Steve Kimbell and Robin Lunge. VTD/Josh Larkin
Vermonters will soon know what benefits their health insurance has to cover if they buy insurance in the individual and small group market in 2014.
The Shumlin administration has narrowed down to three, the list of potential plans that will serve as a benchmark for what services insurance companies in the state’s health benefits exchange will cover.
The short list for benchmark plans includes the state employee plan, the Blue Cross Blue Shield of Vermont HMO plan and the MVP Health Care preferred exclusive provider plan.
The state employee plan offers the most covered benefits, but Lunge said, they are all similar.
Two multistate plans, which are allowed under the federal law could also be sold in the exchange. Lunge said there was a potential that these plans could not adhere to Vermont standards if federal law allows, but the state has been pushing for uniform standards.
“We’ve taken the position that the multistate plans shouldn’t undercut the state plan,” Lunge said.
People making up to 400 percent of the federal poverty level, that means an annual income of around $92,000 for a family of four, will receive federal subsidies if they enroll in health insurance plans through the exchange.
The administration is trying to balance “rich” plans that cover lots of services with the inevitable costs that come with expanded coverage.
States are required to define just what “essential benefits” insurers in the individual and small group markets must cover. In December, the U.S. Department of Health and Human Services punted this responsibility to states to determine the benefits for these markets with the caveat that they must cover services within 10 categories.
“This means by looking at covered services, people can get a concrete idea of what is covered in the exchange in 2014,” said Lunge.
Picking a benchmark plan is the first step in narrowing down what plans in the exchange, the online marketplace for insurance that states must set up, will look like.
The details of what variations of deductibles, co-pays and premiums people will pay in different plans in the exchange will come later, Lunge said.
She will present the three options to the Green Mountain Care Board Thursday. The board must choose which plan the state will use as a benchmark for essential benefits. Lunge said she hopes to see a decision by March 1.
Once the state decides which benefits must be covered, variations on the benchmark will emerge including different “medal” levels that differ in the value that insurance companies will pay for services as opposed to patients. At these medal levels (like gold, silver and bronze), deductibles and co-pays will vary also.
What people pay for health insurance will be based on a percentage of their income rather than a percentage of the benefit they will receive. Further, employers with 50 or fewer employees can drop insurance for their employees without a penalty and refer them to the exchange, where they can enroll as individuals and receive subsidies.
This structure for federal subsidies creates an environment where it benefits lower-income individuals and the state to purchase insurance through the exchange and receive subsidies, said Steve Kimbell, commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration.
“The obvious benefit of the Affordable Care Act is to get health insurance off the backs of small employers,” Kimbell said.
Kimbell said the state should take advantage of the opportunity to draw down these federal funds.
“I would educate employees about their options and turn them loose [in the exchange],” he said.
It appears those below 400 percent of the federal poverty level would benefit from having the most comprehensive plan in the exchange and only paying a percentage of their income regardless of how expensive the plan.
The tension, Lunge said, is that for employers who continue to provide insurance and individuals above that income level, this could mean higher premiums if the state picks a broader set of benefits.
This potential for a cost shift to employers and higher income Vermonters vexes the Vermont Chamber of Commerce.
Betsy Bishop, president of the Vermont Chamber, said she has concerns that some people could end up paying more for the same plan. In theory, someone making $40,000 a year could be paying less than 10 percent of his income for a cushioned health insurance plan while an individual making $50,000 could have to pay more to get the same plan because he exceeds the threshold for subsidies.
Rather than a cost shift like Medicaid, for example, where government funds undercompensate health care providers and others have to make up the difference, allowing a rich plan could hypothetically result in a benefit shift where people pay different amounts for the same services, Bishop worries.
The primary concern for businesses, however, is that the state is considering what to cover without taking the costs into account.
“If we don’t address costs, a major component of information is missing,” Bishop said.
Looking at what benefits will be covered in the exchange without determining the financial ramifications is akin to picking out a new car without looking at the price tag, she said.
Rather, Bishop says, in determining which benefits to offer in the exchange, the state should look at the entire picture, including cost ramifications.
While the short list of essential benefit plans is a small step in health care reform, one advocate for low-income Vermonters says it is an important one for consumers.
Peter Sterling, executive director of the Vermont Campaign for Health Care Security, said having defined benefits “eliminates the confusion about what’s going to get covered.”
Sterling has raised concerns that low-income individuals on state insurance programs like Catamount Health and the Vermont Health Access Plan could see increased costs when these programs go away in 2014.
He said it is too soon to tell what will happen to these people since the actual costs of insurance have yet to be defined. The Shumlin administration estimates about 80 percent of VHAP enrollees will be eligible for expanded Medicaid coverage under the federal law. The fate of the other 20 percent and many Catamount enrollees is still up in the air.
The basic coverage in the three benchmark plans, Sterling said, appears to be a positive sign.
“For most people not in Catamount and VHAP, this will be a step up in coverage,” he said. “At first blush, it’s a step forward.”
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Alan, thanks for this story and helping to clear away some of the fog of the confusion on the exchanges.
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Walter has me at an decided advantage because the more I
read the more confused I become. The interspersing of the
State and Federal mandates brings to mind the Abbott & Costello – “Who’s on First What’s on Second” routine.
Now I read that on the intrastate level there are three candidates for the benchmark Exchange plan and conceivably two interstate plans in the wings. However, they may fail muster because Vermont’s plan could prove broader than the essential 10 minimum health benefits and services categories designated at the federal level. This as the
author points out has effectively been a “punt” to the states.
