Legislative Wrap-up: Health insurance marketplace
May 16, 2013
Posted By Andrew Stein On May 16, 2013
On Oct. 1, the state is slated to open the doors to Vermont Health Connect, Vermont’s new health insurance marketplace.
Three months later, on Jan. 1, 2014, the web-based exchange will become the sole insurance marketplace for an estimated 118,000 Vermonters, who purchase individual plans or work for businesses with 50 or fewer employees. At that time, the state subsidized health insurance programs Catamount and VHAP will end, and the low-income working Vermonters who use these programs would see major cost hikes without new subsidies.
The Legislature this session appropriated $4.35 million in fiscal year 2014 for premium assistance and cost-sharing subsidies to aid Vermonters earning between 133 percent and 300 percent of the federal poverty line. For individuals, that’s an annual income between $15,282 and $34,470.
Since the exchange takes effect halfway through the fiscal year, the $4.35 million is set to double in FY 2015, when the exchange is in effect for the entire fiscal year.
Of that $4.35 million, $1.484 million will go to reducing annual out-of-pocket maximums, which is the yearly limit that someone is liable for paying in treatment costs. Even with these new subsidies, many Vermonters are facing annual limits more than twice what they currently pay Individuals earning between $28,725 and $34,470, who are enrolled in Catamount, would face annual limits that are roughly four times more than what they are currently responsible for.
The administration proposed a higher cost-sharing subsidy at the outset of the session, but the federal government was unwilling to offer matching funds.
The other $2.866 million the Legislature voted to spend on these subsidies will reduce premiums for this population. The feds are willing to pay an additional $3.5 million, which would bring the total premium subsidy to $6.4 million. That’s a 45-55 percent state-federal split.
These combined subsidies are in addition to federal subsidies under the Affordable Care Act that use a scale to cap premiums at a percentage of a person’s annual income. While the state subsidies (with the federal match) only cover up to 300 percent of the poverty line, the Affordable Care Act subsidizes income earners up to 400 percent of the poverty line.
Many Vermonters earning between 133 percent and 400 percent will see their premiums payments decrease in 2014. But single parents, who were enrolled in Catamount and VHAP, are facing the steepest premium increases in the state (link:
A major money issue this legislative session was how to finance the operation and maintenance of the exchange’s infrastructure. The administration and a legislative consultant agreed that running the exchange would cost the state $18.4 million annually.
To meet federal standards, the Legislature needed to provide a sustainable financing mechanism to pay for the operational costs of the state-based insurance exchange. The Legislature decided to continue an assessment on employers that don’t pay for their employees’ health insurance.
The issue many business groups have taken with continuing the employer assessment is that the administration has encouraged small businesses to drop their coverage, yet they are continuing to be taxed extra for doing so. Currently, employers are assessed roughly $120 annually for each employee they don’t cover.
In fiscal year 2015, the Joint Fiscal Office estimates that the employer assessment will raise $14.4 million. In FY 2016, the office estimates that amount will go up to $15.9 million.
Since legislative leaders are planning to transition to a publicly financed health care system in 2017, they estimate this financing plan will fund the exchange until then.