Court drawing from the first round of hearings. Deb Lazar/The Commons

The Shumlin administration says under state statute Vermont Yankee Nuclear Power Plant can continue to operate after its license expires on March 21.

The Vermont Department of Public Service, in a legal filing on Friday, says a Vermont law would allow the plant to operate past that date while the re-licensing process continues.

The state also asserted in its submission to the Vermont Public Service Board that the owner of the plant, Entergy Corp., must meet its obligation to fund the Clean Energy Development Fund. It is unclear whether the Louisiana-based company would still be required to pay millions of dollars in an assortment of other taxes to the state.

Gov. Peter Shumlin, meanwhile, told Vermont Public Radio on Friday he hopes the board, which has jurisdiction over the matter, will block a 20-year license extension for the 40-year-old plant.

Entergy Corp., the plant’s owner, and other parties to the re-licensing proceeding also filed papers Friday addressing the facility’s continued operation.

The company has yet to receive assurance from the Public Service Board that it can keep running the plant.”

Entergy obtained a victory in federal court finding the state overstepped its bounds when it tried to require legislative approval for the continued operation of Vermont Yankee.

The company has yet to receive assurance from the Public Service Board that it can keep running the plant. Entergy has gone back to federal court with two filings, asking for an injunction to ensure it can keep producing electricity after March 21.

In February, the board issued questions to Entergy and other parties asking how it should proceed and held a status conference March 9.

Entergy asked the federal court to step in, claiming it was not the company’s fault that the licensing process was put on hold by Vermont laws that were ultimately found unconstitutional.

Environmental groups and the state say the company needs to live up to its obligations under its existing permit.

One of these requirements, according to the filing by the Conservation Law Foundation, is that the facility can only store spent nuclear fuel produced up to March 21.

Neither the court nor the Public Service Board has announced when they will make a decision on the matter.

In 2012, Entergy made more than $7 million in total tax payments including an electrical energy tax ($1.4 million), an electric generating plant education property tax ($1 million), radiological emergency response plan payments ($2.13 million) and the Clean Energy Development Fund ($3.15 million), according to a report from the Joint Fiscal Office.

In addition, the corporation paid $108,000 in environmental fees for thermal discharges — hot water that flows from the plant into the Connecticut River.

Read the state’s filing with the Public Service Board 7440 DPS Cross Motion and Response

~ Alan Panebaker

House GOP allege Shumlin breached protocol

It isn’t often that a sitting governor makes an unannounced appearance in the House Chamber. Typically, when he or she graces the Big Room, it’s for an event filled with pomp and circumstance — the beginning of the legislative session, the budget address and the end of the session.

Last month, Gov. Peter Shumlin, a former representative and senator, sidestepped the usual form and took a seat in one of the plush red velvet-covered Senate chairs behind the House podium. The circumstance? The governor was making the rounds at the Statehouse with Thomas Sullivan, the new president of the University of Vermont, who was introduced to the General Assembly.

Gov. Peter Shumlin holds up the new "I am Vermont Strong" license plate during his State of the State Address. VTD/Josh Larkin

The governor didn’t speak or draw attention to himself, but his very presence was duly noted by Republicans who say Shumlin breached protocol by entering the chamber while the House was in session.

Rep. Tom Koch, a Republican member from Barre who has served in the House since 1997, called it a “symbolic type of thing.”

“When he’s at work, we don’t go marching into his office,” Koch said. “I don’t want to make a big stink about it, but it’s technically not proper.”

It’s a question of the governor respecting the separation of powers, according to Don Turner, the Minority Leader of the House.

“I know Gov. Shumlin is more down to earth, and it may be hard for him to be in that position,” Turner said. “I think he tries to be one of the people … but it’s the institution of our government that kind of is a question. When you’re the sitting governor you have certain obligations about the way you’ll act.”

Speaker of the House Shap Smith said he couldn’t understand what the problem was. The governor, in his view, was courteously ushering the president of UVM around the Statehouse and ended up coming into the chamber for the introduction. “It seemed quite frankly to me much ado about nothing,” Smith said. “I was disappointed anyone would make any comment about it.”

