Basement wall studs: any alternatives to wood?
The plastic is a vapor barrier. It's used because these are unfaced fiberglass insulation batts. 

In cold climates, the vapor barrier prevents moisture within the living space from penetrating into and condensing in the cooler insulation where it reduces the insulating properties or worse, freezes.

When its replaced, there will need to be some sort of vapor barrier whether it's faced insulation or unfaced insulation with sheet plastic vapor barrier.