[T]he House Health Care Committee has approved a wide-ranging bill that touches on three important and controversial topics – mandatory insurance, association plans and affordability.
The committee bill includes a financial penalty to enforce Vermont’s “individual mandate” when it goes into effect next year, and it lists who will be exempt from that mandate.
The bill also features a provision that, in an attempt to stabilize the insurance market, will strip a key advantage from the fledgling business of association health plans.
And it orders the Agency of Human Services to take an in-depth look at how to make health coverage “affordable for all” – an initiative that would include making inquiries with other states about establishing a “regional, publicly financed, universal health care program.”
Taking the bill as a whole, “we are trying to ensure that health care and health insurance is affordable and accessible over the long haul, as we look ahead,” said Rep. Bill Lippert, D-Hinesburg and the committee’s chair.
A significant portion of the bill is dedicated to the individual mandate, which the state Legislature approved last year and Gov. Phil Scott signed in May.
The requirement for Vermonters to purchase “minimum essential” health coverage takes effect Jan. 1, 2020. But it was left to legislators in this year’s session to determine how to enforce the state’s mandate and to decide who won’t have to comply with it.
On the enforcement front, the Health Care Committee decided to adopt a tax-based financial penalty to be paid by those who don’t obtain minimum coverage – despite the Scott administration’s opposition to that strategy. The committee’s proposal largely mirrors the now-expired federal penalty, with some tweaks.
For example, the former federal penalty was set at $695 per uninsured adult and $347.50 per uninsured juvenile, or 2.5 percent of annual household income – whichever was greater. Those penalties will apply in Vermont for households with annual income greater than 250 percent of the poverty level.
But the penalties will be halved for households with income between 138 percent and 250 percent of federal poverty. That provision was pitched by Rep. Lucy Rogers, D-Waterville, who said it was an effort “to address the fact that, for this income group, the penalty amount exceeds in many cases the amount that it could cost to (pay) a premium and is a much bigger percentage of their income.”
The penalty would be capped; for instance, those paying a percentage of their income would pay no more in penalties than the average premium in Vermont for a bronze-level insurance plan.
The version of the bill approved Thursday by the committee also details who will be exempt from the state’s individual mandate. Some of those exceptions are economic – there’s an affordability exemption based on how much coverage would cost relative to a household’s income, and there’s an exemption for households with income below 138 percent of the federal poverty level.
There also are exemptions for religious reasons; short gaps in coverage; members of Indian tribes; “hardships” as determined by the Department of Vermont Health Access; and nonresidents.
In a potentially controversial move, the Health Care Committee declined to continue the federal practice of exempting health care sharing ministries from the requirements of the individual mandate. Sharing ministries are groups – often religion-based – in which members make monthly payments, and that money is shared to cover the health care costs of other members.
Lippert said the committee didn’t exempt sharing ministries because “it is not insurance … they have no requirement to meet the essential benefits of health insurance.”
He stressed that the bill does not ban sharing ministries. But, if it passes as currently written, sharing ministry members in Vermont would have to obtain traditional health coverage or would face a financial penalty.
In addition to providing structure for the state’s upcoming individual mandate, the committee’s bill features a number of other health care provisions including:
• Encoding in state statute certain protections in the federal Affordable Care Act, including a ban on restricting coverage for pre-existing health conditions and an allowance for a child to stay on a parent’s insurance plan until age 26. Lippert said the idea is to provide “protections for Vermonters from the assault at the federal level on the Affordable Care Act.”
• Enacting the so-called “look-through provision,” which would eliminate an important regulatory and financial benefit of association health plans by not allowing small businesses and individuals to be treated as larger groups in the insurance marketplace. Business groups that participate in association plans have protested the look-through proposal.
• Mandating the Agency of Human Services to “develop a strategy for making health insurance affordable for all Vermont residents.” Elements of that study would include establishing a maximum percentage of income that a person or family should pay for health care; a program for reduced-cost primary care; and the potential for partnering with other states on universal, government-funded health care.
• Two other studies would examine potential changes to the structure of Vermont’s insurance market and the impact of Medicaid and Medicare on commercial insurance rates.
Lippert said the intent of those studies is to look ahead to determine “how we can increase affordability.”
The Health Care Committee’s vote on Thursday was 10-1 in favor of the bill. The sole “no” vote came from Rep. Brian Smith, R-Derby, who said he opposes the individual mandate’s financial penalty because “I could not bring myself to vote to take money out of Vermonters’ pockets.”
“An adult who’s trying to determine whether he or she wants to buy (health) insurance – it ought to be up to them,” Smith said. “We shouldn’t order them to get insurance and fine them if they don’t.”
Some who voted for the bill admitted misgivings about certain elements. Rep. Brian Cina, P/D-Burlington, also had sought to eliminate the financial penalty, and he had advocated for the committee to take a step toward a universal primary care program.
“Although I have concerns with pieces of this bill – specifically the individual mandate penalty piece – I’m going to support the bill because, in its entirety, what it’s trying to do is protect people,” Cina said.
Lippert noted that the committee’s bill now will move on to the House Appropriations and Ways and Means committees, where there will be opportunities for further testimony. He also said the committee will continue to investigate other initiatives aimed at reducing the financial burden of health care.
“Many of us would like to do more,” Lippert said. “And we still have more time in this biennium to try to see if we can’t find ways to strengthen access and affordability in health care.”
