Insurance plan designs recently approved by the Green Mountain Care Board will increase out-of-pocket costs for many individuals in the Vermont Health Connect exchange starting next year.
Costs are going up because the federal government updated its calculation of a health plan’s actuarial value — the percentage of total average costs covered by the plan — in order to reflect increasing health care costs overall, or essentially inflation.
In order to keep the health plans offered on the exchange within the actuarial values specified by the Affordable Care Act, state regulators had to adjust the co-pays, deductibles and coinsurance of certain plans.
At the same time, because of budgetary maneuvering at the Statehouse, the fate of subsidies that help income-eligible people cover those costs is uncertain.
Vermont is one of two states that offers additional subsidies on top of what’s covered by the Affordable Care Act. However, the budget passed by the House Appropriations Committee funds the state cost-sharing subsidies through half of the coming fiscal year and not at all going forward.
That decision was made concurrently with the House Health Care Committee’s passage of a health care package that increases subsidies using new revenue from a payroll tax and an excise tax on sugar-sweetened beverages. The health care package, H.481, is now before the Ways and Means Committee. If the increase for cost-sharing subsidies is pared back or scrapped, people’s out-of-pocket costs won’t be decreased and in some cases could see an increase.
The Green Mountain Care Board’s approved changes only impact the cost-sharing of silver and bronze plans. Cost-sharing subsidies are only available for silver plans, so out-of-pocket costs for bronze plans will increase regardless of what lawmakers do. The bronze plan medical deductible will increase by $500 to $4,000, and the prescription deductible will increase by $200 to $500. Deductibles are the amount one must pay before insurance kicks in. The maximum amount someone can pay out-of-pocket on a bronze plan will go up $500 to $6,850.
Cost-sharing subsidies are available to people between 133 and 300 percent of the federal poverty line who select a silver plan. That works out to annual income of $15,660 to $35,208 for an individual, and between $32,253 and $72,750 for a family of four.
Fifty-two percent of individuals in the exchange are eligible for cost-sharing subsidies, and of that group, 70 percent are currently receiving them. The total number of people who will receive subsidies this year is not known, as the exchange is still processing an enrollment and renewal backlog. Total enrollment is expected to be close to 35,000.
The subsidies’ value is tiered based on income, and if state cost-sharing subsidies are cut altogether, as the House Appropriations Committee budget does, people at the low end won’t be impacted.
For people in the middle and at the top of the subsidy eligibility threshold it means medical deductible would increase by $100 to $2,000 and the prescription deductible will increase by $50 to $150. The out-of-pocket maximum would increase by $500 to $4,500.
Advocates for the underinsured have consistently raised concerns about the current out-of-pocket costs for Vermont Health Connect plans, and the changes this year have increased the burden some will face.
That makes it “even more imperative” that the increase in cost-sharing subsidies in H.481 is ultimately funded, said Peter Sterling, with the health care advocacy group Vermont Leads, in an email. H.481 would essentially hold those receiving cost-sharing subsidies harmless from the federal changes, and provide an increase on top of that for some income levels.
Restoring the cut from the Appropriations budget would cost $1.5 million on an annualized basis, and fully funding the increase in H.481 would cost $8.9 million.
The exchange health plan designs are approved separately and in advance of the premiums, which will be approved later this year after the participating insurers submit their requests to the board. It took the board six weeks of back-and-forth with the Department of Vermont Health Access to approve the plan designs, which has compressed the rate review timeline.
Carriers have until May 15 to submit their rate requests, which will include premiums for exchange plans, and the board must approve them by August 13.
