Advocates: Vt. health aid won't be enough

February 03, 2013

Rutland Herald

MONTPELIER — Gov. Peter Shumlin last month unveiled a budget proposal that aims to ease health insurance costs for about 45,000 low- and middle-income Vermonters in 2014.

But advocates say the state aid won’t bring the price of insurance to within reach of poor and working-class residents, and that failing additional appropriations, thousands of Vermonters could soon join the ranks of the uninsured.

The onset of the “health benefit exchange” next year has triggered some soul searching in Montpelier, where elected officials are grappling with the issue of higher out-of-pocket costs facing many of the Vermonters who will soon be required to buy coverage in the new online insurance marketplace.

At issue are Vermonters living within 350 percent of the federal poverty level — the income threshold at which residents currently qualify for assistance in state programs like VHAP or Catamount Health.

When the exchange, to be called “Vermont Health Connect,” goes into effect on Jan. 1 of next year, Catamount and VHAP will disappear, taking with them the favorable rates credited for helping this state achieve one of the lowest percentages of uninsured residents in the nation.

Administration officials say the “cost-sharing assistance” plan included in the governor’s budget will maintain Vermont’s status as a leader in that category by offsetting the adverse financial impacts on lower-income residents heading into the exchange.

Peter Sterling, executive director of the Vermont Campaign for Health Care Security, says his organization appreciates the administration’s recognition of the problem. But he says its proposal doesn’t fix it.

“Allowing health care costs to go up in the exchange will have either a negative impact on enrollment, or will create a financial hardship for the Vermonters who do buy insurance,” Sterling says.

In his budget address last month, Shumlin said his budget “makes certain that Vermonters currently enrolled in Catamount and VHAP do not suffer federally imposed cost increases” in the online exchange. But that’s not entirely true.

Robin Lunge, director of health care reform for the Shumlin administration, says it would cost about $26 million annually to preserve Catamount-level costs for the 45,000 or so Vermonters at Catamount-level incomes who will be thrust into the exchange next year.

Shumlin’s plan, however, appropriates $22 million to offset the higher prices in the exchange — about $4 million short of what it would cost to avoid any increases. While it doesn’t meet the “hold harmless” standard advocated by Sterling, Shumlin’s plan would temper the drastic increases that would have otherwise faced Catamount-eligible residents.

For instance, a couple making $46,500 annually — 300 percent of the federal poverty level — would have seen, with no state intervention, its yearly out-of-pocket exposure go from $7,092 in Catamount to $16,808 in the exchange.

Under Shumlin’s proposal, an identically situated couple would see exposure rise from $7,092 in Catamount to $8,724 in the exchange.

Lunge says the administration’s proposal has the advantage of being income-sensitive as well, so that the lower a Vermonter’s income, the less severe an increase he or she will experience in the exchange.

An individual making $28,700 per year, for example, would, without the cost-sharing proposal, see out-of-pocket exposure go from $2,874 to $5,393. Under the Shumlin plan, financial exposure would go from $2,874 to $3,482.

Lunge says the actual impact on Vermonters would be even less, since only about 30 percent of insured residents hit their out-of-pocket maximums in a given year.

Sterling, however, says even Catamount-level prices exceed what many Vermonters can pay. The state still has about 47,000 residents — 7 percent of the population — living without health insurance. In a recent survey conducted by the Department of Vermont Health Access, Sterling says, residents overwhelmingly cited price as the chief impediment to getting coverage.

“Catamount obviously is not the sweet spot, because half the uninsured in this state are eligible to be on it, but are not,” Sterling says. “If I was a decision maker, I’d be arguing we need to drastically cut out-of-pocket costs for people. But I feel like ‘hold harmless’ is the best we can do right now, politically.”

In a vote scheduled for later this week, the House Committee on Health Care will decide whether to accept or revise the administration proposal.

Rep. Mike Fisher, a Lincoln Democrat and chairman of the committee, wouldn’t prognosticate on the outcome. But he says he does have concerns about how families on the lower end of the income scale will “find their way through this new system.”

An individual making about $17,000 per year faces less than $600 in out-of-pocket costs under the existing system. Under Shumlin’s proposal, that person would see his out-of-pocket exposure rise to more than $1,000 in the exchange.

“I am happy to see this injection of support to help Vermont families across the income scale in 2014,” Fisher said. “The question we’re grappling with is whether it’ll be enough for all of them.”