2013 Health Care Recap: Exchange turmoil overshadows single payer plans

2013 began with the unveiling of a financing plan for single payer and ended with an 11th hour scramble to enroll Vermonters in the state’s health care exchange.

Over the course of the year, setbacks beset the rollout of the state exchange; the Shumlin administration and a business and health care group released dueling cost estimates for single payer; a health insurance cooperative unravelled and key players in the health care reform effort shuffled from government to consulting gigs and back again.

Vermont’s transition to the Affordable Care Act was unquestionably the main event of the year, and, as Gov. Peter Shumlin was fond of saying, there were winners, and there were losers.

But the year’s opening act didn’t feature the health care exchange. In January, the Shumlin administration unveiled its ambitious plans to create a publicly financed health care system in 2017, as required by Act 48.

Robin Lunge, director of Health Care Reform for the Shumlin administration, speaks at a Vermont Health Connect forum in Montpelier last month. Photo by Roger Crowley/for VTDigger

Robin Lunge, director of Health Care Reform for the Shumlin administration, speaks at a Vermont Health Connect forum in Montpelier last month. Photo by Roger Crowley/for VTDigger

Officials estimated that the total savings gained by reforming the system would be about $35 million in 2017. The annual $5.91 billion cost of health care would depend on $1.61 billion from taxpayers in Vermont, after federal funding, and place a $332 million burden on employers who continued to enroll their employees in insurance plans.

The administration and Democratic supporters maintain that a tax-funded plan would merely replace existing insurance costs.

The plan released in January was short on specifics about just how the state should raise the revenue to fund the system. Instead of narrowing the options to a single source, however, the proposal listed a range of possible taxes that could be raised.

Republicans accused the administration of failing to present a viable financing proposal as required under state statute.

And then there was Vermont Health Connect.

The first order of business for the administration and the Legislature was figuring out just how much the state should supplement federal subsidies for individuals and families who would be buying insurance on the exchange.    

After lengthy discussion and close votes, lawmakers set aside $4.35 million in fiscal year 2014 (that number will double in 2015) to reduce premiums and out-of-pocket maximums for Vermonters earning between 133 percent and 300 percent of the federal poverty line.

Many Vermonters in this income bracket will see their premiums payments decrease in 2014. The changes aren’t good for everyone, however – single parents who were enrolled in Catamount and VHAP face steep premium increases.

Despite the fact that the federal government gave Vermont $168 million to set up a state exchange, the Shumlin administration estimated state funding would be needed to maintain the program through 2017 when a single payer system is slated for launch. Legislators estimated that the annual price tag would be $18.4 million, and they opted to pay for it by continuing to assess a fee on businesses that don’t offer employee health care insurance.

In May, the group of health insurance carriers that lined up to take part in the exchange dwindled to two. The state’s Department of Financial Regulation dealt a fatal blow to the Vermont Health Coop, a nonprofit, mutual member-owned health insurance company that had aspired to sell insurance on the exchange with BlueCross BlueShield of Vermont and MVP.

Susan Donegan, the department’s commissioner, cited concerns about the co-op’s solvency, high premium rates and a potential conflict of interest between the board president and the organization. When the Centers for Medicare and Medicaid Services pulled funding, the co-op folded.

Vermont Health Connect launched on Oct. 1, as planned, despite missed deadlines and repeated warnings about shortcomings with the website.

Those shortcomings became a public relations nightmare when users couldn’t get onto the site and when they did get access couldn’t sign up, let alone pay for insurance online. Though many of the problems were fixed in December, payment options are still unavailable through the website.

The administration held off on a contingency plan but eventually officials shifted course as deadlines loomed. Critics and supporters welcomed the plan, which allowed people to extend their current coverage through March 31, 2013, and permitted small businesses to bypass the website by signing up directly with an insurance carrier.

The administration resisted calls, however, to do away with mandatory enrollment. Vermont is the only state that requires individuals and businesses with 50 or fewer employees to buy insurance through the exchange.

Shumlin and his cabinet also took flak, from lawmakers for allegedly “sugarcoating” the website’s problems.

Department of Vermont Health Access Commissioner Mark Larson. VTD/Josh Larkin

Department of Vermont Health Access Commissioner Mark Larson. VTD/Josh Larkin

The administration, in turn, has blamed the vendor, CGI, for the website glitches and delays. Last month officials sent a memo to the company saying they would impose the maximum penalty allowable under the contract — $5.1 million — for CGI’s failure to meet deadlines.

Trust between lawmakers and the administration was eroded further when Mark Larson, the commissioner of the Department of Vermont Health Access, failed to tell lawmakers about a privacy breach on the website.  The second time this happened, Larson wasted no time letting the Legislature know.

Despite the frustrations, administration officials say they are confident that they’ve avoided any major lapses in coverage by providing back door routes for people to enroll. Most of the glitches gradually were fixed, and enrollment numbers spiked during the final days before the Dec. 23 deadline for Jan. 1.

On Dec. 23, the administration announced that of the 65,000 people that needed to enroll by that date 20,000 had signed up through Vermont Health Connect and another 30,000 had signed up through their small business employer. Coverage for the 15,000 remaining people will be extended for up to three months into the new year, buying them time arrange for a new plan.

The administration also estimates that approximately 40,000 Vermonters will be newly eligible for the fee or low-cost coverage afforded by Medicaid, starting in 2014.

Of that group, 75 percent are people transitioning from the state health insurance programs, Catamount and VHAP, which end on Jan. 1. According to Larson, they will receive more “expansive coverage” after the switch. The remaining 25 percent can enter the program because the income eligibility level has been increased.

In a brief diversion from Vermont Health Connect’s woes, lawmakers turned their attention to a report that called into question the administration’s cost estimate for the state’s publicly-financed health care system. Commissioned by Vermont Partners for Health Care Reform, a coalition of groups representing physicians, hospitals, insurance carriers, and other groups, the report pegged the cost at between $1.9 billion and $2 billion, rather than $1.6 billion. Administration officials were quick to rebuff the findings.

Amid the turmoil, several top players in the state’s health care reform initiative came aboard, departed, or shifted roles.

After Anya Rader Wallack stepped down as chair of the Green Mountain Care Board in early August, the state hired her as a consultant to oversee a $45 million “State Innovation Model” grant from the federal government.

Then, in October, the executive director of the Green Mountain Care Board, Georgia Maheras, left her post to join Wallack.

Prominent Burlington restaurateur Al Gobeille took over Wallack’s post as chair of Vermont’s Green Mountain Care Board.

In April, the administration announced that Michael Costa, policy director at the Tax Department, would begin working on the public financing plan for the single payer system.

Shumlin’s deputy director of health care reform policy, David Reynolds, left in October.

The year concluded with critics — and some single payer proponents — speculating that the exchange rollout could undermine the state’s efforts to implement to single payer. Shumlin, meanwhile, maintained the opposite point of view — that the problems with the exchange strengthen the case for a universal health care system.

Follow Alicia on Twitter @aefreese

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