Donald Milne, Clerk of the House, says the governor’s presence in the House was unusual, but not inappropriate. The Senate seats in the House, he said, are open to the public — and the governor is a member of the public.

Gov. James Douglas appeared in the gallery several times over the course of his tenure in office, Milne recalled.

Shumlin’s office didn’t respond to a request for comment.

Turner pointed to the brouhaha over a member of the administration texting answers to a Democratic lawmaker during an interrogation about the health care exchange bill as an example of the Shumlin administration blurring the distinction between the roles of the executive and legislative branches. (The Republican from Milton said his complaint has nothing to do with technology — he emphasized that he does not want to ban iPads or cell phones in the House.)

“The Legislature has the responsibility to draft bills and when the executive branch is responding to questions in real time, does that not breach the separation of powers?” Turner said. “It’s a question of protecting the institution. If a committee of jurisdiction does not understand a bill well enough that the chair cannot answer questions on the floor there’s a problem.”

Smith said Turner’s question about real-time electronic communication during debate is legitimate, and he has asked Koch and Rep. David Deen, a Democrat, to take examine the chamber rules.

Critics say Shumlin, a Democrat, has undue influence over members of his party who hold an overwhelming majority in the House and Senate, and these incidents make some wonder to what extent the Legislature is independent from the governor.

Doubts about whether the Democratic majority in the General Assembly can stand up to the administration may have been partially put to rest last week. Shumlin wanted the Legislature to approve the decriminalization of pot, a 16-bed psychiatric hospital, a new state office complex outside of Waterbury and the Death with Dignity bill. Lawmakers prevailed on all those policy decisions.

~Anne Galloway

Keller says federal law doesn’t require brokers’ fee prohibition

The House gave initial approval to a bill last week that would eliminate brokers’ commissions from the sale of health insurance insurance policies.

Some brokers are concerned the scheme would cut them out of the picture and leave thousands of Vermonters without support in the exchange.

In 2014 the state will require individuals and small businesses to buy insurance through a health benefits exchange system that will enable consumers to evaluate the actuarial costs and benefits of different types of insurance plans.

When Rep. Sarah Copeland-Hanzas, vice chair of the House Committee on Health Care, pitched H.764 on the House floor last week, she said under federal law insurance companies can’t “bake in” or combine brokers fees into insurance premiums in the exchange.

Not so fast, says Jeanne Keller, a health policy analyst and lobbyist who represents brokers.

Keller says the state will be prohibiting insurance commissions on its own, not under cover of federal law.

Under the Affordable Care Act, states can hire “navigators” who would help people select insurance plans. Navigators would be paid through grants and would not be allowed to earn money directly from insurance companies per the federal law. Brokers, on the other hand, can receive compensation from insurers through a rate schedule set by the state under the federal law, Keller said.

Ruling out the commission scheme the state has been using for years could mean sending a lot of people into the exchange in 2014 with only support from navigators, she said. That might not be enough for the roughly 183,000 people who must buy insurance on the online marketplace, Keller said.

Robin Lunge, director of health care reform for the Shumlin administration, said in an email that the state is working to find roles for brokers in the exchange. They could become navigators, charge a fee directly to the employer, or the exchange could pay brokers outside the navigator system, she said.

According to recent data from the Vermont Department of Banking, Insurance, Securities and Health Care Administration, businesses paid about $17 million to brokers in 2010.

~ Alan Panebaker

Editor’s note: This column was updated at 5:36 a.m. March 19 with the section about the governor’s visit to the House Chamber.

VTDigger

Contact
Angelina Beardsley
Phone:(802) 223-3441
Email: angie@aivt.org

Thursday, March 15 • Capitol Plaza Hotel, Montpelier

Of Special Interest to CEOs, Managers, and Human Resources Personnel

On March 15, AIV will host a human resources seminar providing overviews and critical updates on significant changes in health insurance, as well as proposed changes in workers’ compensation and unemployment insurance. Topics covered could impact all Vermont employers and their employees in fundamental ways.

