Susan Gretkowski, an attorney with the government and public relations firm Maclean, Meehan & Rice, briefs employers on the impacts of health care reform Wednesday in Montpelier. VTD/Josh Larkin
At the federal and state level, businesses have lobbied to ensure new health care laws don’t force them to bear more than their fair share of the burden for expanded insurance coverage to more Americans.
But as new federal rules are implemented for the Affordable Care Act, and the state embarks on plans for a single-payer health care system that would provide universal coverage for all Vermonters, businesses worry about restrictions that could drive up their costs for medical benefits for workers.
In the second of five briefings on health care reform, Susan Gretkowski, an attorney with the government and public relations firm MacLean, Meehan & Rice, provided an overview of health care reform in Vermont and what it means for employers in Montpelier on Wednesday. The Associated Industries of Vermont is sponsoring similar events at locations around the state.
Several prominent business people who attended were apprehensive about the changes. George Malek, executive vice president of the Central Vermont Chamber of Commerce, said companies would like to be able to reasonably predict what their costs will be for the next five years. Uncertainty about health care expenditures make that impossible, he said.
“Expense and predictability, those are the two huge components out there,” Malek said. “What’s it going to cost, and when will I know what it’s going to cost? And then out in the longer term is how much is it going to cost me over time?”
At the federal level, the Affordable Care Act, which was signed into law in 2010, includes an individual mandate that nearly all Americans buy health insurance or pay a penalty. The U.S. Supreme Court decided this month to take up a constitutional challenge on the issue.
The mandate, according to proponents, brings both sick and healthy people into the insurance system and premiums paid by the healthy offset the cost of covering the sick. Otherwise, healthy people wait until they are ill to buy insurance, which leads to what policy analysts call a “death spiral” — premiums skyrocketing out of control. The exchange also serves as a vehicle for consumers and businesses purchasing qualifying health insurance. States must have an exchange in place by the beginning of 2014.
Vermont plans to use the exchange as a platform for a single-payer system by 2017. The logic goes like this: the fewer the number of insurers and the larger the number of patients in the pool, the more administrative costs the state can save, and the more the exchange will mimic the “single-pipe” payment system.
Vermont’s health care reform law, Act 48, requires the state to make an effort to include at least two insurers in the exchange. The implicit goal of Gov. Peter Shumlin’s single-payer initiative, however, is to narrow the field to one “single-pipe” payment system for medical reimbursements. The state currently has three main health insurers — MVP, BlueCross BlueShield of Vermont and Cigna. The federally mandated health benefit exchange will likely limit the number of insurers and plans employers can choose from, and it’s this squeeze on the variety of available options and associated costs that Vermont companies are worried about.
In 2016, the “small employer” qualification for the exchange includes employers with 100 employees or fewer. Before that time, states can choose to qualify small employers as those with 50 employees or fewer. Large employers will be included in state exchanges in 2017.
David Sichel, deputy director of risk management services for the Vermont League of Cities and Towns, said the vast majority of towns in the state fall under the 50 employees or fewer group and will be impacted by the exchange.
“Our primary concerns are to minimize any disruption that might happen,” Sichel said.
Sichel said a lot of towns offer high-deductible plans where the employer and the employee share the costs of premiums and deductibles. Certain plans that are offered now he said could be a better option for workers, but may not qualify as part of the exchange. For example, a plan with a high deductible where the employer foots the bill for the entire premium and contributes to a health savings account, which is not subject to federal income tax, could be a better deal than a plan offered through the exchange.
Sichel said keeping the 51-100 employee group out of the exchange would give employers more flexibility to choose from a wider array of plans and insurers and take advantage of benefits like the health savings account tax incentive.
Malek agreed with that assessment. “Choice is critical, and right now the people from 50 to 100 have a lot more choices than they will if they are in the exchange,” he said.
William Driscoll, vice president of Associated Industries of Vermont, summed up employer worries: “There’s been concern about how many choices are there going to be in the exchange and will plan designs increase cost?”
A report by Harvard economist William Hsiao recommended a payroll-tax funding mechanism that could result in employers paying about 11 percent of total payroll in 2019. Driscoll says most employers who offer insurance are paying about 4 percent to 7 percent of payroll now for health care. The governor has not endorsed a payroll tax to pay for a single-payer plan; the Shumlin administration, charged with developing financing for the universal medical system, will make recommendations to the Legislature in 2012, after Election Day.
