This report from the Urban Institute reviews the advantages and disadvantages of the Basic Health Program Option (BHP) created by the Affordable Care Act. While the author does denote some advantages to these programs like the extension of Medicaid-like coverage to adults between 133 and 200 percent of the federal povery level, the author also notes that BHP costs will exceed average Medicaid costs for this population and it is unlikely to reduce the number of individuals participatin in the exchanges.

From the report:  

The Patient Protection and Affordable Care Act (ACA) offers states the option to implement the Basic Health Program (BHP). BHP gives states 95 percent of what the federal government would have spent on tax credits and subsidies for out-of-pocket costs for two groups:

• Adults with income between 133 and 200 percent of the federal poverty level (FPL); and
• Legally resident immigrants with incomes below 133 percent FPL whose immigration status disqualifies them from federally matched Medicaid.

If a state implements BHP, these two groups of consumers cannot receive subsidized insurance in the exchange. Instead, the state covers them by contracting with health plans or providers. Such contracts must provide at least the minimum essential benefits under ACA, and consumers may not be charged more than what they would have paid in the exchange.

Full Report: The Basic Health Program Option under Federal Health Reform (PDF | 453 KB) 

Urban Institute. (2011). The basic health program option under federal health reform. Dorn, S.