The Vermont Senate gave preliminary approval Thursday to a wide-ranging bill aimed at moving the state’s health care reform agenda forward.
Absent direction from the Shumlin administration, the Senate has endeavored to identify what areas of health care reform it can further this session, as well as target areas that need more study.
“(This bill) is the culmination of the work to date, not only in the Senate Finance Committee, but several other committees of jurisdiction, and perhaps, I think, our best judgment at this time as it relates to achieving the vision of a universal and unified (health care) system,” said Sen. Tim Ashe, D/P-Chittenden, chair of Senate Finance, who spearheaded crafting of the legislation.
Lawmakers expected Gov. Peter Shumlin to present a financing plan for a public universal health care program Vermont hopes to implement in 2017, but he has since reneged on his promise to do that before the end of the session. A state statute called for the governor to deliver a plan in January 2013.
Shumlin reiterated at a Thursday news conference that he wasn’t hiding the plan from lawmakers or the public; rather he just wants the plan to be fully vetted before its release.
“I’m not reluctant to share anything with Vermonters,” Shumlin said in response to a reporter’s question, “My problem is that we don’t have it right yet, and one thing I’ve learned about health care reform in the last few months is it’s better to get it right than to pick an arbitrary date or, in my case, have it picked for you and have to meet it.”
Finding the right method to finance Green Mountain Care, as the program is known, is proving complex, he said.
“Every time you think you’ve got the perfect solution, you drill down into it and find out you’re leaving somebody out, or it has ramifications that you didn’t consider when you first thought of it,” Shumlin said.
Sen. Peter Galbraith, D-Windham, who introduced a Green Mountain Care financing bill at the start of the session, said there are few options to raise the roughly $2 billion in state costs needed to pay for the program. What’s difficult is mustering the political will to publicly back one of those options, he said.
“Raising the approximately $2 billion needed to pay for Green Mountain Care is a big decision,” Galbraith told his colleagues in a speech on the Senate floor. “But being a big decision does not mean it’s a complicated one.”
The amount of revenue needed limits the possible taxes that could be used to bring in that kind of money, he said. He identified an employer payroll tax, which is widely seen as the most likely option to pay for the lion’s share of the program, the income tax, an expanded sales tax, a shared mandatory public premium or some combination thereof.
“Frankly, because there are so few choices, it’s not hard to come up with a workable plan to finance Green Mountain Care. The hard part is having the political will to do it,” Galbraith said.
Galbraith obtained a spreadsheet from the Joint Fiscal Office that shows the employer payroll tax would have to be set at 17 percent in order to cover the estimated $2 billion cost. Other options include a $7,500 per person “public premium” (if large, self-insured companies are excluded), adding a 30 percent increase to each tax bracket, or a 23 percent increase in sales taxes (and the elimination of the tax exemption on food and clothing). A fifth option would be to raise $500 million, or a quarter of the estimated $2 billion for single payer from each of the aforementioned taxes, in which case the employer payroll tax would go up by 4.25 percent; the public premium would be $1,875 (excluding ERISA companies); 7.5 percent would need to be added to each income tax bracket and the sales tax would go up to 11.75 percent.
Though Vermonters stand to benefit in the aggregate from a system that decouples health insurance from employment and shifts the payment method from premiums to taxes, any of the tax options are likely to meet opposition from a variety of powerful interest groups, he said.
The legislation that the Senate gave preliminary approval to Thursday strikes Galbraith’s financing language from the bill he introduced, replacing it with a laundry list of disparate elements relating to health care reform. It has more than 20 sections, some targeted at existing problems, others at clarifying language in Act 48. Still others seek to position the Legislature to make informed decisions and hold the administration accountable to work it’s expected to perform.
Highlights of the bill include:
• Third-party administrator: Act 48 references the state contracting with one or more private entities to administer aspects of Green Mountain Care such as claims administration or provider relations. The bill would require the administration to define and develop criteria for what aspects will go out to bid by February 2015, solicit bids for the work by July and hire a vendor by December of that year.
