New health care bill could cost Vermont $200 million

Al Gobeille

Agency of Human Services Secretary Al Gobeille. Photo by Andrew Kutches/VTDigger

Officials at the Vermont Agency of Human Services say a bill currently moving through Congress could cost the state $200 million per year in federal funding starting in late 2019.

That staggering sum is the first estimate of potential losses the state could face if the proposed American Health Care Act is enacted. The state currently spends $1.7 billion in federal and state dollars on the Medicaid program.

Al Gobeille, the secretary of the Agency of Human Services, said without that $200 million per year, the state could be forced to lower Medicaid payments to doctors and hospitals; reduce benefits for Medicaid patients; and cut other health programs that receive Medicaid funding.

“There’s not a lot of great options, and that’s why this is so serious,” he said at a meeting with reporters Friday.

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Affordable Care Act: The 2010 law mandates that every individual buy insurance. The law created (1) health care websites that allow individuals who don’t get insurance through an employer to buy coverage (2) subsidies for people making between about $15,000 and $48,000 (3) an expansion of the number of people eligible for Medicaid.

American Health Care Act: A bill proposed that would replace the Affordable Care Act. The bill keeps the health care websites, but does not mandate that everyone buy insurance. The legislation would (1) give some individuals tax credits to pay for health insurance (2) allow insurance companies to hike rates 30% over a 12-month period for individuals whose coverage lapses for more than 63 days (3) reduce the amount of money the federal government gives states to pay for Medicaid starting in fiscal year 2020.

Gov. Phil Scott also told reporters Friday he was concerned about tens of thousands Vermonters losing coverage and the possible loss of subsidies under the proposed Republican plan.

“At first blush, this appears would have a detrimental effect on Vermont, “ Scott said. “We take this seriously.”

About $2.5 million of that $200 million is federal money that the Vermont Medicaid program would have paid to Planned Parenthood when Vermonters go to a clinic for reproductive services such as cancer screenings and wellness visits. The proposed bill cuts all federal funding to Planned Parenthood.

“Women’s health care is a priority for the governor,” Gobeille said. “This bill as proposed doesn’t help that. That’s a problem for us … The question becomes, ‘What does the state do about that?’ and that’s unclear at this time, but I believe it’s a priority.”

Additionally, the Department of Vermont Health Access says the federal legislation cuts subsidies for Vermont Health Connect from about $100 million to between $80 million and $95 million.

Gobeille said that means many Vermont families would need to pay thousands of dollars more per year for health care in the commercial insurance market. His team outlined three scenarios for low-income families:

• A 27-year-old making $25,305 currently pays just under $3,000 per year for health insurance, but would pay more than $5,500 per year if the new bill is enacted.
• A two-person household making $37,144 currently pays about $6,200 per year for medical coverage, but would pay nearly $9,800 per year under the American Health Care Act.
• A family of four making $51,020 currently pays just under $5,000 per year for health insurance, but would pay more than $9,000 per year under the new law.

Gobeille’s team also described how higher-income people would benefit:
• A 27-year-old making $75,000 per year currently doesn’t receive any subsidy for health insurance, but could get a tax credit of $2,000 per year under the proposal.
• A 40-year-old making $75,000 per year could get a tax credit of $3,000 per year.
• A 60-year-old making $75,000 per year could receive $4,000 per year.

“Vermonters have been clear with us that the Affordable Care Act to many has not been affordable,” Gobeille said. “Making it less affordable will not encourage folks to remain signed up or get people to sign up, thus driving folks to become uninsured.”

Gobeille said that Vermont has the second-lowest uninsured rate in the nation (3.7 percent), behind Massachusetts, and the lowest uninsured rate for children. “We do not want to see that degrade, but this (bill) would head in that direction,” he said.

Gobeille said the only good thing about the new bill is it continues to give federal money to hospitals to provide charity care for people who are uninsured. He said the drafters of the bill kept the subsidy in place because they knew the new bill would knock people off health insurance plans.

“My biggest fear is that this is a tremendous opportunity for the United States and for Vermont to actually fix problems we all know we have with our current health care system, and we’ll just miss the opportunity,” Gobeille said.

Mike Fisher, the chief health care advocate for Vermont Legal Aid, said the proposed bill would cause “significant and predictable harm to Vermonters” and will result in fewer people with access to medical care.

“We know what happens when people don’t have the care they need,” Fisher said. “They get sicker. They lose their productivity. Their families suffer, and ultimately, we know they don’t live as long.”

He added: “The $200 million number is the kind of thing that makes me very concerned about how we’re going to be able to continue to give people a human level of care.”

The bill has already passed through two key committees in Congress, according to the New York Times.

AARP, which represents retirees, and the American Medical Association both oppose the American Health Care Act.

Erin Mansfield

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