Both members and non-members are welcome to register by faxing or mailing the registration form by March 12.

The registration form and agenda are available on the AIV website, www.aivt.org.

Contact Angelina Beardsley at (802) 223-3441 or email angie@aivt.org for more information.

Agenda

8:30 am Registration (Parking vouchers from the Capitol Plaza will be available)

9:00 am Overview of Health Insurance Changes: Process and Timelines for Choices and Input
Susan Gretkowski, Attorney for MacLean Meehan and Rice LLC

10:00 am Financial Analysis of Green Mountain Care and Proposed Single Payer System:
Reasons for Employer Concern
Wendy Wilton, Treasurer for City of Rutland

10:30 am Break

10:45 am Health Care Reform: Politics at the Federal and State Levels
Darcie Johnston, Executive Director, Vermonters for Health Care Freedom

11:15 am Update and Q&A with Legislators on Key HR Legislation and Issues

12:00 pm Lunch and Address with Q&A with Senator Randy Brock

1:15 pm Overview and Discussion of Proposed Changes in Workers’ Compensation and Unemployment Insurance
Annie Noonan, Commissioner, Department of Labor

2:00 am Workers’ Compensation Reform: Trends, 2012 Rate Changes, Proposed Legislation
Laura Backus Hall, State Relations Executive, National Council on Compensation Insurance

2:45 pm Wrap Up

VTDigger

Contact
Michael Briggs
PhoneL (202) 224-5141

WASHINGTON – Sen. Bernie Sanders (I-Vt.) issued the following statement today as the Senate debated a Republican measure to let employers and insurers opt out of provisions in the health care law:

“In Vermont and around the country, there is growing anger that members of Congress, mostly men I should add, are trying to roll back the clock on women’s rights, in this case the right of women to receive contraceptive services through their insurance plans.

“This attack is grossly unfair, and I hope that men will stand with women in the fight to protect this very basic right.

“Let me add my strong belief that if the United States Senate had 83 women and 17 men rather than 83 men and 17 women, my strong guess is that a bill like this would never even make it to the floor.”

VTDigger

Rep. Mike Fisher. VTD/Catherine Hughes

Last-ditch efforts to change a health care reform bill in the House failed on the floor Thursday.

For most of the day, state representatives lobbed ideas back and forth over where Vermonters should buy their health insurance starting in 2014.

H. 559, which lays the groundwork for the state’s health benefit exchange, will require individuals and small businesses to purchase health insurance in this online marketplace.

Under the federal Affordable Care Act, participation in health insurance exchanges is voluntary, but the current bill would make it mandatory for some. House Republicans offered two amendments, both of which would have the state put the brakes on that idea.

First, Rep. Oliver Olsen introduced an amendment that would allow people to buy insurance outside the exchange if the commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration found plans offered inside the market cost more than 10 percent of “grandfathered” plans. Plans like the Vermont Education Health Initiative that insures the state’s teachers will be likely grandfathered under the federal health care law.

The issue, Olsen said, is that the state is going down a path it has not been down before and it should learn from its past experiments. Forcing people into the exchange does not sit well with businesses in Vermont, according to the Republican from Jamaica.

“If we lock Vermonters in a lab and allow costs to go up and they don’t have a way to get out, I can’t stomach that,” Olsen said.

The amendment died on the floor with 88 representatives voting against and 45 for.

A nearly identical amendment by Republican Reps. Mark Higley and Greg Clark failed on the floor as well, 80-57.

For more than two hours of debate, Rep. Mike Fisher, chair of the House Committee on Health Care, defended the decision made by his committee to require consumers to buy health insurance on the exchange — a regulated online marketplace akin to a travel website for health insurance.

Fisher repeatedly referred to the requirement that Vermonters buy insurance in the exchange as a consumer protection measure.

“The arguments for an outside-the-exchange marketplace I continue to not understand,” Fisher said. “It mystifies me, and I’ve spent a lot of time thinking about it.”

