Subsidies for state health care programs could see boost from Senate

April 15, 2013

VTDigger

The Senate Health and Welfare Committee plans to vote this week on whether to recommend millions of dollars more in health insurance assistance for low- and middle-income Vermonters. And their proposal may very well call for leaving a contentious employer assessment on the table.

The committee will make the recommendation to the Senate Appropriations Committee, which is expected to vote out a budget bill by the end of the week. The subsidies would mitigate increases in deductibles and annual out-of-pocket limits for lower income Vermonters in 2014.

Sen. Claire Ayer, who chairs the Senate health committee, said her committee members want to provide more aid.

“We all want to do that,” Ayer said. “We all know that’s the right thing to do. But we haven’t made that decision.”

By the end of Tuesday, Ayer said, her committee is likely to vote on the proposal, which could include annual subsidies of up to $15 million more than what the House Health Care Committee proposed.

The subsidies are meant to help individuals previously enrolled in the state subsidized programs Catamount and VHAP. When the state’s new health insurance marketplace — Vermont Health Connect [1] — goes into effect in 2014, those programs will end. Without state subsidies, Catamount and VHAP beneficiaries face steep cost hikes. [2]

The Senate committee’s proposal would deviate substantially from the House Health Care Committee’s plan. The House committee recommended $1.84 million in cost-sharing subsidies for fiscal year 2014 to reduce out-of-pocket maximums from insurance plans under the federal Affordable Care Act, or Obamacare.

But, even with the House subsidies, many lower income Vermonters are looking at out-of-pocket limits double what they are now. Individuals earning between $28,725 and $34,470 who are enrolled in Catamount would face limits roughly four times what they are currently paying per year.

The Senate Health and Welfare Committee would hold annual out-of-pocket limits at $1,250 for individuals earning between $17,235 and $34,470 annually. Individuals at that income level, who are enrolled in Catamount, currently have an out-of-pocket limit of $1,050.

“The out-of-pocket expenses can be really huge for a certain population, and we’re worried they won’t even get insurance if they look at that,” Ayer said. “It’s why people don’t get insurance today.”

Subsidies at that level would cost an estimated $6.5 million in fiscal year 2014. That’s about $5 million more than what the House committee proposed, and an allocation in FY 2014 only covers half a year of subsidies because the exchange takes effect on Jan. 1, 2014 — halfway through FY 2014, which begins July 1, 2013. For an entire year, these subsidies would cost the state $13.6 million, or $10.5 million more than the $3.1 million the House committee proposed.

If the Legislature holds out-of-pocket limits at $1,250 for individuals earning between $34,470 and $45,960, the decision would cost the state about $18 million annually.

That total is far above the $4.5 million in FY 2014, or $9 million annually, that House Speaker Shap Smith and Gov. Peter Shumlin, both Democrats, told legislators they want to spend on state subsidies. Those figures don’t include the $2.9 million in premium assistance the House Health Care Committee recommended, and Ayer said her committee would also likely approve.

To pay for these additional subsidies, Ayer and her committee are looking at an existing employer assessment. The assessment currently charges employers (with four or more employees) for every employee not covered under a company plan. In FY 2013, the state projects that the assessment will raise $11.8 million.

The assessment is tied to the Catamount program, and the administration recommended tying the assessment to the new subsidy program. But business groups, such as the Vermont Chamber of Commerce and Vermont Businesses for Social Responsibility, took issue with carrying the assessment forward.

Their main qualm is that small businesses would be financially penalized for doing what the administration had encouraged them to do: drop employees from their plans so that employees can obtain federal subsidies. These employees, earning up to roughly $46,000 annually, would be ineligible for federal premium subsidies if they received insurance through their employers.

Democratic Sen. Sally Fox, who vice-chairs the Senate health committee, said that she is torn on the issue. “In an ideal world with unlimited resources,” she said, the decision to provide more funding would be a no-brainer.

Despite a tight budget, she indicated a desire to provide more aid.

“I think the goal is to make sure everyone is insured,” she said. “When (high) out-of-pocket limits could discourage people from signing up, we’re not meeting that goal.”