Shumlin administration recommends “benchmark” plan for benefits under health care exchange

Mark Larson, commissioner of the Department of Vermont Health Access

Mark Larson, commissioner of the Department of Vermont Health Access

Shumlin administration officials have recommended BlueCross BlueShield of Vermont as the “benchmark” plan for benefits to be offered under the federally required insurance “exchange.”

The state’s two other health care insurance companies — CIGNA and MVP — must match the BCBS benchmark for coverage offered in the exchange.

The recommendation is another step in the Shumlin administration’s long climb toward health care insurance reform under the Affordable Care Act. In a little more than a year, the state will be required to offer a health care “exchange” for about 74,162 Vermonters — or about 12 percent of the state’s population.

Individuals and businesses with fewer than 50 employees will be required to purchase insurance through the exchange starting Oct. 1, 2013. Coverage begins in 2014; at that point, the federal government will offer subsidies for individuals who earn less than $92,500 per year.

Vermont is the only state to require small businesses to participate in the program. Shumlin administration officials have suggested that companies with fewer than 50 employees drop coverage of workers so that the workers can qualify for individual subsidies.

Robin Lunge, the director of health care reform for the Shumlin administration, and Mark Larson, the commissioner of the Department of Vermont Health Access, recommended BCBS as the benchmark plan to the Green Mountain Care Board last Thursday.

The board will decide which insurance plan will serve as the model for the exchange. Two other insurers besides BCBS have been considered: MVP, based in Schenectady, N.Y., and CIGNA, a global health insurance company with offices in Burlington.

Lunge said the state analyzed about 500 different plans offered by the state’s three insurers. Officials determined that despite the large number of plans available in Vermont, there is very little difference between the benefits packages for consumers.

The Affordable Care Act requires individual and small group health insurance plans to cover what are known as “essential health benefits.” Under the federal law, the “benchmark” plan must cover the following: emergency care, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, chronic disease management, lab tests, wellness and prevention, pediatric care, and rehabilitative services for adults and habilitative services for children with developmental issues.

Lunge and Larson said using BCBS as the “benchmark” would be the least disruptive option since 77 percent of Vermonters who are currently in the small group or individual markets use the nonprofit insurer. The MVP plan is virtually identical to the benchmark, but fewer Vermonters use this carrier.

“We are choosing something as our baseline that is very traditional in the market today,” Larson said.

CIGNA insures state employees, and some advocates have held up the Vermont State Employees Association benefit package as the preferable option for the exchange. Despite the perception that the CIGNA plan for state workers is a “richer” plan, Lunge said an analysis from the state shows there is a 1 percent difference between the state employee package and the BlueCross BlueShield “benchmark” plan. The 1 percent difference? State employees receive coverage for infertility treatments and adult vision, Lunge said.

Once the Green Mountain Care Board settles the benefit “benchmark” question, insurance carriers will determine how much it will cost to offer the package based on “cost-sharing” mechanisms consumers would be required to pay for — a mix of coinsurance, deductibles and copayments. Under the federal law, deductibles in the exchange are limited to $2,000 for individuals and $4,000 for families. Premium prices will be based on the actuarial value, or consumer cost-sharing level.

The plans, approximately 10 to 20 in all, will also be rated by actuarial value. The Affordable Care Act has set up standards for four categories, based on the ratio of the amount paid by insurers and consumers: bronze (60 percent covered by insurance/40 percent by consumers), silver (70 percent insurance/30 percent consumers), gold (80 percent insurance/20 percent consumers), platinum (90 percent insurance/10 percent consumers).

The benefits offered in the exchange will be identical — no matter what the actuarial value, Lunge and Larson said.

The exchange is designed to make it easier for consumers to make apples to apples comparisons between plans, Larson said. The information will be available on a state website.

The Shumlin administration has said it would encourage small employers to drop insurance coverage of individuals so that they can qualify for subsidies.

VPR reporter Bob Kinzel asked if the administration was requiring businesses to take leap of faith by letting workers fend for themselves when there is uncertainty about the law.

“One of the challenges is there is always uncertainty in terms of future policy,” Lunge said. “We have to make decisions about what we know and what is likely to happen.”

Since the U.S. Supreme Court ruled in June to allow the individual mandate provision of the Affordable Care Act to stand, more states are planning an exchange, Lunge said.

“To me it doesn’t make sense to make decisions based on unknowns,” she said.

