The Commons

Paying more for health care

Low-income Vermonters face sharp increases in insurance premiums under state exchange plan

Originally published in The Commons issue #182 (Wednesday, December 12, 2012).

—When the Green Mountain Care Board approved the core insurance plans for the state’s health benefit exchange, board members raised concern that the new insurance marketplace would leave some of Vermont’s most vulnerable residents in a precarious position.Several key lawmakers say they must deal with the impact of the fiscal fallout of the exchange on thousands of low-income Vermonters who now receive subsidized health care and will face higher out-of-pocket costs in the new system.“Front and center we need to continue to work on transition issues for people who are currently in VHAP (the Vermont Health Access Plan) or Catamount assistance and are moving into the health exchange,” said Rep. Mike Fisher, chair of the House Health Care Committee. “There are segments of that population for whom I’m concerned.”Exactly how many of these Vermonters will receive government aid at current rates is unknown.Gov. Peter Shumlin has acknowledged that some Vermonters will face steeper premiums and deductibles, but he told reporters recently he didn’t think the state had the money to make up the estimated $18 million difference.The exchange, Vermont Health Connect, is slated to go into full effect on Jan. 1, 2014. At that time, Vermonters above 133 percent of the federal poverty line who do not work for businesses with 51-plus employees will be required to enter the exchange. That includes roughly 17,000 individuals now covered by the state-subsidized health insurance plans Catamount and VHAP.If a person or family eligible for the exchange chooses not to buy health insurance, they will face tax penalties. But such disincentives might not be enough to convince some people to shell out more for less coverage.

A bad deal?

—Peter Sterling is director of the non-profit Vermont Campaign for Health Care Security and Education Fund, which helps to enroll Vermonters in Catamount and VHAP. He speculates that sending lower income Vermonters into the exchange with lesser coverage will deter them from participating.“In the exchange it’s clear that all enrollees in Catamount and VHAP, who have to enter the exchange, will pay significantly more in out-of-pocket costs than they do now,” said Sterling. “The exchange is not a good deal for these Vermonters, and I foresee a lot of problems getting them to enroll in the exchange.”To figure out how much more these Vermonters might pay for health insurance, Sterling and his crew at the education fund ran the numbers. Although the Green Mountain Care Board won’t approve insurance premiums for the exchange until this coming summer, Sterling and his team used premium caps mandated by the federal Affordable Care Act. They also used the annual 2013 out-of-pocket limits set by the federal government.According to education fund calculations, an individual making about $28,000 a year, or 250 percent of the federal poverty line, would pay more than $5,000 annually in the exchange if he or she reaches the out-of-pocket maximum. Currently, an individual enrolled in Catamount would only pay about $1,900 under such circumstances.A couple that makes a combined $45,000 a year, or 300 percent of the federal poverty line, can expect to pay almost $10,000 a year more than they do now, if they hit their out-of-pocket maximum. Right now, they would pay roughly $7,000 between premiums and out-of-pocket costs; under the exchange they would pay almost 40 percent of their annual income.At the board’s meeting last month, Department of Vermont Health Access Commissioner Mark Larson said that the state expects to save $10 million to $15 million on those Catamount and VHAP clients it will no longer subsidize. Currently, the state pays roughly 45 percent of their benefit, while Medicaid pays the rest.Donna Sutton Fay, an advocate for the education fund, says those savings should be applied to the $18 million gap in benefits for low-income Vermonters. “It’s a little bit troubling because the $18 million the governor is using … is not that different from the amount the state is saving,” Sutton Fay said. “When the governor talks about the state not having that money, it seems like those savings should be going to those people who are already enrolled in those subsidized programs.”Larson and Robin Lunge, Shumlin’s head of health care reform, said the state is not finished assessing the numbers. After Shumlin’s budget address in January, they plan to present legislators with final numbers and suggestions for dealing with this situation.“There are a number of ups and downs in the DVHA budget in 2013, and so we’re trying to holistically look at that before we come up with a final proposal for this or anything else in the 2014 budget,” said Lunge.

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