for using federal funds, and the quality and performance standards. (g) Standard health plan offerors A state can let licensed HMOs, licensed insurers, or a network of providers set up for this purpose offer standard health plans. (h) Definitions Any term used here that is also used in the premium tax credit statute, section 36B of title 26, has the same meaning it has there.