Health Care

Vermont Health Connect will cost $9.7 million more than anticipated in this fiscal year

Vermont Health Connect is expected to cost $9.7 million more than what’s in the current budget, largely because of a mid-year change in vendors and labor intensive processes that underpin the incomplete exchange, officials said Thursday.

The General Fund impact of the overages is $3.5 million, which the administration will ask lawmakers to approve in the Budget Adjustment Act. The rest of the money will come from the federal government through Medicaid global commitment money and direct grants.

Lawrence Miller. File Photo by John Herrick/VTDigger
Lawrence Miller. File Photo by John Herrick/VTDigger
“Frankly, given what we’ve all experienced with Vermont Health Connect, I feel pretty good about coming to you with a budget adjustment impact of $3.5 million,” Lawrence Miller, the top state official responsible for the exchange, told lawmakers Thursday.

Vermont was required to take over the maintenance and operational costs of the exchange in January, and the current budget underestimated those costs by $8.3 million for the first six months of the year. Administration officials have not released details on what the estimated costs will be in fiscal year 2016, which starts July 1.

Lawmakers wanted to know how the exchange keeps racking up costs, while their constituents continue to have problems with their coverage.

“How can I explain that to anybody and have them feel any sense of confidence in where we are and where we’re going?” asked Bill Lippert, D-Hinesburg, chair of the House Health Care Committee.

Rep. Anne O’Brien, D-Richmond, a member of House Appropriations, called the increased costs “distressing,” and her committee would want greater assurances going forward.

Vermont Health Connect has been plagued by functionality problems since it was launched in October 2013. Last year, the state changed IT vendors as part of an effort to resolve the issues.

The operating costs in the current budget were based on estimates from the exchange’s original contractor, CGI, that were likely low to begin with, but were also based on that company finishing the job, officials said. Changing vendors required a costly and time-consuming knowledge transfer, and the state and new contractor, Optum, decided it was too late to complete the exchange on schedule.

That forced officials to develop a set of manual procedures to approximate how the exchange technology is eventually hoped to work, which are costly and have led to higher error rates that frustrate users.

The automated change of circumstance function is expected to be completed in April, Miller said, which will allow people to change their coverage online, eliminating the need for much of the manual processes that are causing delays. That should also reduce operating costs, he said.

“It’s just a lousy situation. I wish it were better. I’m sorry,” Miller said.

The state underestimated the complexity of the project, as did CGI and the federal government, Miller said. The underlying technology is incomplete but working, he said, and the exchange will ultimately live up to its promise.

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Morgan True

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  • Dave Bellini

    Where does all the money come from in “Budget Adjustment” ?? Does it grow on trees? This administration wants to cut everything and everybody to keep this hunk of junk running?

    “It’s just a lousy situation.”
    There were decisions made by this administration that made it lousy.

  • Kyle Williams

    Pull the plug on this, how much more of Vermonters hard earned money are we going to waste on this?

    • Ann Meade

      I agree. Do what you would do at home if you ran out of money. Stop spending,. Repurpose current employees. If this must continue and after all the money that has been invested maybe it should remain but the administration must take it out of hide. If they believe so strongly this is right, slash and burn.

      • Willem Post

        “Do what you would do at home if you ran out of money.”

        It is NOT their money!!

        • Ann Meade

          I never said it was, I said stop spending money that doesn’t exist,

  • Gary Murdock

    This reads very similar to the VT Gas fiasco…will the Shumlin administration please hold themselves to the same level of accountability that Vermont Gas is held? Can we have this mess put on hold and ask the PSB to rule if this is for the public good???

  • Clive Berry

    No one wanted to believe Dan Feliciano, including me, that VHC was never really going to work.
    I can hear the cries now, we have to dump more money into this system, even though it doesn’t work, so we can fool the federal government into giving us health care subsidies.
    I guess the government is giving subsidies to states who claim to have an exchange regardless of the exchange’s functionality.
    We are no better than the welfare cheats. Shame on us.

  • Chet Greenwood

    Out of Control!
    ONLY $3.5 million Vermont taxpayer money!
    How can you underestimate costs by $8.3 million in a six month period?

    Where is Doug Hoffer? or Bill Sorrell?

    • “ONLY $3.5 million Vermont taxpayer money!”

      Right, so now they go after the farmers in Vermont for half that money! Shame on us….

  • Wendy Wilton

    There is only one solution. Transition to the federal exchange and shutter Vermont Health Connect. Not just for the savings. Anyone on Facebook has seen the issues and problems that VHC participants are still facing with costs, coverage, invoicing, etc…what a needless hassle for those people who have been forced into it. Make it voluntary as well, so people have options.

