When a 2012 ruling from the U.S. Supreme Court and, ultimately, the re-election of President Barack Obama firmly cemented the future of the Affordable Care Act, Vermont was quickly moved into the list of states that were ?well equipped? to move forward. After all, Vermont, a state with a generous healthcare safety net program, had already declared it was moving toward a single-payer healthcare system, with a goal of 2017 implementation.
Vermont planned to use the ACA as a launching pad of sorts for its move to single-payer, and was already well into designing its federally mandated health insurance exchange, Vermont Health Connect, when Obama was re-elected in November 2012. So that means it has been smooth sailing for Vermont and its single-payer healthcare pilgrimage, right? Well?not exactly. And to be fair, it's not that Vermont officials expected a smooth ride, but the realities?and complexities?officially hit home as the state moved further into the design of its health benefits exchange.
Exchanges are the virtual insurance marketplaces set up to help the uninsured determine their eligibility for Medicaid or for premium subsidies, and then choose a standardized insurance package among various options. To implement the exchange, Vermont will be eliminating its Catamount Health program, a state-mandated product with sliding-scale subsidies available to Vermonters whose gross household income is up to 300 percent of the federal poverty level. In Catamount Health, monthly premiums for individuals range from $60 to $208.
With the advent of the exchange in 2014, those with incomes of 133 percent to 300 percent FPL will move from Catamount Health into the exchange, and when doing the math, state officials realized that around 20,000 beneficiaries would be facing higher premiums and deductibles, and higher out-of-pocket costs in general. In Catamount Health, the annual in-network deductible is $500 for single coverage, and then 20 percent coinsurance until the out-of-pocket maximum is met. Annual out-of-pocket costs for deductibles and coinsurance combined are $1,050 for single coverage and $2,100 for a family plan. That will not be the case in the exchange, as these numbers will vary.
Advocates expressed concern that higher costs in the exchange could lead to some individuals dropping coverage altogether if they encounter a price shock. Peter Sterling, director of the state advocacy group Campaign for Health Care Security, theorized that if beneficiaries ultimately see the exchange as problematic and unpopular due to higher costs, it could undermine public support for the state's hopeful move to a single-payer system.
In his Jan. 24, 2013, budget address to the state legislature, Vermont Democratic Gov. Peter Shumlin laid out a plan to partially defray some of those costs. Shumlin plans to allocate $10.3 million, raised from a 1 percent tax on health insurance claims, to help offset some of the cost increases for former Catamount Health beneficiaries. However, this new state-allocated premium assistance program will not keep costs from rising for all beneficiaries, as out-of-pocket maximums could increase by around $2,000 for some.
Shumlin's plan didn?t appease everyone, of course, but it is about the best that could be hoped for. Robin Lunge, director of Health Care Reform for the Shumlin Administration, told Vermont Public Radio that on average, only around 30 percent of Catamount Health enrollees hit their annual out-of-pocket cap as is, so using state funds to target premium assistance would prove the most beneficial.
The true impact won?t be known, of course, until exchanges go live in 2014. But Vermont's case does show that even the most ?well equipped? of states can find the intricacies of healthcare reform difficult to navigate.
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