Health Care

Lawmakers wise to look at Vermont Health Connect alternatives, Speaker says

Vermont Speaker of the House Rep. Shap Smith, D-Morristown. Photo by Roger Crowley/for VTDigger
Vermont Speaker of the House Rep. Shap Smith, D-Morristown. Photo by Roger Crowley/for VTDigger
House Speaker Shap Smith, D-Morristown, says Vermont Health Connect can’t continue to underperform in perpetuity, and at some point the state will need to “fish or cut bait.”

The ongoing payment and billing problems customers are having and the inability for them to make changes to their coverage or information quickly and easily is very troubling, Smith said in a recent interview with VTDigger.

“There are legitimate reasons to think that many of the issues are going to be corrected but we don’t know that for a fact. So at this point in time, I think it’s important for all the business markets and, quite frankly, for individuals to know they’re not shoehorned into something that they don’t think is working correctly,” he said.

State officials have said the automated change of circumstance function, the source of much of the exchange’s frustrations, will go live in April. That will end the costly and labor-intensive process in which state employees and contractors enter those changes manually.

If that’s the case, the conversation about alternatives may prove unnecessary, Smith said, but lawmakers can’t count on that happening given the exchange’s history.

One option Smith floated is to see if there’s a way to allow people in the individual market to purchase insurance directly from the carriers participating in the exchange, the same way that small businesses do.

The challenge there, Smith said, is whether the state and carriers can find an alternative mechanism to determine people’s eligibility for subsidies or Medicaid when they sign up, and he acknowledged such an alternative would rely heavily on the carriers’ willingness to participate.

Smith said the House will also give serious consideration to Rep. Patti Komline’s proposal to transition from the current state-based exchange to a new category of exchange called a supported state-based marketplace (SSBM). Several other states, including Oregon and Nevada, are using an SSBM, but there is a dearth of information from the feds about how they work.

Smith said he was part of a conversation with officials in Oregon to find about more about how SSBMs work, and though he’s not sold, he hopes the House Health Care Committee will continue to weigh it as an option.

“It’s not clear to us that that mechanism is one that would work for the Medicaid populations, and it probably would still require us to have Medicaid software in place,” he said.

He’s also concerned Vermont could lose the ability to offer additional subsidies on top of what the feds provide, if they rely more heavily on the federal exchange. Another question is whether the transition could happen before the next open enrollment period in November.

Then there’s the matter of the the King v. Burwell Supreme Court case that could prohibit states using the federal exchange from offering subsidies at all. Smith said he’s not as sure as some others in the Legislature and elsewhere that an SSBM exchange would bypass a court ruling against the Obama administration.

Others who are calling for Vermont to join the federal exchange are “too cavalier” in discounting a loss for the president at the hands of the Supreme Court, he said, saying the case is in his mind a “jump ball.”

However, the current state of affairs at Vermont Health Connect isn’t sustainable or fair to those required to use it, he said. After the high court rules, which it’s expected to this spring, if the exchange isn’t working as advertised, it will be time to look for other options, Smith said.

“I think it’s going to be really important to see what happens in May, and at some point in time you’ve got to fish or cut bait,” the speaker said.

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  • Wendy Wilton

    VT Health Connect has cost nearly $200 million to set up and will cost an additional $80 million to operate next FY. The legislature has sufficient time to plan the conversion to the federal exchange in FY 16 by preparing and discussing a bill pending the King vs. Burwell case.

    The state of NH has implemented the exchange via the Feds for 10% of our cost and they have a population double VT.

    Given the history of exorbitant costs and malfunction of VHC, why wouldn’t we want to plan to move to the federal system?

  • Just imagine how much better shape the state would be fiscally if we hadn’t spent 100 plus million on VHC.

    • Wendy Wilton

      No kidding.

  • joe wolak

    “One option Smith floated is to see if there’s a way to allow people in the individual market to purchase insurance directly from the carriers participating in the exchange, the same way that small businesses do. ”

    YES! YES! YES! Why are Vermont and the District of Columbia the only places that force residents who do not qualify for assistance to go through their exchange? In the 49 other states, residents who do not need financial help can buy insurance directly through a carrier.

    • Joyce Wilson

      Joe, Also restore both the individual and the small group insurance market for under 50 employees in Vermont. Vermont is the ONLY state that forces both individuals and small businesses to purchase “exchange insurance”!

      When the businesses under 50 employees have been purchasing directly from MVP and BCBS in Vermont, it still is “exchange insurance” that we are purchasing.

      By forcing the small groups and individuals to purchase “exchange insurance”, it has not held down the costs as hoped for anyone! For 2015, “exchange insurance” had almost a 11% increase for MVP and BCBS just shy of 8% increase.