  • This article tells us the underestimated cost for VHC but doesn’t give the grand total for VHC line items in budget adjustment. Please publish the grand total. I believe the grand total may well exceed $11 million. Let’s see the total.

    Also the excuses of why they can’t accurately budget the cost of VHC are pathetic. It’s way past time to shut this system down.

  • paul lutz

    End this mess and move to the fed exchange. Good grief!!!

  • Kathy Callaghan

    “How can I explain that to anybody and have them feel any sense of confidence in where we are and where we’re going?” asked Bill Lippert, D-Hinesburg, chair of the House Health Care Committee.”

    Right on, Rep Lippert! I’m happy that we now have a chair of the House Health and Welfare Committee who will question the status quo. It is widely known that for the past several years, all former Rep. Mike Fisher did was rubber stamp everything that came his way, in a blind quest for single payer.

    Maybe now we can expect a thoughtful process in H&W that considers ALL the alternatives and makes decisions based on the greater good, not the administration’s stories.

    Based on the single payer bias of the administration’s health care team, it will be very important for the legislature to do independent research with CMS on the new SSBM exchange alternative. It is certainly an option worth pursuing sooner rather than later.

    Even if Vermont Health Connect actually achieves the ability to process changes of circumstances by April – which would be the first target met on time – Vermonters are still paying high-priced consultants (Optum and several others).

    Legislators should hire a consultant to do a due diligence on Vermont’s Exchange – look at what we’re now spending for what we’re getting – line by line – and examine ALL options that would make it better and more cost efficient. Actually, Larry Miller should be doing this, but apparently is content to continue going to the legislature for more money to throw into the Vermont Health Connect money pit.

    Enough is enough, and I applaud the bipartisan bill requiring the legislature to look into SSBM. All legislators should support this bill. It should not be bottled up in some committee, but should go to the floor and be voted on.

    Perhaps we can cut our losses and get out of this financial morass that the administration has created.

  • Practically, what do Vermonters really get out of this exchange?

    For a moment, forget that the exchange doesn’t work as promised and as required while costing a fortune that we can’t afford.

    Now remember that Vermont essentially has only two companies selling health care insurance, BCBS and MVP. Its not as if there are 20 or 30 insurance companies in Vermont whose policies the people would have to wade through to find coverage.

    If the exchange did work as required and as promised and with only two insurers offering coverage, again, what would the people of Vermont really be getting for the more than $120 million spent on developing the exchange?

    We all know that the exchange was not Larry Miller’s idea. He’s the poor guy brought in to bail out this ego driven, first in the country, history making disaster along with single payer that was supposed to launch Peter Shumlin on to fame and bigger things on the national stage. Instead we have a massive and smoldering computer crash requiring tons of cash to hopefully correct.

    Larry Miller is touted as an astute business man. Would he, on his worse day as a businessman with his own money at risk, have proposed and entered into anything remotely resembling the exchange given the very low cost federal exchange alternative?

    Assume that businessman Miller erred and did get involved with a such a project, at what point would he stop wasting his money, admit a mistake and pull the plug?

    Mr. Miller, we recognize that you’re a loyal lieutenant for the Governor so this isn’t easy, but at what point is it time to admit this has all been a terrible mistake and time to pull the plug?

    Also, if the exchange finally does become operational, how many state employees and at what annual cost will it take to maintain an exchange to list the policies of two insurance companies?

  • Ralph Colin

    If the Vermont state government were run like a business, what would happen to its CEO if he/she screwed up like our governor has on an undertaking as large as VHC?

    Just some food for thought.

    • Kathy Callaghan


  • Gary Murdock

    Randy Brock predicted this just before the initial epic fail rollout, and was dismissed outright by the dems. Here are excerpts from a news story just prior to the rollout.

    On the eve of the Vermont Health Connect launch some of Vermont’s republicans are pointing to some major flaws in the system. Randy Brock says simply “The system doesn’t work.”
    It’s cost the state about $84,000,000 to have CGI develop the site, more than was originally budgeted. That figure rose because of three major amendments in the contract to change the original plan for how the website was to operate.
    Meanwhile democrats say that Brock and other republicans are trying to stir up fear ahead of the launch.
    “Brock and the national Republicans may be able to scare some people for a short time, but continuing his failed campaign rhetoric falls flat,” Vermont Democratic Party Communications Director Ryan Emerson said in a statement.