Jeffrey Wennberg, director of Vermonters for Health Care Freedom, an anti-single payer group, doesn’t oppose the exchange per se, though he says the reason there is so little variation in benefits from one insurer to another is because the Vermont Legislature has “mandated coverage of a great many health benefits over the years.”

Wennberg tied the mandates to a dramatic increase in premiums over time. “This is also a major reason why Vermont health insurance premiums are high compared with other states,” he wrote in a statement.

In 2016, the exchange will include businesses with 51-100 employees. After that, the Shumlin administration hopes to bring large employers into a single-payer style plan.

Wennberg says at that point Vermonters will no longer be able to choose between insurers. “Notably absent from the administration’s talking points was the fact that within three years of the establishment of the exchange all choice will be outlawed and everyone who was forced into the exchange will be herded into the single payer government monopoly plan,” Wennberg said.

Donna Sutton Fay of the Vermont Campaign for Health Care Security, an affordable health care advocacy group, called the benchmark recommendation a “landmark first step in Vermonters learning about what health care will look like in 2014.” She says BCBS offers better coverage for mental health and substance abuse treatment than MVP.

Follow Anne on Twitter @GallowayVTD

Anne GallowayAnne Galloway

Comments

  1. Dan McCauliffe :

    Anne,

    “But, with the employer (Catamount) assessment still in place, employers who drop their coverage as the administration and Legislature have been encouraging them to do, will be required to pay the monthly assessment – again, for a Catamount program that no longer exists!”

    From: http://vtdigger.org/2012/05/22/scheuermann-health-care-reform-must-be-fair-and-transparent/

    I awould be grateful if you would comment on the Catamount assessment on employers who drop coverage of their employees. Does it still exist, and if so how will employers be penalized. Thanks.

    Dan

  2. Dave Bellini :

    A few points of clarification:

    “CIGNA insures state employees…” – State employees are self-insured. We do not have a CIGNA product. The plan is NEGOTIATED by the VSEA and the state. The design was a collaberative effort by the Dean Administration and the VSEA. Cigna pays the claims for us.

    “…there is a 1 percent difference between the state employee package and the BlueCross BlueShield “benchmark” plan.” – The USA has a basketball team with 12 players and so does Tunisia. They look similar on paper but there are quality differences. The difference in insurance plans may be greater than my sports analogy.

  3. paul poirier :

    In reference to the Catamont fee, it will take a vote of the legislature to repeal the fee. Last year the administration wanted to end Catamont, but keep the fee. A strong majority of the House Committee on Health Care rejected that move. I have been very clear on this subject that with reform the fee on employers is terminated. My reason is simple: The government created the fee to support Catamont not the general fund.

  4. Cynthia Browning :

    Rep. Poirier’s comment is spot on. I will just add that Nolan Langweil of the Joint Fiscal Office has prepared a memo concerning how the Catamount assessment compares to fees or penalties that could affect employers under the Federal legislation. It can be found listed as “Employer Responsibility under the Affordable Care Act and Current Vermont Law”, July 2012 on the JFO page of the Legislature’s web site. Go to http://www.leg.state.vt.us, click on Joint Fiscal Office, and look for this under “New and Notable”.

    The JFO issue brief concludes that there may be some large employers that will pay both the Catamount and the ACA assessments because of the nature of the coverage that they offer and whether workers are eligible for premium tax credits. However, this may not ultimately prove to be true since both firms and workers may change their behavior as the health exchange and the ACA fully go into effect.

    I agree with Rep. Poirier: the Catamount assessment should be repealed when the program no longer exists. We need to finance future health insurance programs in transparent and sustainable ways, not slide tax assessments originally intended for a particular program over to a different program.

    Rep. Cynthia Browning, Arlington

  5. Craig Powers :

    Thank you Mr. Poirier. Some legislators cannot let go once they have the “green” in their hands, even if the program it was meant for will sunset.

  6. Thaddeus Severy :

    So how about we talk about the real issue here. The government controlled forced participation resulting in the removal of an individual’s right of freedom of choice. Why don’t we call single payer what it really is? Communism.

  7. Paula Schramm :

    Thaddeaus Severy – Or we could call it universal access to affordable health care. That’s a much more accurate labeling in my view

  8. walter carpenter :

    “Why don’t we call single payer what it really is? Communism.”

    So every other democratic nation — Australia, England, New Zealand, Norway, switzerland, Sweden, Taiwan, etc — is communist because, as Paula said, ” they provide universal access to affordable health care,” to all their citizens. As for your individual freedom of choice, please tell me what those are, and how it is you can choose when your choices are dictated by economics.

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