by Peter Sterling, Executive Director of the Vermont Campaign for Health Care Security
Governor Shumlin’s plan for transitioning Vermont to a publicly funded universal health care system in 2017 is truly exciting and should be just the solution for our health care crisis. However, beginning January 1, 2014 (and running until our single payer system is in place) Vermont must have in place a Health Care Exchange as mandated by the federal Patient Protection and Affordable Care Act. How this Exchange is created will not only be an important foundation for Vermont’s universal health care system, but it will determine the quality and affordability of health care for small business owners and their employees, the almost 50,000 Vermonters in Catamount and VHAP and the estimated 47,000 uninsured Vermonters.
Even though 2014 seems like a long way away, the 2012 legislature which convenes in January will have to make several critical decisions about health care for the estimated 100,000 Vermonters who will be accessing health care through the Exchange beginning in 2014.
In the new Exchange, all health insurance plans will be offered by private insurance companies like Blue Cross Blue Shield and MVP. VHAP and probably Catamount Health will no longer be offered and these enrollees will have to purchase other private insurance. People in households under 400%FPL (about $90,000 for a family of 4 and $44,000 for a single person) will receive federal subsidies towards their premiums.
This brings us to a problematic issue: the affordability of the plans in the Exchange, particularly for the low and middle income Vermonters currently on Catamount Health and VHAP. Right now if you are on Catamount, you have an annual out of pocket (OOP) maximum of $1,050 in addition to your monthly premium; if you are on VHAP, the only OOP cost you have other than your premium are prescription drug co-pays of $1 or $2 and a $25 emergency room visit fee. In the Exchange any VHAP or Catamount enrollee who is over 133%FPL (about $1,230/mo gross household income for a single person and $2500/mo for a family of four) will have up to a $1,964 and $3,987 OOP limit respectively And this is on top of an increased monthly premium in the Exchange! The bottom line is that the federal subsidies aren’t nearly enough to make private health care affordable for low and middle income Vermonters.
Given that half of all the uninsured in Vermont are currently eligible for a public health care program and that high OOP costs are repeatedly identified as the number one reason people don’t enroll, the 2012 Vermont legislature needs to act to make sure health care is truly affordable in the Exchange. One option available to Vermont is to provide an additional subsidy on top of the federal subsidy people under 400%FPL will receive in the Exchange. Unless the state acts through an additional subsidy of its own, many thousands of Vermonters will either lose the relatively affordable coverage they had through VHAP and Catamount or just remain uninsured.
The other major issue after the affordability of health care through the Exchange is the comprehensiveness of coverage. All plans offered through the Exchange will be mandated by the government to offer similar benefit packages but what will largely differ is the cost sharing arrangement of each particular insurance plan, i.e. deductibles, co-pays, co-insurance etc. The federal government is expected to announce the list of mandated benefits for all plans in the Exchange sometime early next year. But since Vermont has traditionally mandated that private insurance plans covers services they typically don’t cover, it is the expectation that many benefits we are used to seeing in private plans offered in Vermont (such as naturopathic coverage) won’t be mandated by the federal government and therefore the state legislature is going to have to ensure are still offered. We need the 2012 legislature to act to make sure all plans in the Exchange cover a truly comprehensive range of services.
While the two issues mentioned above are the most critical for the upcoming legislature to deal with, there are several other very important flaws in the Exchange that must be address before 2014 including:
- Reconciliation: If over the course of the year, household income turns out to have been greater than projected the government may have paid the enrollee more for premium subsidies than they were entitled to. In this case, the enrollee must pay the difference back and, if final annual income exceeds 400% FPL the entire tax credit must be repaid. Having to pay the government back money at year’s end for health care could be a serious financial hazard for many people causing them to drop coverage or suffer serious financial harm.
- Limited open enrollment periods: The initial open enrollment period for plans in the Exchange will be from October 1, 2013 through February 28, 2014. Starting with the January 1, 2015 benefit year, open enrollment for the Exchange will be October 15 to December 7 of the previous year only. Though there will also be “special” enrollment possible for those newly eligible for the premium subsidy, who lose employer coverage, or whose household changes through marriage, divorce, etc, for most people this means they will only have a very short time in which to enroll, otherwise they will have to remain uninsured for the rest of the year.