Fisher said plans inside and outside the exchange will be essentially the same. The difference, he said, is that plans inside the exchange allow individuals to draw down federal tax credits. Having an outside market would mean added administrative costs for the state, which would have to regulate two markets rather than one, Fisher said.

Fisher’s list of benefits for consumers in the exchange failed to convince representatives like Ronald Hubert, a Milton Republican.

Hubert, who runs his own business, balked at the idea of having the state tell him where he and employees need to buy their health insurance.

“It should be my right, not the state’s, to decide whether to buy health insurance in the exchange,” Hubert said.

Clark defended his amendment by saying that the issue is really one of choice, and Vermonters want to make a decision for themselves, particularly when it comes to what some see as an experiment.

“Idea of value comes from the fact that Vermonters would like to make their own decisions,” Clark said. “Vermonters are always willing to be led to the water trough, but, man, they get irritated when their heads are forced into the trough.”

The argument over whether to allow individuals and small groups to buy insurance outside the exchange has lingered as the prominent issue in the debate over this year’s health care reform bill. It represents a stark shift from other states that are making participation in the exchange voluntary.

Other points where the Shumlin administration and leading Democrats proposed changes to the bill, like allowing high deductible bronze plans and requiring larger businesses to buy insurance in the exchange, saw little debate Thursday.

While many House Republicans urged the body to allow greater choice, Progressive Rep. Chris Pearson and Independent Rep. Paul Poirier, both members of the health care committee, urged their fellow representatives to keep their eyes on the prize of universal health care at a fair price. Using the exchange to draw down federal funding will help do that, they said.

In another twist, Gov. Peter Shumlin issued a statement Thursday commending final federal rules that would allow the state to obtain a waiver from certain requirements of the federal Affordable Care Act and implement reforms that deviate from the federal model.

An amendment that would move up the date for financing for Green Mountain Care to before the November election failed as well.

VTDigger

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

“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.

VTDigger

Robin Lunge, center, talks with Sens. Randy Brock, left, and Peter Galbraith. VTD file photo/Josh Larkin

The Shumlin administration plans to reveal legislation and multiple reports on Tuesday making suggestions for how the state should proceed to create a Health Benefits Exchange.

The new bill will answer two longstanding questions: which employers will be in the exchange and whether insurance will be available outside the exchange for the small-group market.

The exchange, mandated by the federal health care reform law, will put insurance plans for individuals and the small group market in one place. The oversimplified analogy is a travel Web site only for health insurance.

What this means for individual states is still up in the air. Each state must have an exchange by 2014, or the feds will create one for them. Act 48, the state health care reform law requires the state director of health care reform to address both the insurance issues by Jan. 15.

Robin Lunge, Vermont Director of Health Care Reform, told lawmakers this week, the proposal would recommend that insurance only be sold inside the exchange for individuals and small groups.

“The biggie that most people will be clamoring for is how we move forward with the insurance market,” Lunge said.

Questions also remain about what employers will be drawn into the exchange. The federal law allows states in 2014 and 2015 to define “small employers” as those with 50 or fewer employees or those with 100 or fewer. Because the administration has stated publicly its intention to bring as many people as possible into the exchange, the rumor around the state house is that the proposal will include the larger businesses.

Lunge said she could not divulge the administration’s decision until next week.

The 50 or 100 question has been a lingering issue throughout the health care reform effort.

Sens. Hinda Miller, D-Chittenden, and Vince Illuzzi, R-Essex-Orleans, proposed an amendment to last session’s health care bill to only include employers with 50 employees or fewer. It failed, and they are trying again this year.

“We don’t want to disrupt our businesses,” Miller said.

Miller, who owns her own business, said only bringing in the smaller employers would allow the state to provide health care coverage for those who need it most without disrupting the businesses that already have systems in place.

The bill has garnered support from the business community.

Betsy Bishop, president of the Vermont Chamber of Commerce, said keeping the smaller employers in the exchange will allow the state to work out the kinks in a brand new system, without dismantling the current insurance market — a theme in the Illuzzi/Miller bill.

“Let’s build a system we know that works and add to it,” Bishop said.

