House committee votes to double health care costs for low-income, chronically ill Vermonters

February 19, 2013



Posted By Andrew Stein On February 19, 2013 @ 10:29 pm In Recent | 9 Comments

The above graph shows the discrepancy in out-of-pocket maximum costs between what Vermonters enrolled in the Catamount health insurance program currently pay and what they would pay under the subsidy program passed by the House Health Care Committee on Tuesday. Annual out-of-pocket maximums are reached only for those individuals with high costs, like the chronically ill. These figures were compiled from baseline data provided by the Legislature’s Joint Fiscal Office. Graph by Andrew Stein

The House Health Care Committee approved new health insurance programs for low-income Vermonters on Tuesday that will more than double out-of-pocket costs for many chronically ill patients earning between $15,300 and $34,500 annually.

The committee approved $4.35 million in state funding for these subsidies in fiscal year 2014 — roughly $160,000 less than the Shumlin administration’s proposal of $4.51 million.

These subsidies, which are part of a larger health care budget bill, [2] will replace the low-income Catamount and VHAP health insurance programs when they end in 2014. At that time, the state’s health benefit exchange will become the state’s primary marketplace for health insurance, in accordance with the federal Affordable Care Act. [3]

While the subsidies will cushion sharp cost hikes, the new programs will provide significantly less coverage to low-income Vermonters than the current programs do.

Kelly Stoddard, a lobbyist for the American Cancer Society, said the new programs will place chronically ill Vermonters, like cancer patients, “at risk. At risk of not being able to get the care they need when they need it because they cannot afford the care, and at risk of incurring higher medical costs when they do get care.

“A cancer diagnosis can quickly translate to bankruptcy for families and, in the worse-case scenarios, the inability to access potentially lifesaving treatments and medications,” Stoddard said. “Cost-sharing is one of the single biggest insurance issues for cancer patients. These out-of-pocket maximums will quickly be realized for those with a diagnosis.”

After the federal government told the administration it was unwilling to fund roughly 20 percent of its original subsidy proposal, [4] the administration said it couldn’t make up the difference in federal dollars and slashed the overall amount from $10.3 million to $7 million.

Of that original figure, roughly $4.51 million was slated to come from state general fund dollars, and the administration recommended holding the state allocation to that level. House Speaker Shap Smith, D-Morrisville, told the House Health Care Committee last week to limit spending within the parameters of this year’s tight budget.

Rep. Mike Fisher, a Democrat who chairs the House Health Care Committee, proposed the subsidy programs that passed. His proposal provides almost $1 million more than the administration’s plan for premium assistance, but Fisher allocates roughly $1.1 million less to bring down annual out-of-pocket maximums.

Premiums will be lower than they are now for many individuals earning $15,300 to $34,500, but the out-of-pocket maximums for these Vermonters will be much higher. That means that many people who are healthy will see a net benefit from this new arrangement (while many will not), but those who actually need care will pay much more out of pocket.

A Vermonter earning $28,740, who is enrolled in Catamount, will see an increase of $1,450 above the $1,050 that he or she is currently liable for in a year, and will, in all, pay $2,500. For an individual earning $34,515 a year, he or she will see a $2,750 increase over that $1,050 annual out-of-pocket maximum, which will result in an annual maximum of $3,750.

One of two main drivers behind Fisher’s proposal is that it takes better advantage of federal dollars. The state receives a 55 percent federal match for premium assistance and nothing for cost-sharing subsidies — that’s the part of Shumlin’s proposal that the feds turned down the other week.

Under Fisher’s premium assistance program, the state will spend $2.87 million from the general fund and receive $3.5 million in federal subsidies to pay out a total of $6.4 million in FY 2014. The $1.5 million in state funds to bring down annual out-of-pocket maximum costs will receive no federal match.

The subsidies under Fisher’s plan come out to about $8 million, or $1 million more than the administration’s $7 million proposal. His proposal also uses fewer general fund dollars.

In FY 2015, the overall amounts will roughly double because they will account for an entire fiscal year — the exchange takes effect halfway through FY 2014.

The other leading element that factored into Fisher’s proposal is that studies show lower premiums encourage more people to purchase health insurance, which results in better access to primary and preventative care.

As Robin Lunge, the administration’s director of Health Care Reform, put it: “Premiums drive enrollment and cost sharing drives utilization.”

The latter part is what concerns Stoddard and other organizations that represent the chronically ill, like the American Heart Association.

“It will have an impact on the decisions people make about care,” said Stoddard. “People can stretch their prescription drugs out, they can delay treatment, and ultimately impact their outcome for cancer — decreasing their survival rate.”

Fisher’s proposal wasn’t the only one on the table. Rep. Paul Poirier, I-Barre, proposed an additional $6 million in subsidies.

“If we don’t do something up front, the whole health care system will be doomed to fail,” he told his fellow committee members. But without a concrete revenue proposal to generate an extra $6 million for the program, only three members of the committee voted for Poirier’s plan, including Poirier.

Rep. George Till, D-Jericho, told the group that without Smith’s support, he didn’t think such a proposal would fly.

“I’ve had multiple conversations with the speaker, and try as I might, I’ve failed to convince him that we should do a lot more,” he said. “It’s not that I don’t think it’s the right thing to do, I just don’t think we have a chance to succeed.”

Till proposed a second plan that was very similar to Fisher’s, but a bit more generous. It included the same cost-sharing subsidies, but bumped up premium assistance to the Poirier level at $3.83 million, rather than $2.87 million. His fiscal argument was that the federal dollars it would generate would more than offset the amount being proposed.

The vote resulted in a tie, as Rep. Kristy Spengler, D-Colchester, was absent. Fisher shot it down.

After that, the committee voted 7-3 to pass Fisher’s proposal. All three Republican representatives on the committee — Doug Gage, of Rutland; John Mitchell, of Fairfax; and Mary Morrissey, of Bennington — voted against Fisher’s programs, just as they did the other proposals. Poirier said that while he voted in favor of Fisher’s proposal, he would vote against the health care budget bill at the end of the week because of the cut to subsidies.

Fisher reminded the committee that this is a small step on the way to implementing a single payer health care system that would be publicly financed and that he said would provide better coverage for low-income Vermonters. The state isn’t eligible to apply for a waiver to implement such a system until 2017, and some of his fellow committee members are uncertain that the grass will be so much greener on the other side.

“We have to be realistic about what we’re doing,” said Morrissey. “I do not want to shortchange any of the people sitting on the sidelines who are advocating for good health care … I’m fearful with what the outer years look like even with funding from the federal government. I think we got a taste of that last week.

“We could shoot for the sky,” she added. “I’d love for everyone to have everything. I truly would. But I don’t think that’s the reality.”