Driscoll said multi-state corporations could be required to offer different benefits in Vermont than in other states. Furthermore, providing universal care would increase utilization of health care services, by severing the connection between individual choices to utilize health care services and costs.
Another potential cost issue for businesses, he said, is that they may have to offer supplemental insurance if, for example, a union contract offers better benefits than that offered in an exchange. In this case, businesses could be subject not only to the payroll tax, but they would also have to buy supplemental insurance to make up the difference between what employers receive under reform and what they received under the contract.
Robin Lunge, director of health care reform for the State of Vermont, said the governor’s office and the Department of Banking, Insurance, Securities and Health Care Administration are working on actuarial models to develop a recommendation for the legislature regarding the 50 or 100-employee level in the exchange.
As for buying insurance on or off the exchange, Lunge said there will probably not be much difference as far as flexibility in plans.
“One common misconception is that folks think buying insurance outside the exchange is more flexible and a different risk pool,” Lunge said. This is not necessarily true, she said, since the exchange is a mechanism for buying insurance rather than a completely separate market.
The amount of flexibility in a benefit package will depend on how the feds design different levels (i.e. gold, silver or platinum). That flexibility will be the same inside and outside the exchange, Lunge said. There are also five criteria that apply for plans within the exchange, Lunge said. Aside from the restriction on advertising designed to eliminate fraud, the other criteria are similar to current Vermont law.
If the Affordable Care Act was determined to be unconstitutional, she said, Vermont could still enact its own individual mandate or provide coverage without a mandate as it has done for children with the Dr. Dynasaur program.
For now, the fate of the individual mandate is in the hands of the Supreme Court. Vermont received an $18 million federal grant to fund the exchange, and it should be up and running by 2014. A plan for which employers will be in the exchange will reach the legislature in January. For more details, individuals and businesses will have to wait and see.
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$18 million; this is what we used to call in sandlot football games a “flea-flicker”, a sort of unorthadox play with a little trickery and razzle dazzle.
nice to see our fed tax dollars being funnled to the state; NOT! and the proponents boast about this ‘entitlement’ in typical “pork slinging” gratitude.
obamacare to shumcare, it’s all paid for by you the taxpayer (few of us left) to promote one payer health care and more nanny state socialism.
pathetic.
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You are a business. Your costs increase due to mandated tax by VT to provide healthcare for all. You have to pass the costs onto your customers and charge more to sell your product. Your product is now more expensive than the same product in NY, NH, or even in MA (how about the internet?). Joe Consumer buys the product in NY/NH/MA/internet because it costs him less. The VT business is now uncompetitive and loses sales (less tax dollars for the fusion progs/democrats to spend to save humanity from the 1%). VT business sheds workers and finally must close because they are uncompetitive….(no tax dollars at all for healthcare now).
Oh…that’s ok. We are Vermonters…we shall just pull together and sing Kumbaya and everything will be ok.
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It’s about cost — not content
By JIM MULLIGAN – Published: January 6, 2010
[2nd Anniv. looms]
There is a facet of my make-up in which I take particular pride. I am a print journalism junkie. However, I also readily admit to a significant level of ineptness when it comes to matters mathematical. I have come to accept this as a reasonable trade-off for those of us with a bent toward liberal arts. So possibly the following has its numerical warts, but I want to direct this at promoting a price comparison approach before we launch the Good Ship Health Care Reform.
http://www.timesargus.com/article/20100106/OPINION04/1060303
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It’s not the “mandated federal exchange” that will limit insurers and plan offering on the exchange. That is the state’s decision regarding the exchange.
The administration has been very clear that Vermont is not trying to build Orbitz like most other states. It’s trying to collapse everything into a single pipe, as you note. It needs to be clear there are still some very important policy choices yet to me made.
If you collapse into one, the small group and individual markets then extend this new group to employers with less than 100 employees, as permitted by the ACA and you’ve captured the lion’s share of the private insurance market in Vermont – the vast majority of privately insured Vermonters. All you have to then is not permit sales outside of the exchange and…
Voila! Not quite a single payer but close enough for government work!
