Masland: Vermont Health CO-OP deserves a chance

Editor’s note: This op-ed is by Vermont Rep. Jim Masland, a Democrat, of Thetford Center.

Health care in Vermont is in transition. The recent rollback of a key provision of the federal Affordable Health Care Act (ACA) and other possible changes to the federal law may affect Vermont’s ambitious timeline. Vermont Health Connect, Vermont’s own health care exchange, will begin on Jan. 1 and the hope is that Vermont’s single payer system will begin in 2017. While the Vermont Legislature and administration have devised a rough road map of how to get there from here, there is a great deal of uncertainty as to whether we’ll be able to hold the course and how we will pay for it. Looking ahead, Vermont needs to keep its options open and not close off new ideas that might help us make the grade. One such idea is the introduction of Vermont Health CO-OP, a new provider that intends to insure Vermonters under a cooperative organizational structure.

As we work our way forward, there are a myriad of interrelated problems to solve, all of which need to be thoroughly understood before the final goal can be reached. Among these, the most obvious are:

• Determining the real costs and matching them with the taxes necessary to pay the bills;
• Establishing equitable cost sharing – will people who currently get health care at a discount have to pay more?
• Increasing the pool of insured lives to a size sufficient to assure true viability;
• Assuring quality and affordable administration and customer satisfaction;
• Determining doctor participation and how they will be reimbursed.

It is against this background that Commissioner Susan Donegan’s rejection of the Vermont Health CO-OP should be viewed. It is true that there were a number of flaws in the CO-OP’s application, but these flaws should not be insurmountable. More to the point, the concept of introducing an additional health care provider, particularly a co-op run by and for Vermonters, has real merit.

Currently there are only two health insurance companies that sell policies in Vermont, Blue Cross Blue Shield of Vermont, which has approximately 85 percent of the market, and MVP (out of New York) which has the other 15 percent. Unless things change, these are the only providers that will sell policies on the exchange. In addition, the large unions such as those representing teachers (VNEA) and state employees (VSEA) get insurance through Cigna and are grandfathered outside the exchange. They might remain outside the single payer system as well, provided they don’t slide backwards on what they deliver. Cigna does offer good coverage at reasonable rates. However, the fact that so many lives may remain outside the exchange and the eventual single payer system makes spreading the risks within our own insurance pool more difficult and potentially more expensive. Further, MVP recently backed out of insuring lower income Vermonters under Catamount, citing excessive costs. There is no assurance that MVP will remain a Vermont insurer for long.

Even though each provider is to offer the same products on the exchange, there will be differences among them as to price and how administration and customer service is handled. That is exactly the way an exchange is supposed to function with competition and customer satisfaction driving the bus. Presumably, this competition will lead to improved results while keeping rates down. Vermont’s experience with the formation of the health care exchange is already producing strong benefits for Vermonters. Competition has exposed the high rates/poor coverage that a number of group association policies have offered. Some have effectively been bilking their membership on behalf of the parent organizations.

If we assume for the moment that Vermont does transition to a single payer system in 2017, it is by no means a foregone conclusion that we will also have a single administrator. Several models that are currently available that might fit the bill. They are:

• A single payer/single administrator system where one bureaucracy covers all functions. This is the way Medicare currently operates.
• A single payer/multi administrator system where several insurance providers continue to sell policies and compete on the basis of price and improved service. Under this scenario, the providers would continue to sell and administer their policies in a tightly regulated environment but the state, acting as bill payer, would be free of the burden of administrative headaches.
• Or a new hybrid to be created during the next few years.

Commissioner Donegan’s rejection of the Vermont Health CO-OP seems based on the assumption that by 2017 we will have a Medicare type structure where everyone is covered under the same statewide policy and that both payment and administration is handled under a single bureaucracy. Yet, this approach fails to account for what will happen to existing insurers, Blue Cross Blue Shield in particular. BCBS currently operates out of a large modern edifice in Berlin and another in Williston where around 350 employees report to work each day. Are they simply to fade away, or does Blue Cross intend to become the state’s single administrator? Are we assured that BCBS would be the best party to fulfill this role, or instead, might competition among several companies for the administrative functions of single payer have beneficial outcomes?

It would be good for Vermont if the Vermont Health CO-OP and Commissioner Donegan could reach a rapprochement such that the CO-OP begin operations and then flourishes. Vermont has had good experience with cooperatives. There are examples all around us that frequently provide high quality products and services at better than competitive rates. And, during this uncertain time of health care upheaval, having new organizations at work and a part of the solution is an inherently good idea. It would be a shame if the CO-OP has to fold up shop before it really begins.