      It was very flawed thinking for Vermont to force both individuals and small businesses under 50 employees into the exchange. The Vermonters receiving subsidies in the exchange are limited to a percentage of their income and often do not see an increase in their premiums. On the other hand, year after year of very high premium increases must totally be absorbed by both the individuals and small businesses under 50 employees purchasing “exchange insurance”.

      This is unfair to those individuals and small businesses and their employees with the only option to purchase “exchange insurance”. Restore both the individual market and the small group market in Vermont. Let everyone make their decision to purchase “exchange insurance” or “regular private insurance”! This option exists in ALL the other states!

    • Representative Patti Komline

      In July Rep. Heidi Scheuermann and I called for the Governor’s Administration to allow people who don’t receive subsidies to direct enroll with their insurance carriers. We’ve been constantly pushing for this for six months now and have also introduced a bill on this issue.

      The insurance companies can provide the service. The Chief of Healthcare Reform reported in the following article that this group of people aren’t his priority:

      Just set these people free for crying out loud. Then they can focus on the thousands who are still in Vermont Exchange Change of Circumstance Queue Hell.

      • Joyce Wilson

        Representative Komline, To just enroll directly with MVP or BCBS as suggested with your bill does not solve the problem as we still would have “exchange insurance”. Vermont is the only state that forces anyone to purchase “exchange insurance”. When we go directly to MVP or BCBS as a small business, we still are purchasing “exchange insurance”.

        The people that receive subsidies in the exchange are protected by income percentage limits so the cost of premiums does not rise. Meanwhile as the individuals without subsidies and businesses stuck with just exchange insurance must absorb the total premium increase.

        These is an unfair and unjust and very costly burden and their employees to have to purchase “exchange insurance”. To just enroll directly with the insurers does not address the problem.

        Restore both the individual and small group market that exists in all the other states! This option exists in all the other states! We as both individuals and small businesses can decide to purchase “exchange” insurance or regular private insurance.

    • Ron Pulcer

      Perhaps the original “reason” citizens not qualifying for a subsidy were still required to enroll through VHC exchange, versus directly with insurance company, was that VT was attempting to customize the VHC systems to work within an “eventual” Single Payer environment.

      But since the Governor has (for now) backed away from his campaign promise of Single Payer, there doesn’t seem to be a need any longer to require all customers to go through VHC. It would seem that if people could go directly through insurance company, and as long as the insurance company provided the “official” verification that person / family is enrolled, that should suffice for purposes of ACA “mandate” (which currently is not being enforced).

      I think it is wise that the Legislature will be considering all the possible alternative options, instead of just wishing and hoping that VHC will get all the bugs worked out and/or new functions will be available and working properly in the next few months.

      • Karen McCauliffe

        Ron, You seem to have missed Joyce’s major point. Her point is that Vermonters should be allowed to purchase non-exchange health insurance products like residents in every other state are allowed, and as intended by the ACA (Obamacare) law. The Vermont legislature voted to take this right away from individuals and small businesses and has limited them to purchasing only the insurance products offered in the Health Connect exchange, whether the purchase it through the exchange web site or directly through an insurance agent. See my comment below for a more lengthy explanation, that was posted on February 7, 2015 at 6:46 pm.

        • Ron Pulcer


          I was not disagreeing with Joyce. I was merely pointing out “perhaps” why the Legislature decided to do things differently than other U.S. States. I already knew that other states have this option. Now that that “reason” (Single Payer) is no longer being pursued, I concur that there isn’t anything now that should hold back VT Legislators from allowing other insurance alternatives.

  • Kathy Callaghan

    “So at this point in time, I think it’s important for all the business markets and, quite frankly, for individuals to know they’re not shoehorned into something that they don’t think is working correctly,” he said.”

    Statements like this are amazing. The business markets and individuals ARE shoehorned into something that does not work correctly! And they have been for two years! Reality check here?

  • Dave Bellini

    The exchange WOULD have worked perfectly if, the people running it had gotten pre-k when they were young.

    • Jim Christiansen

      Best comment ever!

      • Glenn Thompson


      • Paul Lorenzini

        That made me laugh, thanks!

  • chuck gregory

    None of this would be happening if we go to a single payer system. All the Exchange does is funnel even more money to for-profit insurers– although technically BC/BS, MVP and CIGNA are not “for-profit” in Vermont, they are guaranteed 15% for “administrative costs,” which for BC/BS translated to $3.2 million for CEO compensation and trustee

    • Dan McCauliffe

      Chuck, Do you realize the single payer health care model is failing. Even in socialistic countries like Sweden, more citizens are buying private health insurance as the single payer government system can not adequately meet their needs (mostly due to very long waiting times). Switzerland and the Netherlands have two of the best health care systems in the world. They both rely on competition between health insurers.