She emphasized that businesses want a good exchange, and started with a smaller market will be a better bet.

Jeanne Keller, a health policy analyst and lobbyist, wrote a post this week on the blog “Toward Evidence-Based Healthcare Reform,” outlining arguments for smaller rather than larger employers in the exchange. Keller argues that bringing the larger employers into the exchange will require them to subsidize the smaller ones, whose costs tend to be higher. Bringing in the larger businesses would also remove flexibility for those employers and threaten the exchange’s chance of success.

If plans are allowed outside the exchange, Fuller said, people can have better plan designs.

The one-size fits all approach does not work, she said.

Regardless of the administration’s proposal Tuesday, it will certainly not be the end of the matter. The administration still needs to determine what to do about insurance brokers, who larger employers hire to coordinate employee health plans.

“We’re still drilling down on the broker issues, because the feds have been a little cagey about what’s allowable,” Lunge said.

Under the federal law, brokers could not receive a commission selling plans in the exchange — a big money maker. One option, Lunge said, would be allowing them to be “navigators” in the market who contract to help people find insurance plans.

The state is also in the process of defining “essential health benefits,” which insurance companies must cover for policyholders. Under federal guidelines issued in December, states will develop these benefits instead of the feds. The federal deadline is this fall, but Lunge said she hopes to get a plan out sooner.

Clarification: This story states that insurance brokers will not be able to receive a commission selling policies in a health benefits exchange. The federal Affordable Care Act permits the Secretary of Health and Human Services to establish rate schedules for broker commissions in the exchange. A proposed rule by the secretary, however, does not address how brokers in the exchange would be paid. Under federal regulations, states may allow brokers to help people enroll in insurance plans in an exchange. How they will be paid is still unclear.

VTDigger

As Vermont moves toward a single-payer health care system, a crucial step in changing the way we pay for services is through small-scale trial programs.

The State of Vermont and the Vermont Association of Hospitals and Health Systems recently submitted a letter of intent to the Center for Medicare and Medicaid Innovation to try different pilot programs that involve “bundling” payments. All hospitals throughout the state are involved in this measure in some way or another, although the specifics of which hospital will do which type of program are still up in the air.

The state and hospital association applied to operate programs that would include bundled payments rather than a traditional fee-for-service payment where patients pay for each operation, test or visit individually. Through bundling, a patient could, for example, make one prospective payment for all services received during an inpatient stay.

This pilot program is one of many different initiatives that states are tackling as a means to implement health care reform at the federal level.

The federal Affordable Care Act, which was signed into law in 2010, created the Center for Medicare and Medicaid Innovation. The federal law gave the center $10 billion in funding for fiscal year 2011 to 2019. One of the things the center works on is studying pilot programs like the ones Vermont wants to try to determine which ones make sense.

At a special meeting of the Green Mountain Care Board Friday, Jim Hester, acting director for the Population Health Models Group for the center, presented different options for programs the state can apply to participate in.

Hester said payment reform at a national and state level requires drastic shifts in the way we pay for health care along with large enough pilot programs so that the center can really study how effective they are at reducing costs.

“To really deal with the issues requires a transformational change in the system,” Hester said.

One of the pilots the center has focused on involves what are called accountable care organizations. The idea is that a group of health care providers takes responsibility for the quality, cost and overall care of patients. In turn, the group shares in savings that in theory emerge from a reduced rate of growth in health care spending.

The center is currently working with 30 groups around the country to develop another level of program that includes a population-based payment system — moving close to a single-payer system and paying a single price for all of the health care services needed by a group of people for a fixed period of time.

Testing out these pilot programs will provide the state with more information to determine what is the best way to reform how people pay for health care. Under Act 48, Vermont’s health care reform law, the Green Mountain Care Board is charged with setting the overall policy goals for pilot projects.

The state is already participating in one payment reform model, the Blueprint for Health, which is one of eight advanced primary care practice models throughout the country. The idea is to focus a group of caregivers around one patient. Practices are paid on a per-member basis rather than on a fee-for-service for each visit or other service.

