The Vermont State Employees’ Association is gearing up for a fight with Gov. Phil Scott’s administration over whether retired state employees should be moved over to a private Medicare Advantage plan.
State officials say such a switch, which could come Jan. 1, 2023, at the earliest, would maintain the same level of coverage that retirees currently enjoy and save them an average of 20% on their premiums. The state and retirees together would save about $9 million a year, according to Beth Fastiggi, commissioner of the Vermont Department of Human Resources.
“It's designed to mirror our current plan, but the Medicare Advantage actually provides equal or better coverage. So savings and better coverage: that's really what I would like to have for our retirees,” she said.
Medicare Advantage plans provide Medicare benefits to retirees through private insurers. These plans often also provide supplemental coverage not offered through traditional Medicare — and at a lower cost — but critics charge that insurers make the numbers work by aggressively denying coverage when seniors file claims.
The union echoed these concerns and argued that the administration was using an end-run around the collective bargaining process, which requires retirees to have access to the same health benefits as active state employees.
“Our retirees trust their bargaining teams more than they trust the private insurance industry,” said Steve Howard, executive director of the Vermont State Employees’ Association. “We want to maintain collective bargaining and not privatize this benefit out to an industry that is renowned for denying health care services to people when they need it the most.”
Medicare Advantage plans have drawn the ire of providers and seniors’ groups and received growing scrutiny from the federal government. The VSEA distributed a list of articles to their members that included coverage from the New York Times of a recent report from federal watchdogs that found that tens of thousands of people enrolled in such plans are denied necessary care each year.
State officials freely acknowledge that Medicare Advantage plans are receiving negative attention. But they say there’s a difference between the plans being aggressively marketed to individual seniors and the plans governments can negotiate on behalf of their retirees.
“A lot of the negative information regarding Medicare Advantage is not necessarily regarding group Medicare Advantage plans. It's usually the individual Medicare plans on the market that you see various celebrities pitching on late-night TV,” Fastiggi said.
Individual seniors shopping for plans are essentially “buying what they're selling,” Fastiggi said. But in this case, the state can request certain terms, “and then the providers provide us proposals on how they're going to do that.”
State officials argue they are following their contract with the union, which they say dictates what share of health insurance each party must pay and what benefits a plan should cover — but not specifically who the vendor is. The union emphatically disagrees.
“We're gonna fight with everything we have,” Howard said. “If we have to go to court, we’ll go to court.”
Fastiggi also noted that the state is only the latest in a string of large employers — public and private — to make the switch. On Jan. 1, for example, the board of the Vermont State Teachers’ Retirement System moved retired educators who were Medicare-eligible over to Vermont Blue Advantage, a Medicare Advantage plan offered by BlueCross BlueShield. The move impacted about 6,700 retirees, according to the Vermont Education Health Initiative.
“The bottom line for me is that the benefits are the same or better, and … retirees are experiencing a 38% average reduction in their monthly premiums,” Vermont Treasurer Beth Pearce said in an interview Friday. “So we're talking about more for less. Which I think is a very good thing.”
Tim Duggan, director of the Vermont Retirement System, said that the change is going well so far. And he said that’s to be expected, given that such group plans are designed in response to an RFP process and then overseen by professional staff.
“There's a level of accountability that these providers have to us, to get a sizable book of business that frankly I think wouldn't be found in the individual marketplace,” he said. The “Joe Namath plan from late-night TV,” he added, doesn’t “have experts working to ensure that their insurer is operating to spec.”
There are now a large number of Medicare Advantage plans available to Vermonters, including those offered by BlueCross BlueShield of Vermont, United HealthCare, Cigna, MVP HealthCare, Centene, Humana and Aetna. Nationally, nearly half of all Medicare-eligible Americans are now enrolled in private plans through Medicare Advantage.
Mike Fisher, the state’s health advocate with Vermont Legal Aid, said he’s generally concerned about what the explosive growth in Medicare Advantage plans means for the stability of the Medicare Trust Fund.
But more locally, Fisher said Legal Aid is worried that more Vermonters are now finding themselves in plans that exist “completely outside of state regulation,” since Medicare Advantage plans are fully federally regulated products.
If Legal Aid has concerns about traditional BlueCross BlueShield plans in Vermont, for example, it can go to state regulators, Fisher said. But with Medicare Advantage plans offered in state by the same insurer, he said, Legal Aid must take its complaints to the Centers for Medicare & Medicaid Services, or CMS, where it’s “very hard to get any kind of regulatory response.”
Meanwhile, he said, “we hear concerns all the time from Vermonters who have no doctors, no providers, in their community that are in-network or struggle with more prior authorizations, more barriers to getting care.”
Clarke Collins, deputy director of benefits and wellness for the state’s Department of Human Resources, said that while Fisher was generally correct, he believed that these particular plans would receive the same level of oversight from the state’s Department of Financial Regulation as is provided with retirees’ current plans.
National organizations representing health care providers have also criticized Advantage plans, and specifically their use of prior authorization — a requirement by insurers that doctors obtain approval from plan managers for certain treatments before they can be provided to patients.
Both the American Medical Association and the American Hospital Association are heavily lobbying Congress to impose stricter oversight of Medicare Advantage through CMS. A bill to do so, the Improving Seniors’ Timely Access to Care Act, passed the U.S. House earlier this month.
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