      So for you and all the others who want a single payer health care system, I suggest you read about the health care systems elsewhere. It should be a real eye opener for you.

  • Karen McCauliffe

    Please realize that residents in the other 49 states can buy health insurance products that differ from their exchange insurance products, outside their Obamacare health insurance exchanges.

    What Shap Smith is suggesting is to allow individuals to purchase “Health Connect Exchange insurance” directly from MVP and BC/BS. This is not the same as the other 49 states where individuals and small businesses can buy health insurance products that differ from their Obamacare exchange insurance products.

    Shap’s suggestion would still limit individuals and small businesses to “Health Connect Exchange insurance products”, but they would be allowed to purchase them directly from MVP and BC/BS to bypass the dysfunctional exchange website.

    The intention of the Obamacare law was to increase choice and competition by allowing individuals and businesses to buy health insurance products either from within the exchange, or different products outside the exchange, if those products were less expensive or better met their needs.

    Vermont was the only state that mandated that individuals and small businesses could only buy health insurance products offered in the exchange. The products in the exchange are limited and have proven very costly for those who do not qualify for federal subsidies, and even for some that do qualify.

    The choices in the exchange are limited. For example, Vermont’s Health Connect Exchange offers no Preferred Provider Organizations (PPO) health insurance products, only the more limited network Exclusive Provider Organizations (EPOs) by BCBS and a Health Maintenance Organization product (HMO) limited to 3 states by MVP.

    Preferred Provider Organizations (PPOs) allow the patient to go to an out of network doctor, provider and/or hospital. The patient pays at a higher out of network rate, but is limited to the cap of their deductible. For example, if a patient’s deductible is $6,250 and they select an out of network hospital then their total cost is $6,250. Both the Exclusive Provider Organization (EPO) and the Health Maintenance Organization (HMO) have NO out of networks available. If the patient goes out of the network then they must pay the total cost. For example, if the cost at Sloan Kettering Cancer Center is $1 million, then the patient must pay the full $1 million.

    Isn’t it discriminatory that the individuals and small businesses in Vermont that are forced into the Obamacare exchange do not have the choice of a PPO? I am currently a low consumer of health care, but I have selected a PPO for years just in case I require hospitalization or desire treatment at one of the nation’s top hospitals. Everyone else in the country has the option to purchase a PPO insurance plan, but not the individuals and small businesses who have had this choice taken away from them by the Vermont legislature.

    The Vermont Legislature should abolish this limitation to allow individuals and small businesses to purchase a broad range of health insurance products, including PPOs, that don’t exist in the Health Connect Exchange. We should be given the same freedom of choice as residents are given in the other 49 states.

    I ask Shap Smith, Patti Komline and all the other legislators to restore the choice for individuals and small businesses in Vermont to purchase health insurance products outside the exchange, if they desire, where they may find lower cost products and products, like PPOs, that better suit their needs.

  • Please note that the ACA prohibits what some legislators are calling for (directly signing up with the insurance carrier). The only real fix is to end the mandate on all Vermonters and Vermont Businesses.
    45 CFR 155.110 – Entities eligible to carry out Exchange functions.
    § 155.110 Entities eligible to carry out Exchange functions.
    (a) Eligible contracting entities. The State may elect to authorize an Exchange established by the State to enter into an agreement with an eligible entity to carry out one or more responsibilities of the Exchange. Eligible entities are:
    (1) An entity:
    (i) Incorporated under, and subject to the laws of, one or more States;
    (ii) That has demonstrated experience on a State or regional basis in the individual and small group health insurance markets and in benefits coverage; and
    (iii) Is not a health insurance issuer or treated as a health insurance issuer under subsection (a) or (b) of section 52 of the Code of 1986 as a member of the same controlled group of corporations (or under common control with) as a health insurance issuer; or
    (2) The State Medicaid agency, or any other State agency that meets the qualifications of paragraph (a)(1) of this section.
    (b) Responsibility. To the extent that an Exchange establishes such agreements, the Exchange remains responsible for ensuring that all Federal requirements related to contracted functions are met.
    (c) Governing board structure. If the Exchange is an independent State agency or a non-profit entity established by the State, the State must ensure that the Exchange has in place a clearly-defined governing board that:
    (1) Is administered under a formal, publicly-adopted operating charter or by-laws;
    (2) Holds regular public governing board meetings that are announced in advance;
    (3) Represents consumer interests by ensuring that overall governing board membership:
    (i) Includes at least one voting member who is a consumer representative;
    (ii) Is not made up of a majority of voting representatives with a conflict of interest, including representatives of health insurance issuers or agents or brokers, or any other individual licensed to sell health insurance; and
    (4) Ensures that a majority of the voting members on its governing board have relevant experience in health benefits administration, health care finance, health plan purchasing, health care delivery system administration, public health, or health policy issues related to the small group and individual markets and the uninsured.
    (d) Governance principles.
    (1) The Exchange must have in place and make publicly available a set of guiding governance principles that include ethics, conflict of interest standards, accountability and transparency standards, and disclosure of financial interest.
    (2) The Exchange must implement procedures for disclosure of financial interests by members of the Exchange board or governance structure.
    (e) SHOP independent governance.
    (1) A State may elect to create an independent governance and administrative structure for the SHOP, consistent with this section, if the State ensures that the SHOP coordinates and shares relevant information with the Exchange operating in the same service area.
    (2) If a State chooses to operate its Exchange and SHOP under a single governance or administrative structure, it must ensure that the Exchange has adequate resources to assist individuals and small employers in the Exchange.
    (f) HHS review. HHS may periodically review the accountability structure and governance principles of a State Exchange.