Otherwise, this is the best overview I’ve read of the issues.
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George Malek’s comment that VT companies need to be able to predict their health care costs far into the future is right on. However, what business, under our current system, has been able to predict its health insurance costs even into the next year? We all wait, with dread, for the new numbers to be issued by our insurance carriers — dreading what has become an annual exercise of “how can I possibly pay for this and stay in business? This is why a single-payer system is so needed by exactly the companies that Malek serves.
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And let’s look at some of those Health Plans with such high deductibles every year that folks postpone needed medical or mental health care. Catastrophic insurance does nothing to prevent more serious illnesses from developing. Free Care in some of the free clinics is not an alternative if someone has one of these catatrophic health plans, because free clinics are for folks with NO insurance. For low wage earners no insurance may be the better route to go; at least they still have emeregency rooms and without a Health Insurance Plan, they won’t have to pay a thing — the rest of us get to pay for THAT!
And why is there such a rush to second guess what the Green Mt. Care Board will come up with in the way of a benefits and cost plan? In Cognitive Therapy we call that “Negative Future Predicting”. Let’s all get in there are influence the process rather than sit on sidelines throwing darts at “what MIGHT happen.
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To my friend and insurance agent, Craig:
You’re a business. Your costs for health insurance has been increasing 10-20% per year, each year for the past 10 years. You’ve had to move from being able to offer health insurance as a benefit to your employees, to in some cases, discontinuing insurance altogether.
As an employee you are now working harder for less benefits. You may not have any health insurance. You get sick or hurt what do you do? Lose it all?
That’s the system we have right now and it obvious that it is no longer working. The insurance companies have clearly demonstrated that left to their own device that will price the average worker out of the market. The current situation was exaserbated by the fact that our former president, George Bush, would not allow the government to negotiate the costs of prescription drugs with the Pharmas.
The situation has spiraled out of control. Municipalities are forced to raise taxes just to cover the increased costs. The best thing we can do as a society is to break the stranglehold the insurance companies have on our society and go to a single payer system.
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My brother is a contractor over in New Hampshire. He had two employees. He paid for their health insurance. It cost him about $20,000 per year in premiums for all three employees and their families. He had to incorporate this into his costs on the bid. One employee moved out of state. His other employee stayed on, and has been with him for about twenty years.
This year my brother had to cancel the employee’s health insurance. His insurer is MVP. This year they raised the premiums by over 200%. They never consulted my brother about it. They just did it. It now cost my brother $2,700 a month for this employee, who has had two strokes due to a condition beyond his control. The employee is freaking out and my brother is helpless. New Hampshire has nothing like Catamount that this employee could fall back on. He makes too much to qualify for medicaid. If he has another stroke…well…he’s on his own. So what. If my brother kept his employee insured, he would have to charge his customers for this cost; they would just go elsewhere because my brother’s bid was too expensive.
This is the kind of choice that small businesses face every day. And this is a system that we want to preserve? It no doubt makes a few in the chamber of commerce rich, but for want of predictability, as Mr. Malek seems to desire, it is lacking when an insurance company can just up the premiums whenever they want. If we want predictability and stability, or at least a measure of it in this society of constant change, let’s give the Green Mtn. Care Board time to do its work.
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I’ve know Bob Stannard for more than 20 years and I’m stumped as to why he calls me his “insurance agent.” I’ve never represented insurance companies. He must have me confused with his friend and BISHCA head, Steve Kimball.
For 25 years I have proudly represented Vermont employers and their employees as the purchasers of health insurance.
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Craig Powers (see above)
I’ve probably called you, Craig Fuller, all kinds of things but never an insurance agent! LOL
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Am I your agent?
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All Vermonters need to know the answer to Question #1:
What will the new health plan mean to my family?
I’m a state employee so my question is:
For state employees, retired state employees and dependents of each: What would the new plan mean to your family?
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As a small business owner with 40 employees, we have have used Georg e Malek’s Chamber VACE insurance plan for eight years. It has never been predictable. Now he also talks about choice! VACE has decided (Mr. Malek) to switch from CIGNA to VT BCBS and in so doing is chasing out of Vermont a competitor that he so clearly wants to keep. So you can’t have both ways George.
Also as a business person I can tell you I do not want to be in the insurance business, I have a business to run!