[S]tate lawmakers are fast-tracking a bill designed to keep health insurance costs stable despite a controversial federal subsidy cut ordered by President Donald Trump.
The House on Tuesday gave preliminary approval to S.19, which has been dubbed the “silver-loading solution.”
It’s a complicated set of maneuvers meant to preserve $12 million in federal health plan subsidies that benefited 12,000 Vermonters last year.
“This is not the path we would have chosen,” said Rep. Tim Briglin, D-Thetford and ranking member of the House Health Care Committee. “I think our hand was forced by the Trump administration.”
At issue is an Affordable Care Act feature that requires insurers to offer reduced-cost plans to customers with incomes that are less than 250 percent of the poverty level.
Insurance companies still have to offer such plans. But in October, Trump ended the federal subsidies – called cost-sharing reduction payments – that reimbursed insurers for providing the lower-price coverage options.
That triggered fears that insurers simply would spread their newly unsubsidized costs “all across the board,” raising premiums for everyone, said Rep. Bill Lippert, D-Hinesburg and House Health Care Committee chairman.
One Blue Cross Blue Shield estimate said health insurance plans across the exchange could go up by 2 percent as a result, Briglin said. That would equate to an additional cost of $300 for a $15,000 plan.
The silver-loading solution is a way to combat that. Described by Briglin as a “countermeasure,” the proposal takes its name from the silver-level plan on the Vermont Health Connect exchange.
The proposal has two parts.
The first authorizes insurers to raise premiums on silver plans in order to cover for the lost federal subsidy. But those higher prices then would be “fully offset for qualifying consumers by a different federal subsidy – the advanced premium tax credit,” Briglin said.
The advanced premium tax credit is available to everyone who had qualified for the now-defunct cost-sharing reduction. So state officials are trading one subsidy for another, and “the qualifying individual or family would incur no additional cost” for health care, Briglin said.
Lawmakers said Vermont is not alone in pursuing this solution. “What we’re doing in this bill is something that 37 other states have also done,” Briglin said.
It’s possible that federal officials will disapprove of the new subsidy strategy and try to squelch it. But Rep. Ann Donahue, R-Northfield and House Health Care Committee vice chairwoman, said there’s a “fundamental difference” because the previous subsidy went to insurers while the new funding source is directed to individual consumers.
“Hopefully, (the federal policy) won’t get changed again,” Donahue said.
The second part of the silver-loading solution was the subject of Tuesday’s vote. S.19 creates a nearly identical, low-cost silver-level health care plan to be offered outside the state’s insurance exchange for customers who don’t qualify for federal subsidies.
The target audience for that benefit includes “a lot of small businesses and families,” Briglin said.
The alternate silver plan is necessary because, due to pricing-structure changes that would be implemented under the silver-loading solution, those who don’t qualify for federal tax credits would be paying an artificially inflated price if they tried to buy a silver plan on the exchange.
In spite of the convoluted setup, “the net result for consumers in Vermont is essentially no increase in costs,” Briglin said.
S.19 already has passed the Senate and requires one more House vote. The goal is to get it to the governor quickly, Lippert said, because state regulators already have begun planning for 2019 health insurance policies and the silver-loading solution would take effect that same year.
“This is a proposal that has been brought to the Legislature unanimously by the Green Mountain Care Board, the Department of Vermont Health Access, the Office of the Health Care Advocate, Blue Cross Blue Shield and MVP,” Lippert said.
“Everyone has come together and said, ‘This is what we need to do. And more importantly, we need to do it now.’”
Trump’s subsidy cut came too late for state officials to implement any cost or structural solutions for the current year. But that doesn’t mean insurance costs went up, Briglin said, because insurers agreed to eat the cost of the lost subsidy for one year.
“They’re going to have to essentially accept the losses and use their reserves to pay for that cost in 2018,” he said.
On a side note, Trump’s subsidy cut is the subject of an ongoing legal challenge: Vermont is one of 18 states suing to reverse the decision.
