[I]n the wake of President Donald Trump’s cutoff of federal funding for a health insurance subsidy in October, state officials, insurers and lawmakers are considering a plan to ease the impact on Vermonters.
Lawmakers anticipate moving quickly to allow reworking of some health care plans, as the insurance rate-setting process for next year is set to kick off within weeks.
A Trump executive order in October ended federal funding for a subsidy, part of the Affordable Care Act, aimed at stabilizing insurance premiums and keeping costs manageable for consumers.
However, a mandate in federal law continues to require insurers to offer a silver-level health plan at reduced cost to people whose income is up to 250 percent of the federal poverty level. Without federal dollars, insurance companies are left to bear the cost of that benefit themselves, which is expected to drive up premiums for all health plans.
Now, key players in Vermont’s health insurance sector are backing a proposal meant to prevent across-the-board increases because of Trump’s action.
The proposal would take advantage of a different federal subsidy — the premium tax credit — to make up for the loss of cost-sharing funding.
According to the Department of Vermont Health Access, Vermont insurers have received about $12 million from the federal government in cost-sharing reduction subsidies.
Under this scenario, premiums would increase only on silver-level health plans sold on Vermont Health Connect. Blue Cross Blue Shield puts that increase at 10 percent. Customers would be shielded from paying the higher rates themselves.
For most consumers, the premium tax credit would cover the rate increase, according to the plan’s architects. The credit is available for people with incomes up to 400 percent of the federal poverty level. Based on the 2017 federal poverty level, the credit is available for individuals with an income up to $48,240; for a family of four, the cutoff is $98,400.
People who buy silver plans through Vermont Health Connect but aren’t eligible for the tax credit — there are about 2,195 such customers now — would pay the full cost of the higher premium if they purchased their plan through the exchange.
But to help keep costs down for those people, the insurance companies would develop a similar plan with lower premiums that would be available directly from the companies. Lawmakers’ authorization is required for the insurance companies to develop parallel silver-level plans to offer outside Vermont Health Connect.
Only Vermont, North Dakota and Washington, D.C., did not make changes in the wake of the October executive order. According to Blue Cross Blue Shield, 37 states implemented a plan similar to the one lawmakers and health care officials are considering in Vermont.
Blue Cross Blue Shield initially drew up the plan, which has been endorsed by the state’s other major insurance company, regulators, advocates and other key stakeholders.
“We fully support it,” Susan Gretkowski of MVP Health Care told the House Health Care Committee on Wednesday. “We do feel it is the best way to protect each group of people in the silver level.”
Chief Health Care Advocate Mike Fisher, of Vermont Legal Aid, also supports the plan.
“It will avoid many Vermonters seeing increased premiums,” he said.
It’s important for people to be aware of available subsidies, Fisher said.
He encouraged people to pay close attention to the amount they must contribute to their insurance plan when they are enrolling through Vermont Health Connect. Though the total costs may be high, their contributions will be much lower, he said.
“The sticker shock of the total premium scares people, understandably,” Fisher said. “It’s really important that people look at what their family contribution requirement is, and that will be unchanged.”
He and others emphasized the need for a campaign to raise public awareness of the change. Rep. Bill Lippert, D-Hinesburg, chair of House Health Care, asked representatives from the insurance companies if they would reach out to customers who would be affected by the changes.
Lippert said it is important to recognize that insurers, regulators, the health care advocate and the Department of Vermont Health Access have all backed the proposal.
“That speaks volumes for me,” he said.
Lippert said the situation is not one that most Vermont policymakers would choose but that they are working in the landscape of a “shifting health care environment” at the federal level.
“We’re faced with the Affordable Care Act being taken apart piece by piece, and how do we protect Vermonters in the course this change,” he said.
The Senate Health and Welfare Committee heard testimony on the proposal this week as well.
Lippert anticipates the Legislature will move forward with a measure shortly. The proposal may be included in the annual budget adjustment bill or move forward separately.
Sen. Claire Ayer, D-Addison, chair of the Health and Welfare Committee, said she and her committee plan to move the proposal out attached to a piece of legislation shortly so the Senate Finance Committee can begin its review.
She said she does not see major issues with the proposal.
“My only concern is at some point the feds are going to catch up with it, and we’ll have to do something else,” Ayer said.
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