Democrats, Republicans draw battle lines on House health care debate
 

Democrats, Republicans draw battle lines on House health care debate

Gov. Peter Shumlin, Feb. 22, 2012. VTD/Alan Panebaker

Gov. Peter Shumlin, Feb. 22, 2012. VTD/Alan Panebaker

As the House health care reform bill heads to the floor for debate, both sides of the issue framed their strategies Wednesday.

At Gov. Peter Shumlin’s weekly press conference, he and prominent Democrats touted the benefits of H. 559 and the health benefits exchange it will implement.

“I have long advocated that one of the biggest obstacles to job growth in Vermont is the inability of employers to afford the rising cost of health insurance,” Shumlin said. “It is killing business. This exchange will allow employers to get out of the health care business and allow their employees to get subsidies by buying health insurance in the exchange.”

The sticking point of the health care reform bill is its requirement that businesses with fewer than 50 employees and individuals buy health insurance in the exchange. The “exchange” is a federally mandated online marketplace that will lay out the options for consumers. People who buy health insurance there will be able to access federal subsidies and tax credits to help cover the cost.

The Shumlin administration predicts increased Medicaid funding and federal incentives will bring $300 million to Vermont starting in 2014 when the exchange goes into effect. Nearly 100,000 Vermonters (about one sixth of the state’s population) and more than 16,000 businesses will be required to purchase health insurance through the exchange.

Since most subsidies in the exchange are for individuals only, the administration proposes that many smaller businesses would prefer to drop health insurance coverage for their employees and send them to the exchange — a proposition that makes some employers who have offered insurance for their employees uneasy.

“We believe there are many instances where employers may choose to get out of health insurance business for employees,” Shumlin said.

The administration offered a chart outlining the benefits for people enrolling in the exchange. For example, an individual earning $40,000 and paying $600 per month in premiums could save $283 a month with tax subsidies, the administration claims.

Michael Roche, owner of Stowe Tree Experts, joined the governor’s press conference in support of the bill.

Roche has five employees including himself. He said the exchange will help him be more competitive since he will not have to pay for insurance for his employees.

“I have a small accident insurance plan for my staff but it’s not adequate,” Roche said. “I feel their efforts will have direct effects on my employees. I feel my company is the type of company they are trying to help.”

House GOP: H.559 “not ready for prime time”

Shortly after the administration touted the benefits of participation in the exchange, Republican leadership announced a plan to make substantive amendments to the House bill.

House Minority Leader Don Turner said his party wants to make sure there are options for health insurance outside the exchange market and provide information on the financing system for Green Mountain Care — the universal health care system the state aims to put into effect in 2017.

Turner released a statement Tuesday on the Vermont GOP website expressing concerns that many lawmakers do not understand the complex piece of legislation that will have widespread effects.

“The simple truth is that H. 559 is not ready for prime time,” Turner’s statement reads. “Legislators cannot and should not be asked to vote on this bill until we can better understand how it will impact Vermont employers, Vermont employees, and Vermont families. We simply cannot afford to make mistakes when the health care coverage of thousands of Vermonters is at risk.”

Turner said Wednesday that the idea to herd individuals and small businesses into the exchange is a bad strategy. He thinks if people have a choice, they will choose the exchange if it is better than their current insurance.

Don Turner. VTD/Josh Larkin

Don Turner. VTD/Josh Larkin

“Business people are smart,” Turner said. “If the system is robust and it makes sense financially, people will join.”

Turner said the Republican caucus hopes to integrate into H, 559 a requirement that the administration move up the financing plan for Green Mountain Care from Jan. 15, 2013, to Sept. 15, 2012 — before the November gubernatorial election.

“The only opportunity Vermonters are going to have to weigh in on this issue is during the election,” Turner said.

Sen. Randy Brock, R-Franklin, has announced his bid to run for governor against Shumlin, and he said health care will play a major role in his campaign.

Brock introduced a bill in the Senate that would require an early release of the financing plan for Green Mountain Care also. The Shumlin administration has made clear that the exchange is a step toward its goal of universal health care in 2017 when the state can receive a federal waiver.

Brock said he had not studied the House bill, but as a policy matter he thinks the exchange should be optional.

“We should expand the [insurance] marketplace and use the exchange as it was intended — as a marketplace in which consumers can go and pick things that best fit their needs, and their family’s and business’ at prices they can afford,” Brock said.

More options in the health insurance marketplace, Brock said, will drive down prices.

Bill Driscoll, vice president of Associated Industries of Vermont, said mandatory exchange participation raises red flags for his constituents.

Associated Industries represents businesses, primarily in the manufacturing sector. Driscoll said they are concerned about costs.

“I think [the administration’s] shift in rhetoric toward emphasizing that 50 or under employers should drop insurance indicates that the exchange could be more expensive than their current options,” Driscoll said.

Dropping health insurance for employees raises a number of issues, Driscoll said. For one, multistate companies that provide insurance for employees in other states could be inconsistent. Additionally, he said, while employers with 50 or fewer employees do not face penalties if they drop coverage for their employees, larger businesses will be penalized under the federal Affordable Care Act. This could create problems in 2016, when companies with 51 to 100 employees will be included in the exchange.