One of the proposals the state may try, says Green Mountain Care Board Chair Anya Rader Wallack, is expanding the existing Blueprint projects to include specialists in the group of health care providers that care for a patient and therefore receives the payment.

Michael Del Trecco, vice president of finance for the Vermont Association of Hospitals and Health Systems, said every hospital in the state is currently working with Richard Slusky, Director of Payment Reform for the Department of Vermont Health Access on varying degrees of payment reform.

Del Trecco said he could not say at this point what specific hospitals would be taking which measures.

“We are all actively at the table trying to figure out the best way to meet the health care goals in Vermont as well as hospitals meeting their goals of providing care in their communities,” he said.

While pilot reform projects could be in the works next year, a comprehensive overhaul of Vermont’s health care system is still years away. In 2014, the state is required under federal law to implement a health benefit exchange that will assist residents in choosing insurance plans from those that qualify under federal standards. In 2017, the state can receive a waiver from the federal government to operate its own single-payer system.

VTDigger

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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As Gov. Peter Shumlin and the Democratic leadership of the Vermont Legislature continue their efforts to transform our state’s health care system into a centrally-planned and government-managed system, it has become clear that they would like us to focus exclusively on the potential upsides of their new system while ignoring the downsides.

We all agree that health care costs are unsustainable and that something needs to be done to bend the cost curve. Bending that curve will require government to make smart and rational decisions, and be cognizant of the impacts those decisions will have on health care consumers and providers and Vermont’s employers.

In response to a 2011 legislative mandate, the Legislature’s Joint Fiscal Office and the Department of Banking, Insurance, Securities and Health Care Administration recently issued a report that focused on the cost of Vermont’s health care system, and the potential savings that might accrue from the proposed system. The report estimates that under a single-payer system, Vermont could reduce health care expenditures by nearly $2 billion by 2020.

The most stunning aspect of the report, however, is what it ignores: There is no mention of how to fund such a system, and there is no discussion of how this system will affect Vermonters, Vermont businesses, and Vermont’s network of health care providers.

Curiously, the report also includes savings that the state was already hoping to achieve from the Blueprint for Health Chronic Care Initiative. Those “Blueprint savings” should be in our health care spending baseline, and not counted as “single payer savings.”

Furthermore, no information is provided regarding coverage: That is, what medical and pharmaceutical benefits will be covered under the system, and what benefits will not be covered. For example, will there be limits on the quantity of services Vermonters receive, such as an annual maximum number of visits to a physical therapist?

What portion of the cost of care must be paid by the patient? How will Vermonters access care from providers whose services are not covered under the new system, and how will we access care at out-of-state health care facilities?

Don’t we need to know the answers to these questions? Don’t we need to know where the revenues are coming from, what the benefits package will be and how much it will cost each of us? Right now we only have a “plan to plan” with few details – other than an incomplete financial model. A financing proposal is due to be reported by the Secretary of Administration in January 2013 – but that is more than a year away.

Another question which needs to be asked: Why aren’t we working to maintain and build on those best practices already in place? For example, Vermont has a strong fully-insured large group market, a strong and large self-insured (ERISA) group market, a strong state employee health care plan, and a unique “Choices for Care” waiver that stands out nationally and puts home health care and institutional care on an even footing with individuals needing long-term care. We also have the Medicaid “Global Commitment” waiver that has given Vermont the opportunity to use federal dollars more flexibly to help improve health care quality and outcomes for Vermonters.

Professor William Hsiao cautioned that there will be winners and losers with the implementation of a single-payer system – it’s important for us to know who they are. It’s important that we talk about solutions, consider all viable choices and build on what is good in Vermont’s health care system – with as much transparency as possible.

We need to ensure that we do not lose ground on Vermont’s legitimate advances to date in the public and private health care sectors. We need to broaden our thinking and not simply focus on a one-size-fits-all system to the benefit of all Vermonters.

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Darcie Johnston. Courtesy photo.

The Green Mountain Care Board is revamping the health care system in Vermont, and conservative groups want to know how they are going to pay for it.

