For the Week Ending January 25, 2013 

Governor Peter Shumlin announced his administration’s budget plan last week during a Thursday afternoon appearance before a joint assembly of the legislature. The speech focused on healthcare, education initiatives, changing the way Vermont delivers welfare benefits, and transportation and energy issues.

The FY2014 budget proposal includes an appropriation to increase Medicaid payments to providers by three percent per year and to establish a state subsidy in addition to federal subsidies that will be available to income-eligible Vermonters who purchase health insurance on the federally-mandated purchasing exchange beginning in 2014. Shumlin also proposed $643,937 to provide “hands-on assistance” to those signing up for coverage through the exchange.

The most highly anticipated health care news unveiled Thursday by the administration were their recommendations on how to finance the operation of the exchange when federal assistance runs out at the end of 2014 and the overdue release of a legislatively-required report on how to finance Green Mountain Care, the state’s single-payer, publicly-financed, universal coverage health care system slated to begin operation in 2017.

Administration officials began a series of appearances before legislative committees immediately after the Governor’s address to explain to legislators how the additional income-based state subsidies on the exchange would work, and how those subsidies would be financed.

Additional state subsidies

It became apparent last year that many of the low income Vermonters currently enrolled in the state’s VHAP and Catamount Health insurance programs would see their out-of-pocket costs increase in 2014 when those state programs cease to exist and those Vermonters transition to coverage in an exchange with lower federal subsidies than they had enjoyed on the state programs. The administration’s FY2014 budget proposal proposes a two-component solution for this dilemma: a recommendation to expand the ACA’s advanced premium tax credit by 1.5 percent and to extend the ACA’s cost-sharing reductions to more affordable levels. The premium reduction would assist Vermonters below 300 percent of the federal poverty level (FPL), covering nearly 41,000 Vermonters and costing the state $2.9 million for FY2014. The cost sharing proposal would lower out-of-pocket costs and provide assistance for those with incomes up to 350 percent of FPL, covering nearly 45,000 Vermonters and costing $1.7 million in state funds in FY2014. These additional premium subsidies and cost sharing reductions would apply to all income-eligible Vermonters who purchase through the exchange and not just those previously covered on VHAP and Catamount.  

The Medicaid Cost-Shift

The cost-shift is the amount of cost private payers pick up in additional charges from hospitals to make up for the shortfall in payments from Medicaid payments that cover only about 55 percent of the actual cost for medical services delivered.
The budget proposal calls for increasing Medicaid provider payments by three percent this year and an additional three percent in subsequent years, the first time Vermont will have a built in inflation factor for Medicaid according to administration officials. This increase will reduce the amount that private insurers will have to pay hospitals by about $24.4 million, according to the administration.

Financing the initiatives

The administration proposes increasing an existing one percent tax on medical claims by another one percent over FY2015-2016. The one percent would be phased-in over two fiscal years with a .5 percent increase in FY2015 and another .5 percent in FY2016. The money collected from the increase would be used to pay for the additional state premium and cost-share subsidies recommended for the exchange as well as the cost of administering the exchange beginning in 2015. Federal grants to Vermont are funding the start-up costs and the first year of operation of the exchange but states must establish a plan for sustainable funding for the administrative operation of the exchange beginning in 2015.

2017 Green Mountain Care financing report

Act 48 required the administration to submit a plan January 15th for financing the single-payer universal coverage Green Mountain Care program anticipated to begin operation in 2017. The administration contracted with UMASS Medical School Center for Health Law and Economics and the Wakely Consulting Group to develop a model for the single-payer reform plan and a number of alternative scenarios for financing the plan. The lengthy report they prepared was submitted to the legislature last week, but the administration ducked when it came to recommending a specific plan. The Governor has stated publicly that it makes more sense to make that recommendation closer to the 2017 date. Instead of a recommendation, administration officials used the report to tell legislative committees that the report again confirmed that moving to Green Mountain Care could cover the uninsured, increase benefits to the uninsured, and still cost less than the current system. The lack of a recommendation combined with the PR slant did not go over well with skeptics of the 2017 plan ensuring this debate will continue over the coming weeks and months.

This week, the House Health Care Committee will begin hearings related to the administration’s proposals. The Senate Health and Welfare Committee will begin hearings on the controversial death with dignity issue.

New Bills of Interest

H.77     Introduced by Representative Till of Jericho
This bill (identical to S.44 as introduced in the Senate) proposes to make publicly available the requirements for prior authorizations and to define and set standards for adverse determinations.

If you are interested in this week’s Legislative Committee Meeting schedules, agendas, and a listing of other meetings and activities, please visit the Vermont Legislature’s website at http://www.leg.state.vt.us/Committee01.cfm Committee meetings are normally updated daily, and are subject to change without notice.  If you plan on attending, you may want to call ahead to verify the agenda.

For more information on legislative proposals, visit the Blue Cross and Blue Shield of Vermont website at www.bcbsvt.com or call Leigh Tofferi at (802) 223-6131 or Kathy Parry at (802) 371-3205. If you wish to discontinue receiving these updates or know of anyone else who would like to receive it, please call Kathy Parry or send an e-mail to webmail@bcbsvt.com