The House health care reform package has been revised downward to $52 million, according to figures from the legislative Joint Fiscal Office posted Friday.
The package is supported by a 0.3 percent employer payroll tax, which is expected to raise $39 million, plus a 2 cent per ounce excise tax on sugar-sweetened beverages, which would generate $31 million.
VTDigger and others reported the package would be close to $70 million but that figure did not include the repeal of the employer assessment. The assessment is a penalty on employers who do not offer health insurance or do not offer health insurance that employees can afford. The state would forgo $18 million in revenue if the employer assessment is repealed.
However, the bill, H.481, uses only $47 million in state money to pay for its health care initiatives, leaving a potential $5 million in additional revenue to shore up the state’s $113 budget deficit. Much of that spending is eligible for a federal match through Medicaid, bringing total health care spending from the package to $91 million. The governor’s original 0.7 percent payroll tax would have yielded $190 million for health care spending.
The above figures are annualized, and represent revenue and spending for a full year. The payroll and excise taxes and the repeal of the employer assessment would go into effect on Jan. 1, 2016, halfway through the fiscal year.
Money in the House Health Care bill would pay for the following:
• $8.8 million in additional cost sharing subsidies to reduce the out-of-pocket costs of health plans sold on the Vermont Health Connect exchange. Rep. Mitzi Johnson, D-Grand Isle, chair of the House Appropriations committee, has proposed cutting $1.5 million out of the same subsidy program to help balance the budget. (The $8.8 million again is annualized, so the proposed cut would mean a net of $2.7 million for cost-sharing subsidies in FY ‘16).
• $23.2 million to raise Medicaid rates in a targeted attempt to reduce the costs shifted by medical providers from the government program to commercial insurance. The Shumlin administration initially wanted to invest $51 million in the reduction plan, which the governor promised would decrease private premium growth by 5 percent. The more modest investment would reduce premium growth by 2.34 percent, according to the administration. That falls short of bringing Medicaid payments in line with Medicare, which officials had said would help correct structural inequity in health care payments, and better position the state to apply for a federal waiver to set Medicare payments. The waiver would allow the state to incorporate Medicare into payment and delivery reforms already underway for Medicaid and commercial insurance.
• $13.8 million in other Medicaid rate increases. These include $11.3 million to support nonprofits that provide mental health, disability and substance abuse services as well as minor rates increases for a limited range of related services. The agencies say low Medicaid rates make it difficult to retain staff. Another $2.5 million would go to rate increases for home health agencies. Both are funded at the same level in the House bill as the governor’s proposed budget.
• $4 million to increase payments to providers who participate in Vermont’s Blueprint for Health managed care program. The program is credited with reducing costs and improving outcomes for patients with chronic illnesses. Participating medical practices haven’t seen an increase in the program’s monthly payments since 2008.
• $3.5 million to increase the Green Mountain Care Board’s budget. That money is meant to strengthen its hospital budget and insurance plan rate review processes, and allow the board to help Vermont apply for the aforementioned federal waiver. The bill also places Vermont Information Technology Leaders, a nonprofit primarily backed by public money that seeks to bridge the divergent medical records software used by providers in the state, under the board’s control. Some of the money includes one time study costs and increases the board’s budget by $3.3 million going forward.
• Restores $300,000 in state funding for the Health Department’s health care worker student loan repayment program. That money is eligible for a $400,000 match, but is cut in the governor’s proposed budget.
• $250,000 to support home health services; $200,000 for a study and report on making sure every Vermonter has access to publicly financed primary care; restores $40,000 in funding for Legal Aid’s Office of the Health Care Advocate cut in the governor’s proposed budget.
• Creates a task force to study what it will take for Vermont to achieve universal health coverage (costs associated with per diem for task force members are undefined). Requires the Agency of Human Services to create and maintain a registry of mental health and substance abuse services for use by primary care doctors (costs associated with the registry are expected to be found in existing resources).
• $4.1 million in implementation costs for the payroll and excise taxes in FY ‘16 and $1.2 million in out years (includes the state’s payroll tax expenses as an employer). The FY ‘16 costs are offset by $4.3 million in employer assessment collections prior to its repeal.
The package must earn the approval of the tax levying Ways and Means Committee, and the Appropriations Committee before it can come to a vote.
A sugar-sweetened beverage tax failed narrowly in Ways and Means last year. Interest groups on both sides have spent heavily and lobbied hard on the issue, and the committee’s deliberations on it are likely to draw attention and scrutiny.