• Conceptual waiver: The bill would require the state to submit a preliminary or “conceptual” waiver application to the federal government by October of this year seeking to circumvent elements of the Affordable Care Act that will allow Vermont to implement a universal public health care system.
• Interim action: A section of the bill requires the administration to issue a policy recommendation on whether Vermont should attempt to provide all residents with health coverage using the benchmark plan for Vermont Health Connect prior to the implementation of Green Mountain Care. In the event that Green Mountain Care is delayed, this interim action could move Vermont toward providing all residents with health coverage, Ashe said.
• Public employees: Another section would convene a stakeholder group to develop a plan to transition public employees into Green Mountain Care from their existing health plans, and have the state address the role of collective bargaining in the transition to a universal health care program.
• Equity in the employer assessment: The employer assessment is a penalty paid by employers whose employees in some cases can’t afford the insurance they offer. If an employee does not take their employers health insurance, the employer pays a penalty of roughly $480. However, if the employee goes on Medicaid, the penalty is removed. The bill would require employers to pay the penalty regardless of whether an employee not on their benefit plan has coverage through Medicaid. The Joint Fiscal Office estimates the change will bring in $2.5 million in additional revenue.
• Military and federal employees: This section of the bill establishes that federal employees and active duty military, as well as retirees from both, would keep their federal health coverage, but have the option to obtain secondary coverage from Green Mountain Care in the event that the program’s benefits package is more generous.
• Independent physicians: The bill calls for a report on whether state policy should encourage Vermont’s remaining private doctors to stay in private practice, and if so, what policy levers could increase the number of private practices in the state.
• Insurer surplus: If Vermont transitions to a public universal health care program, many of the state’s private insurers will cease to operate. Those companies are required to have a rainy-day cash reserves for catastrophic events, such as a disease outbreak, that would require paying out an unusually high number of claims. There is some question about who that money belongs to, because Vermonters’ premiums pay for insurers to build up those reserves. The bill calls on the Department of Financial Regulation to report on the legal and financial considerations involved in appropriating that money.
• Intellectual property: The bill asks the state and the public-private health information technology partnership VITL to examine what systems the state is creating for a universal health care program that might be proprietary and could possibly be patented and used for profit at some point.
• Work force symposium: Sen. Kevin Mullin, R-Rutland, introduced an amendment that calls for a conference to educate workers and executives of Vermont’s hospitals on what reform is likely to mean for their organizations, and help providers prepare for an anticipated increase in demand for health care services if more Vermonters have access to coverage.
Notably absent from the bill is any discussion of how Green Mountain Care would incorporate the employees of self-insured companies, Medicare recipients or Vermonters who work or access health care across state lines.
Robin Lunge, the state’s director of health care reform, said the administration supports the Senate’s overall intent of moving health care reform forward, but said it has concerns about putting dates for hiring a third-party administrator in statute.
“We welcome the Senate’s engagement on Act 48. This is what the governor had asked folks to do over here,” Lunge said in a recent interview, “The dates in the procurement section I think are problematic, which I’ve indicated.”
Lunge added that the administration hasn’t taken a position on changes to the employer assessment, because it has not had the opportunity to look at the proposal in the larger context of the overall budget.
The bill will likely get final approval in the Senate on Friday, and is expected to land in the House Health Care Committee.
That committee’s chair, Rep. Mike Fisher, D-Lincoln, expressed disappointment that a section that originally increased compensation for providers participating in Vermont’s Blueprint for Health was turned into a study and report on their compensation.
He said his committee is particularly interested in another section that examines whether the state could act as its own pharmacy benefit manager for Green Mountain Care, which he said is a real opportunity to improve cost transparency and realize administrative savings.
Fisher said his committee might also seek a middle ground between the Senate and administration on the question of whether procurement dates for a third-party administrator should be placed in statute.
Editor’s note: This story was updated with information from JFO and a new headline.
CORRECTION: The section on estimated taxes for single payer was clarified. If the state chose to raise all of the money for single payer from the sales tax, the increase for that tax would be 23 percent. The public premium figures exclude ERISA companies. Thirty percent would be added to the marginal tax rates, if the income tax was the sole source of funding for the $2 billion single payer system.
