State's health plan has to figure out how to drop 40,000 poor people

More than 40,000 Washington residents are likely to be stripped of their state-subsidized health insurance — one of the largest group casualties in the state's new austerity budget.

Administrators of the state's Basic Health Plan, which sells deeply discounted health coverage to the working poor, said Friday they would stop processing applications after May 4 as they brace for a 43 percent drop in funding between 2009 and 2011. The move will save $255 million.

In addition, some 18,000 people on a waiting list for Basic Health coverage likely won't land an open slot anytime soon — if ever.

The cuts to Basic Health are included in a compromise budget expected to be approved before the Legislature adjourns Sunday. Friday night, the House approved the budget 54-42 after sometimes emotional debate. It now heads to the Senate.

The cuts come as more laid-off workers are turning to public insurance programs to replace their employers' health coverage — and those on the rolls are staying on longer.

In March, 2,000 people left the plan, less than half the normal attrition rate.

"We are definitely going to have to be disenrolling people" for the first time, said Dave Wasser, a spokesman for Washington Health Care Authority, which operates the Basic Health Plan.

The plan has 102,000 enrollees; the compromise budget provides enough to cover 60,000. The task facing the agency is deciding whom to bump, and when.

Among the questions are whether to kick off members based on income or date of enrollment, and whether to keep coverage for more people by reducing benefits.

"No matter which way we go, there are going to be a lot of people hurting," Wasser said. And with the new budget year starting July 1, he said, officials will have to move quickly.

Basic Health is open to people earning up to twice the poverty level. But 57 percent of its members earn less than the poverty level, which is $18,310 a year for a family of three.

Premiums are heavily subsidized based on household income. A 55-year-old single person who earns $13,000 a year, for instance, pays $30 a month for medical, hospital and prescription-drug coverage. Most charges are covered at 80 percent, and co-pays are relatively low.

Rebecca Kavoussi, director of public policy for Community Health Network of Washington, a network of nonprofit community health centers, predicted cuts to Basic Health will reverberate widely.

More uninsured people, Kavoussi said, would forgo medical services, which could jeopardize their health. Public-health clinics and community health centers, which legally cannot turn away patients who can't pay, would absorb more costs.

What's more, hospitals would have to provide more charity care. That would raise costs for everyone — making insurance even less affordable, Kavoussi said.

"The costs of taking care of these people are not going to go away," she said.

Kavoussi said the least painful cuts might be canceling Basic Health coverage for children and certain adults who then might qualify for Medicaid. However, Medicaid, the federal-state insurance program for the poor, accepts virtually no able-bodied adults, no matter how low the income.

Beyond that, the choices for reducing the ranks of Basic Health quickly become unpalatable, Kavoussi said. Bumping off higher-income members would eliminate the biggest premium payers.

Preserving coverage for older, and presumably sicker, enrollees would make the Basic Health pool more expensive to insure.

And if officials elect to bump members based on enrollment date, who goes first — the earlier enrollees or the most recent?

"A lottery is probably the fairest way," Kavoussi said. "We don't have any better ideas right now."

Kyung Song: 206-464-2423 or ksong@seattletimes.com. Information from The Associated Press is included in this report.