Editor’s note: This commentary is by Rep. George Till, D-Jericho, who represents Chittenden-3 in the Vermont House of Representatives. He is a doctor.
[T]hings are not always as they initially appear.
You should be clear that the governor’s proposal relates to a change happening to teacher health plans throughout the state. This change is not dependent upon, nor due to the governor in any way.
The new plans are cheaper because they are less generous plans. The statewide savings estimate is $75 million. Of that, $48 million is anticipated to be needed to pay for the increased copay and deductible costs in the new plan. The remainder, if you believe the estimates, would be the $26 million, which has been the subject of much discussion.
The governor’s plan was to return $8 million to property tax payers and to usurp the other 70 percent for other purposes, namely the general fund and to cover a transfer of the liability for the state portion of current teacher retirement obligations to the education fund. The issue of statewide bargaining has no impact on whether the savings occur.
I am extremely skeptical that there will actually be the decrease in utilization predicted. If utilization doesn’t decrease to the extent predicted, the amount needed to cover co-pays and deductibles will be much higher than predicted and those “savings” won’t occur.
What the House passed instead was a provision that makes no change in bargaining, but directs 100 percent of the savings that actually do occur in teacher health care to be directly returned to the local community in the form of reduced property taxes. The money saved would be returned to the local community only after budgets were voted upon and approved. It can go to only one place, and that is to directly reduce property taxes. All of the savings, rather than just the 30 percent in the governor’s plan would come back to your property taxes. School budgets have been passed. Calculating budgeted versus actual spending on teacher health care will not be difficult.
Personally, I believe the $26 million is inaccurate. The health care contracts begin on Jan. 1, 2018. That means that only half the fiscal year would be included. In other words, it is not $26 million but $13 million we are talking about in 2018, even if the “savings” do materialize. Where do the “savings” come from? We have been told that because these plans are high deductible plans with HSAs or HRAs, teachers and their families will use fewer health care services. One could argue whether that is a good idea or bad idea, but the underlying question is whether data on this issue can be generalized to teachers. Here we have a highly educated group. They have been, and will continue to be, their own risk pool for pricing insurance plans. They are already a low utilization group for health care service; that is why their plans are already cheaper than exchange plans. I am extremely skeptical that there will actually be the decrease in utilization predicted. If utilization doesn’t decrease to the extent predicted, the amount needed to cover co-pays and deductibles will be much higher than predicted and those “savings” won’t occur.
I believe that just as with plans on the exchange initially, the price will increase rapidly in the first few years. I also believe that the governor’s plan to spend that “savings” before it actually happens is irresponsible. The House plan returns all of the savings to the property tax payers if the savings actually materialize.
