What might transitioning to the federal exchange mean for Vermonters?

Republican lawmakers are calling for the state to scrap Vermont Health Connect and join the federal health care exchange, but the implications of such a move are unclear.

Vermont Health Connect has never worked properly and is currently propped up by a number of manual processes. It was taken offline in mid-September, but is expected to relaunch Saturday for open enrollment, a three-month period in which consumers can buy or renew health insurance.

Vermont increases the value of the Affordable Care Act’s premium tax credits for people who earn between 100 percent and 300 percent of the federal poverty line. For a couple that would be annual income of $15,730 to $47,190, respectively.

Gov. Peter Shumlin and Democrats in the Legislature have said the federal government won’t allow those subsidies to be included if Vermont transitions to the federal healthcare.gov exchange.

If joining the federal exchange means forgoing Vermont’s additional premium assistance, then low- and middle-income customers would be required to pay more toward their health insurance.

An individual making $23,340 would pay $350 more in annual premiums, and a family of four making $47,700 would pay $716 more in annual premiums. There are roughly 21,000 people receiving premium subsidies through Vermont Health Connect.

Vermont also currently reduces people’s out-of-pocket costs beyond what is available in states using the federal exchange.

For someone making between $30,000 and $35,000 a Standard Silver high deductible plan would have an out-of-pocket maximum of $5,750. With Vermont’s cost-sharing assistance, that out-of-pocket limit would be $3,400. A person with high medical costs would save $2,300.

House Minority Leader Rep. Don Turner, R-Milton, said at a news conference last week that Vermont should bring back the popular Catamount Health plans as a way to keep coverage affordable.

Don Turner. VTD/Josh Larkin

House Minority Leader Rep. Don Turner. VTDigger file photo

Turner clarified in an interview Monday that his proposal is not to restore the actual health plans offered through Catamount, which the Affordable Care Act would preclude and which insurance companies might not offer.

Instead, he wants to use state revenue that previously went toward subsidizing Catamount plans to make up the premium assistance that would be lost by transitioning to the federal exchange.

Catamount plans were private insurance products offered to low- and middle-income Vermonters with certain income levels and who were eligible for financial assistance.

The state subsidies were supported by an assessment on employers who don’t offer their employees insurance. In addition, cigarette and tobacco tax revenue and flexible Medicaid funds were also used to support the subsidies. All of that money now goes toward the state exchange.

Turner has not devised a framework for how those revenues would subsidize insurance for consumers.

It’s also unclear whether the Catamount revenue stream would cover the cost of subsidies lost in the proposed transition to the federal exchange.

Vermont lowered premiums for the roughly 21,000 people receiving subsidies by $460,000 in October beyond what the feds have paid, according to state officials. But officials did not have a figure for the total premium assistance counting state and federal premium subsidies.

Peter Sterling, director of the health care advocacy group Vermont Leads, was critical of Turner for being light on specifics when he announced the proposal last week.

“I think he should have come forward with a more fleshed-out plan,” Sterling said. “Give us the details of how you think this is going to benefit Vermonters before you call for it publicly.”

Turner said he’s working with the legislative Joint Fiscal Office and fellow Republican lawmakers to draft a bill creating a framework and timeline for transitioning to the federal exchange while still maintaining subsidies.

He hopes to have the proposed legislation on the governor’s desk before the budget address in mid-January. That effort would require support from Democrats who hold the majority of seats in the House.

If the Vermont Health Connect site relaunches Saturday for open enrollment and is working well, there won’t be the same urgency to join the federal exchange, Turner said.

“None of us want to shut it down during the middle of an open enrollment period if it’s working,” he said.

However, even if Vermont Health Connect is working well, the state needs to do a “cost benefit analysis” before it continues to use taxpayer money to complete the website buildout, Turner said.

State officials have said the website, when it goes back online won’t allow automated changes to personal information or coverage, and small businesses still won’t be able to use it.

Another consideration for Vermont in joining the federal exchange is the U.S. Supreme Court announcement last week that it will hear another legal challenge to the Affordable Care Act. The suit challenges whether the federal exchange can offer subsidies at all.

A ruling against the Obama administration would eviscerate the Affordable Care Act, and require people in the three-dozen states using the federal exchange to pay the full cost of the insurance they purchase.

Editor’s note: This article was updated at 3:05 p.m. Tuesday.

Morgan True

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