My views on the Federal having been expressed let me move
to an arena that may have been covered somewhere along the way but, I have missed it. No question, the matter of cost is a riveting issue and somewhere along this tortuous path we have been told that Single Payer is less expensive than the current tab which eventually the #s will obviously support. My level of “vexing” is directed at the most simplistic of precepts – “How are we going to pay for it?”
Amazingly, I have never heard a word or seen a syllable treating with the topic. Again, I can understand how getting a handle on the exact cost can prove gargantuan but long before one walks up to the check-out counter in this case the check-in the matter of payment is predetermined
I can say that when this initiative first saw the light of day in 1993 that mention was made of serious thought being given to a payroll tax as high as 12.5%. At the risk of being redundant “How are we going to pay for it?” It would be interesting to know how much we have expended studying
Single Payer over the course of the past two decades and what if any impact it has had on our current cost structure but, hard #s are always difficult to come by.
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And the sad thing is we are still all dancing to the tune played by the insurance companies. The one that leaves us scratching our heads as they laugh all the way to the bank. The goal of insurance companies is not to pay out. Imagine a simpler world with the medicare model for all. Has to be less expensive and much more sane.
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“Walter has me at an decided advantage because the more I
read the more confused I become. The interspersing of the
State and Federal mandates brings to mind the Abbott & Costello – “Who’s on First What’s on Second” routine.”
Jim, the exchanges are confusing. I have been following it a bit more perhaps so can see where they are going. As Pam said , “we are still dancing to the tune played by the insurance companies.”. The exchanges were written by insurance companies for insurance companies. They are not single-payer. Vermont is trying to make the best outcomes as possible of what is admittingly not a very good situation.
As for your other question about the financing of single-payer I have two questions. How many times do we pay for health care already? When you consider the premiums you already pay that can rise by anywhere from 10, 15, 20% a year, the state and fed taxes (Medicare, Medicaid), and what you pay in hidden costs for the uninsured, you are already paying for it. With single-payer, the premiums will be gone as well as the hidden costs for the uninsured (cost-shifting and so on) will be eliminated.
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American “health care” is BOTTOM OF THE BARRELL.
I have these spots developing on my skin which actually bother me at times.
So I made an appointment with my dermatologist at Dorset Street Dermatology, in South Burlington. I hadn’t been there in three years.
But because at the time of my appointment I only had $25 of a $45 copay, guess what? They wouldn’t see me.
I don’t owe the office anything and have always paid them in the past.
Great place we live in here in Vermont isn’t it?
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Walter
Thank you for your response but, being a dedicated a “One Trick Pony” [Rocinante] guy – I am going to stick with my major premise of yesterday – if I may, be it prompted by pride of authorship / uniqueness of inquiry or whatever.
Yesterday:
My level of “vexing” is directed at the most simplistic of precepts – “How are we going to pay for it?” Amazingly, I have never heard a word or seen a syllable treating with the topic. Again, I can understand how getting a handle on the exact cost can prove gargantuan but long before one walks up to the check-out counter in this case the check-in counter the matter of payment is predetermined.
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Now today let me insert an addendum – “Who is going to pay for it?”. Keeping in mind that in the early 90′s our pop. was in the 560k range and now it is 625k.
Unfortunately, Single Payer from the moment it appeared on the scene has taken on more of a political identity than a pragmatic one, medical aside for the moment. Let me stipulate that long before the Single Payer concept ever hit the hardwoods I have been in favor of Universal Health Care. My approach going back decades is that we needed to institute a “Single Policy” along the lines of our mandatory auto policy. The program with conceptual legislative blessing should have been initiated and concluded under the auspices of our Insurance Department arguably the best in the country.
It has been awhile – how time flies – but, the Department is so uniquely qualified considering their extraordinary background in the world of Captives, not to speak of overseeing Health Insurers since Caesar had pups. I could not agree with the Governor more in terms of getting it out of the workplace. I have been sputtering about it for years that the reason our U-6 unemployment is 15% [?] is more the result of Benefits than Wages. How much of NAFTA & Off shoring is so motivated? Obviously, a topic never treated with like my “How are we going to pay for it?”.
Strange how we are repeatedly subject to wage exposes and working condition off-shore but no one ever puts the apothecary scale of medical trials and tribulations both domestic and foreign on the table.
My opposition to the VT Single Payer is purely predicated on fiscal fear of the unknown having despaired politically as I have said repeatedly when they threw Steve Forbes and his flat tax under the bus. Putting aside for the moment never seeing any numbers that spell out exactly why we find ourselves where we do
[numbers being forbidden fare] I can say that two decades ago I had enormous concern about the proposed Single Payer plan predicated on the outright prohibition to establish a “residency requirement”. At this stage of the proceeding, I presume this hurdle certainly must have been cleared by now.
My read being that in the past two decades our overall spending has increased by about 350% and our population by 10%. I sense we would shutter if we saw the
like medical percentile spending segment. Just how the unmentionable GASB-45 municipal & state liabilities are going to be integrated is also an area of interest.
But, above all my abiding paranoia finds it’s roots in the premise that with the passage of time Vermont’s percentile of $s participation will increase as our reinsurer Uncle Sam’s contributions decrease.
You simply cannot close your eyes [not that anyone wants to open them] that our partner – reinsurer – retrocessionaire, pick your nomenclature has incurred $4 trillion in operational losses [aka Deficits] in the past 3 fiscal years and projects a loss of $1.3 trillion this year. Also throw into the mix that our Debt $15.360 trillion has just crossed the GDP Rubicon. Put the politics out of it – that has reached the decoy stage of opening day of duck season. Just look at the numbers – if you can find them?!?
Again your input and interest much appreciated.
Jim