More importantly, they want to know before the 2012 election.

The conservative advocacy group Vermonters for Health Care Freedom and the National Federation of Independent Businesses are petitioning the Vermont Legislature to introduce a law that will require the board to release the financing mechanism for a single-payer style plan by Sept. 15, 2012.

“We’re not going to support a system that puts further demands on the pocketbooks of Vermonters and Vermont businesses, large and small,” said Darcie Johnston, founder of Vermonters for Health Care Freedom, the 501(c)(4) non-profit organization that announced the petition.

Johnston, a GOP fund-raiser, said small businesses and individuals want to know how much health care is going to cost and whether a universal health care program will be paid for through new taxes.

Under Act 48, which Gov. Peter Shumlin signed into law in May, the newly-appointed Green Mountain Care Board is responsible for creating a system that will provide universal health care to all Vermont residents. The act states that every Vermonter should be eligible for care through a single payment system. The act mandates that the Green Mountain Care Board develop a benefit package for health care recipients and an expenditure analysis for the state.

Proponents of the plan claim it will save administrative costs and be cheaper than the current array of insurance companies. Opponents, like Vermonters for Health Care Freedom, fear the plan will increase taxes and result in lower quality health care outcomes.

Once the board completes its research, the state secretary of administration, Jeb Spaulding, will submit financing plans to the House committees on health care and ways and means and the Senate committees on health and welfare and finance. The deadline for these plans is Jan. 15, 2013.

That date, however, is not soon enough for Republicans.

Vermont GOP Chair Pat McDonald said Republicans are interested in doing exactly what the Vermonters for Health Care Freedom petitions says: move up the financing plan deadline four months, just in time for election season.

“We want people to go to the polls with the right information,” McDonald said. “The more information you give voters, the more informed they are to make the right decision.”

On a more fundamental level, McDonald said her party is concerned that a single-payer system will not work in the state. She said it is a complicated issue, and the GOP wants to see more information about specific facts like: who will be covered, what will be covered, who will pay for the system and how costs will be contained.

Rep. Michael Fisher, D-Lincoln, disagrees that a single-payer system will cause a hardship for small businesses. Fisher is the chair of the House Committee on Health Care, and he says the status quo is “bankrupting us on every level.”

“We can’t afford not to reform health care,” Fisher said.

Fisher said a large segment of the business community cannot afford to plan for health care costs the way they are.

According to a report by the Vermont Department of Banking, Insurance, Securities and Health Care Administration, health care spending for Vermonters rose 7.6 percent in 2009, compared to 5.7 percent nationwide. For that same time period, private payers (including worker’s compensation, self-insured individuals and private commercial plans) paid for 37 percent of those costs—slightly less than the national average.

Fisher said a lot of what the Green Mountain Care Board will be doing is reducing health care costs overall and doing away with a lot of waste. He said he hopes the process will be able to engage people from all perspectives as the Green Mountain Care Board works out the details of the new system.

Anya Rader Wallack, chair of the Green Mountain Care Board, said the plan is to reduce costs. She said she will be conducting a full vetting of the financing plan submitted by the secretary of administration, and there will not be any surprises.

Wallack said one of the board’s goals is to make health care more affordable for small businesses that pay for the health care of their employees. She said right now small businesses have an amount of certainty that insurance rates will increase between 6 percent and 8 percent each year.

“The certainty that they have is an unsustainable health care cost picture,” Wallack said. “Our job is to come up with a plan to improve that picture.”

Rep. George Till, D-Jericho, a practicing physician, also expressed some concerns about the process for creating the new universal health care system in the Vermont Medical Society’s newsletter. Till, an advocate for universal coverage, explained in the newsletter that he would prefer a method of first developing a sound financial model, then testing it to make sure it works. He noted that medical providers would prefer knowing how much they would be reimbursed at the beginning of the process rather than in 2013. Till was unavailable to comment for this story.

As part of the financing plan, the secretary of administration also must consult with health care professionals, employers and the public to determine impacts on businesses and the state economy in general. The deadline for this research is February 2012.

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