Basic Health budget cuts don’t reflect plan’s intent

When government can’t cover all citizens with a particular benefit or service, it generally invokes a “means test,” whereby a line is drawn based on income. Those below the line are covered because they have fewer means with which to pay. Medicaid and Washington state’s Basic Health plan are two examples.

Because of the slumping economy and the ailing condition of the state treasury, legislators whacked Basic Health’s budget by 43 percent. The program is designed to help those who earn too much to qualify for Medicaid but not enough to afford health-care coverage.

Now, there’s no good way to institute such a draconian budget cut, but Basic Health chose one that is counterintuitive. Call it the reverse means test.

Instead of lowering income eligibility, Basic Health imposed steep premium increases, with the knowledge (and silent hope) that a sufficient number of clients faced with choices between coverage and food or housing or transportation would drop out of the program. Of course, those most likely to do that are those with the lowest incomes.

At the beginning, Basic Health was open only to those whose incomes were a certain percentage from the official poverty line. From there, income limits were raised. As a result, the state has one of the more generous health care programs in the nation.

The cuts should reflect the original intent. Basic Health could have accomplished this by lowering the income limit, thereby forcing those with higher incomes off the program. If that didn’t pick up all the needed savings, then smaller raises in premiums and deductibles could have been imposed. As is, those in the lowest income levels will see a doubling of their premiums.

Basic Health had some other options. We’ve noted the income limits, but it could also raise the age of eligibility, which is 19. Young people generally have less need for health-care services. Officials are also considering asset and wealth tests to make sure low-income people who can pay for their coverage do so. Medicaid does this. The state should, too, since it would preserve some slots for needier clients.

The Legislature would be wise to change state law to bar illegal immigrants from the program. The attorney general’s office advised Basic Health to avoid doing this for fear of lawsuits. A tweaking of the law would hold off the litigation. The budget savings wouldn’t be huge – about $16 million of the $255 million in needed cuts – but the gesture would dampen a common complaint against the overall program.

Basic Health officials are calling their budget solution fair and impartial because it will be clients, not they, who will make the cuts. But they know who is more apt to drop coverage. They should return to the drawing board to protect the most vulnerable.