Vermont adjusts path toward universal coverage

But state leaders remain committed to obtaining a federal health reform waiver by 2017 that would allow a single payer-type plan.

By — Posted March 2, 2012

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Vermont is making significant progress toward implementing its own health insurance exchange, but transforming that marketplace into a truly universal health care program could prove to be very difficult, judging by recent compromises on the issue by Gov. Peter Shumlin.

The Vermont House of Representatives on Feb. 24 adopted a measure to implement a state health insurance exchange. The bill passed by a 2-1 ratio and heads next to the Vermont Senate for consideration. Shumlin has announced his support for the measure.

Also, the five-member body that state lawmakers created last year to implement the state's universal health care program soon is expected to choose mandatory minimum health benefits for insurers operating in its exchange as well as for many plans outside the exchange.

The national health system reform law requires states to operate their own health insurance exchanges by 2014. If a state does not establish such an insurance marketplace, the federal government will operate an exchange in the state. Employees offered inadequate or too costly health coverage through their jobs will have the option to purchase health insurance in the exchanges. These people will be eligible for federal subsidies if they earn 400% or less of the federal poverty level.

Shumlin and legislative leaders in early February signaled that they would implement the state's universal health care program -- Green Mountain Care -- more slowly than previously expected. The decision represents a compromise of Shumlin's earlier support for requiring as many people as possible to buy coverage through the exchange as soon as possible.

The governor and state lawmakers said they would exempt employers with 51 to 100 workers from mandatory participation in the state's health insurance exchange through 2016. Employers with 50 or fewer workers still would be required to participate in the exchange. Companies with more than 100 employees are exempt.

Shumlin administration officials have said the state's individual and small group insurance markets are so small -- Vermont's population is about 630,000 -- that requiring people in these markets to purchase health insurance in the exchange should reduce waste in the health system. However, mandating exchange participation for everyone starting in 2014 would have reduced businesses' choice of coverage.

Shumlin also offered new flexibility to businesses by supporting the inclusion in the exchange of the lowest-value plans permitted by the national health system reform law. These so-called bronze plans will pay 60% of a subscriber's health care costs. However, this means that most employees offered this coverage will not qualify for federal subsidies to purchase other coverage in the exchange.

"Our goal is to build an exchange that offers consumers maximum flexibility as allowed under federal law," Shumlin said in a statement.

His long-term goal still is to require everyone to purchase coverage through the exchange and transition to a single payer-style health system by 2017. "We feel strongly that the exchange is not the answer to all of Vermont's health care problems," Shumlin said. Moving to another system in 2017 would require the approval of the federal government.

Shumlin's recent health exchange decisions disappointed some universal health care advocates but drew praise from the Vermont Chamber of Commerce, which had requested the compromises.

The Vermont Medical Society supports expanding health insurance coverage to all Vermonters, but the society is concerned that the supply of physicians in the state may be inadequate to care for the newly covered, said Paul Harrington, the organization's executive vice president.

Several obstacles stand in the way of Shumlin's goal to implement universal health coverage in Vermont by 2017. The state needs new revenue streams to support Green Mountain Care, possibly including a payroll or income tax. The state also must make the program work with Medicare and self-insured employers, who generally are exempt from state coverage mandates. "Those are some pretty high hurdles to get over," Harrington said.

Vermont Republicans, who are in the minority in both legislative houses, are calling for Shumlin, a Democrat, to release a Green Mountain Care funding proposal in September, ahead of the November elections. But Shumlin probably won't begin working on a financing plan with state lawmakers until early 2013, said David Mannis, a spokesman for the Vermont Dept. of Banking, Insurance, Securities and Health Care Administration.

"Everything is on the table," Mannis said. "The idea is to come up with a coherent financing plan."

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