We have recently finished a basement under a module home. The ceiling is very short so finishing it with drywall or a dropped ceiling is out of the questions. We would like to paint, but the only problem is the insulation and the plastic sheeting covering that. Do you have any suggestions?

Why aren't you considering 1/2" drywall?? It will only make the room 1/2" lower and it would solve your problem.

If you don't want tpo drywall you can spray it with Dryfall or just flat latex paint.