Lt. Gov. Phil Scott, senators explore alternative to Vermont Health Exchange

Lt. Gov. Phil Scott led a mini fact-finding mission to Rhode Island on Monday to learn more about components of the Connecticut health care exchange that could help Vermont save money.

The cost of fixing the dysfunctional Vermont Health Connect website will be roughly $200 million, and maintaining the state’s health care exchange on an annual basis will be about $51 million a year.

Gov. Peter Shumlin last month said he will pull the plug on the customized website if contractors can’t develop proper functionality for the site with deadlines at the end of May and in October. Since then, various alternatives have been floated, including moving the state’s system to the federal exchange.

Scott and lawmakers are looking for ways to cut annual costs associated with the exchange, which could have an ongoing impact on the state’s budget. To that end, Scott brought along Sens. Tim Ashe and Jane Kitchel for an exploratory meeting with Connecticut officials who recently helped Maryland save money on its exchange.

The typical cost of maintaining exchanges in other states is between $20 million and $30 million.

Scott, Ashe and Kitchel are interested in exploring a regional effort to improve Vermont’s exchange. Scott learned about Connecticut’s interest in sharing exchange components at a recent lieutenant governor’s meeting.

“I was thinking about whether there could be another avenue we could take if our exchange doesn’t meet expectations,” Scott said. “Maybe there’s another approach rather than the federal system. Maybe there’s a way to work with other states.”

Nancy Wyman, the lieutenant governor of Connecticut, explained that her state’s exchange program has components built by Deloitte that could be used by Vermont, including the “shop” or web marketplace for small businesses that buy into the exchange. Vermont has yet to build this portion of its exchange. Contractors for the state are still working on building basic functionality for the Vermont Health Connect website. (Anya Rader Wallach, who had been involved with the Shumlin administration’s health care reform efforts but now serves as the head of the Rhode Island exchange, was also at the meeting.)

In addition, it’s possible that Vermont could save money by bidding out its call center service with other states that use the vendor Maximus.

Kitchel compared a more regional approach for the exchange to the state’s adoption of the food stamps debit card known as an EBT some years ago. Vermont worked with Maine and New Hampshire to develop the system, which relies on technology and interfacing with financial institutions.

“For one state to do it by itself wasn’t feasible, but three states pooling resources made it manageable,” Kitchel said.

Ashe said it was helpful to see what other states are doing. “I think it raised questions more than it provided answers, but there are opportunities for potential savings by working together with other states and that seemed possible,” Ashe said. “We don’t know all the complications, but things like call center contracts particularly if we are using the same vendor, might be opportunities.”

Last year, Mark Larson told the Senate Finance Committee that the exchange would cost the state $14 million a year. Ashe and others on the committee were aghast at this year’s $51 million price tag.

“So then to come back this year and have $26 million more, that’s the piece in terms of fact finding we need to be doing that kind of due diligence,” Ashe said. “If you just think about our budget gap, some people say we have all these structural spending problems but if you think about it, we’re losing $59 million a year on Internet sales taxes, and then you’ve got a $12 million jump in cost of operating exchange. That’s not a structural problem, that’s a technological fiasco.”

Scott said he had a debriefing with Justin Johnson, the secretary of the Agency of Administration, and there is interest from the Shumlin administration in exploring the Connecticut model further.

“If the governor truly does pull the plug, we have to consider all the options and I want us to be at the table so we can to go in a direction that’s beneficial in the long run,” Scott said. “Maybe there is nothing there for us, but nothing ventured, nothing gained and more information is better in these times when we have to be realistic about the fact that our exchange isn’t functioning and hasn’t been from the beginning and there is a real possibility we’ll need to do something else.”

Anne Galloway

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