Alan Panebaker

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12 Comments on "Democrats, Republicans draw battle lines on House health care debate"

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Wendy Wilton
4 years 6 months ago

The Administration has already admitted that H.559–in it’s current form with mandatory participation by small employers–will create a 18% minimum increase in premiums. How is that reducing the cost of health care for Vermonters?

Paula Schramm
4 years 6 months ago
In response to Wendy Wilton’s question on how H.559 will help to reduce the cost of health care for Vermonters I can point out what is stated in the article that perhaps she missed . People buying health insurance through the exchange set up by the bill will be able to access federal subsidies and tax credits to help cover costs of the premium. This will vary depending on their income. The example cited was of someone with an annual income of $40,000 who pays $600/mo. premium who will have a savings of $283/mo. This strikes me as a substantial… Read more »
Concerned Citizen
4 years 6 months ago

I believe that much of the “affordability” of this bill relies on “free” money that comes from the Federal government. It does nothing to control costs, and it has been said that in order to get more “free” money, it will be a Cadillac plan that will be expensive for those who need to purchase it but don’t have the benefit of the subsidies.

4 years 6 months ago
Has anyone run the numbers for what the income level is where the federal subsidy is not enough to replace the employer’s current contribution to premium? In the case of families in the $50K + income range, I wonder if the family’s share of premium in the Exchange (after the federal subsidy) will be higher or lower than it currently is in their employer plan. It seems like these kinds of numbers should be run before assuming employers dropping coverage is going to be better for everyone. I have to believe that whether you are better or worse off depends… Read more »
Dan McCauliffe
4 years 6 months ago
“I have long advocated that one of the biggest obstacles to job growth in Vermont is the inability of employers to afford the rising cost of health insurance,” Shumlin said. “It is killing business. This exchange will allow employers to get out of the health care business and allow their employees to get subsidies by buying health insurance in the exchange.” It has been estimated that forcing businesses into the exchange will increase the cost of insuring employees by over 18%, by the Shumlin administration’s own estimates. Shumlin wants to decouple health insurance from employment, but will not the employer… Read more »
Doug Hoffer
4 years 6 months ago
Mr. McCauliffe said, “Vermont already is a small business unfriendly state. It ranks 48th on the 2011 small business survival index.” These indices are deeply flawed. They make grand assumptions about the connection between tax rates and job creation but they don’t prove it. For example, they often ignore the critical structural elements that differentiate states (e.g., using the top marginal personal income tax rate without considering the number of brackets, if any, or where the brackets kick in). This makes them nearly useless for comparing state tax systems. But even more importantly, these rankings make no effort whatsoever to… Read more »
Dan McCauliffe
4 years 6 months ago

Doug,

I agree that ratings are not perfect but anyway you spin it a ranking of 48th is not good. You can try to loose us in the weeds as you often do, but these are ratings that people read and they don’t reflect well on Vermont.

Doug Hoffer
4 years 6 months ago

I didn’t “spin” it, I offered some information about how they are constructed and some shortcomings.

And if we don’t at least look at some of the details (the “weeds”), how can we be certain the rankings aren’t just a device used by anti-tax advocates instead of a serious analytic tool? The evidence shows clearly that they are much less than meets the eye.

Dan McCauliffe
4 years 6 months ago
From the survey (http://www.sbecouncil.org/uploads/SBSI2011%5B1%5D.pdf): Vermont Rank: 48th SBSI Score: 78.291 Highlights: • High personal income, individual capital gains, corporate income, and corporate capital gains taxes • High property taxes • Imposes a state death tax • High electric utility costs • High workers’ compensation costs • High level of state and local government employees • High level of state and local government spending • High five-year rate of increase in state and local government spending • Poor private property protections • High state minimum wage • No individual or corporate alternative minimum tax • Low crime rate Doug, I strongly… Read more »
Mike Curtis
4 years 6 months ago

Vermont has the 5th lowest unemployment rate in the country.

Spin it anyway you want, but Vermont is doing a lot better than the vast majority of states.

walter carpenter
4 years 6 months ago
“So now we will be shifting this cost from the larger and self insurance companies onto the backs of small businesses, most certainly through an employer payroll tax on every employee.” We are? Are you sure? Hsiao did recommend it, but are we adopting it? No matter what, though, business will no longer have to be health insurance agents as well. “we construct an exchange with little competition.” Why do we need competition in health care? We have had competition and a free-market system for the last thirty years and it has only erected barriers to care and left us… Read more »
Doug Hoffer
4 years 6 months ago
Mr. McCauliffe I will discuss a few of the components of the ranking methodology and let you make up your own mind. 1. High personal income tax: As I said earlier, they are referring to the top marginal rate which, without more information, tells us nothing about the actual tax liability for a given family. For example, the JFO Tax Study looked at tax returns for various families in 12 states. Three states had no income tax but of the other nine, Vermont’s top marginal rate was the highest. Nevertheless, the report found that for a family earning $80,743, Vermont’s… Read more »
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