H.524, the 2019 session’s major health care policy bill, got through the House Ways and Means and Appropriations committees by week’s end. But in the process, it was stripped of several provisions – most significantly the tax penalty for the state’s forthcoming “individual mandate.”
If that decision holds up, it means Vermont will have no means to enforce its mandatory insurance law. Rep. Janet Ancel, D-Calais and Ways and Means chair, said her committee wasn’t able to properly vet the penalty proposal before a Friday deadline for financial bills.
“Some of it’s just timing – it’s a really complex structure and, quite honestly, we didn’t feel that we had enough time to nail it,” Ancel said. “I think the committee was probably split on whether we should do it at all.”
The House Health Care Committee on March 14 approved H.524 as a way to address current concerns about the health insurance market and to seek solutions for improving health care affordability in the future.
Some key provisions of the bill remained intact after the bill advanced on Thursday and Friday through the House’s “money” committees.
That includes a change that could essentially eliminate association health plans from Vermont. Those plans are catering to small businesses after a regulatory expansion last year by the federal government, but some worry that they’ll destabilize the insurance market by pulling customers from exchanges like Vermont Health Connect.
H.524 contains a provision dubbed the “look-through” that will remove an important regulatory and financial advantage for association plans. The expected effect is that associations will cease to exist, officials say.
Business groups have pushed back against the proposal. And on Friday, Rep. Peter Fagan, R-Rutland and the Appropriations Committee’s ranking member, asked why officials shouldn’t study the insurance market further “and then make a determination based upon that going forward, instead of cutting the association health plans off at the knees?”
Rep. Lori Houghton, D-Essex Junction and the House Health Care Committee’s ranking member, said waiting could cause enrollment in association plans to grow further – thus making it harder to take regulatory action.
“It was a very hard decision for the committee,” Houghton said.
The bill also puts several protections that exist in the federal Affordable Care Act into state law, including a ban on restricting coverage for pre-existing health conditions.
But the individual mandate penalty, the most significant portion of H.524, has been deleted.
The Legislature last year enacted a mandatory health insurance law to take effect on Jan. 1, 2020. It was left up to lawmakers this session to decide how to enforce the mandate, and there’s been little agreement about how to do that.
House Health Care endorsed an income-based financial penalty modeled after the federal penalty that has expired. The administration of Gov. Phil Scott has opposed that strategy.
Ways and Means members unanimously ditched the penalty on Thursday. Ancel noted that the bill still requires Vermonters to tell the Tax Department whether they had insurance the previous year, and that’s “a step in the right direction.”
She also said legislators aren’t ruling out imposing a penalty at some point in the future.
“This is step one in a process,” Ancel said. “I think a penalty makes the mandate much more meaningful, so I don’t disagree about that. But the fact that it isn’t in this version of this bill at this moment doesn’t mean it will never happen.”
The Tax Department is pleased that it’s not happening right now.
“We’re happy and strongly supportive that there’s not a financial penalty collection process that we have to get in front of,” Tax Commissioner Kaj Samsom said.
It’s “not a Ways and Means issue,” she said.
Similarly, the House Appropriations Committee mostly stuck to issues concerning state spending.
At the request of House Health Care, Appropriations members deleted two sections of a health insurance affordability study to be conducted by the Agency of Human Services. Notably, one of those sections was supposed to determine how to provide all Vermonters with access to low-cost primary care.
Both sections would have required expensive actuarial analysis, officials said.
The committee left intact other portions of the affordability study as well as a report on how Vermont’s insurance market should be structured. That latter report, to be conducted by a consultant, is expected to cost about $100,000.
House Appropriations voted 7-4 to advance H.524. The bill now will go to the full House for consideration.