  • bob zeliff

    Before we start to hop scotch around looking at alternative…which also might very well have other problems or un intended consequences….
    Lets understand what the problems with health connect REALLY are.

    Vermonters can take the truth. Facts please!

    There has been very little in the press about the root causes of the problems. Details of specifically what next needs to be done, what the effort is, what the risks are.

    We the public have only seen very doesn’t work…we will fix it…then only to find it still does not work!

    The Administration and by the professionals in the State government have done a very POOR job of being transparent.
    The press has also done a poor job of uncovering these details.

    These fact must be shared..known…before the legislature (politicians all) make a half baked decision…which may very well take us from the proverbial frying pan to the fire.

    We need to be better informed!

    • Hi Bob,
      I agree that state officials have not done enough to explain why the problems with the exchange persist.
      But it looks like you missed this report by Morgan True that explains the root causes.

      • Hilary Cooke

        Anne’s link to the Morgan True piece is worth a look. It is fun…or is it sad?…to read the comments from a year ago…same folks defending the performance of the VHC then and now willing to say that it was worth the try.
        I don’t know anyone who is against a better value proposition for the finance and delivery of health care for Vermonters. Nobody wants to be the skunk at the garden party, but criticisms of this administration’s health care reforms were obvious from the get go.
        In the meantime, agenda driven navigators have replaced value driven brokers; their books of business eviscerated.
        Oh, but we can go back to talking about “bending the cost curve”…yup, we are really leading the country.

      • bob zeliff

        I did miss that excellent report. My apology to VT Digger and Morgan True!!


        I do think we need a follow up now, a year later.

        Has Vermont been successful in fixing these problems? Do we have better more experienced staff in place to lead the projects.
        Is there an update State Wide IT long term plan? The one I looked up a while ago was not adequate.

        I think is would be great if the Vermont Administration and IT leadership publish a report of errors/missed steps, corrections, current status and a road map for the future.

        This would server Vermont Government well, give Vermonter’s transparency and smooth the way to more efficient Government and give us supports of Universal Health Care for ALL Vermonter much higher confidence that we have the detail technical skills to implement and administer such a program.

        • Bob Elliot

          Bob, You didn’t miss the report, as you made a couple of comments on it. Perhaps you forgot about it.

  • Stuart Lindberg

    Unchain the free market. Allow Vermonters to purchase health insurance across state lines. Encourage health savings accounts. Competition is proven to drive down costs for consumers.

  • Bill Dunnington

    Every school of business and government in the country should use the VHC experience to date as a case study in policy-to-program failure. First prize for fiscal lunacy, we-can-do-it arrogance, piss poor management, wrong development approach, technical and PM incompetence, etc. Who in their right mind releases a new product except in very measured, iterative, scope and scale contained fashion – until the bugs are out?

    Maybe Vt could “lead” a fish-or-cut-bait health care workout – like a classic GE workout – after the supreme court rules, when federal money is a known entity. Time in advance to take stock, assess, plan. Then a fact-based, no holds barred, summit with stakeholders in the room. Electronic voting. Imagine – a summit with a decision. And a chance to be planful, hit reset and get on the right path. Who knows, maybe a new model….

    • Christopher Daniels

      there are numerous examples, both by private companies and governments, who roll out products prior to perfection. Microsoft (every Windows operating system) Apple (the most recent ios for mobile platforms. GM. Ford. Military weapons such as the space defense program. Aircraft such as the F-35. The list goes on.

  • Christopher Daniels

    when are we going to claw back money from CGI, the private, for-profit, company that built the failed exchange?

  • Christopher Daniels

    Folks like to rant here about accountability, the infallibility of the free market, and how the state does nothing right. Yet not a word on how this private, for profit company billed for a product if failed to provide. That’s called fraud.

    • walter moses

      I agree Mr. Daniels. Who has something to lose if the State goes after CGI? We may never know, but this won’t be forgotten.