MIDDLEBURY — By late next year, shopping for health insurance in Vermont will be like shopping for a travel package online, Vermont Department of Vermont Health Access Commissioner Mark Larson told about 20 people gathered at Middlebury’s Ilsley Library on Sept. 13.
Larson was making another stop on his statewide tour explaining the Vermont Health Benefit Exchange, which by 2014 will be the go-to place for many individuals and small businesses to buy health insurance in the state.
“It’s like Travelocity or Expedia … where you can compare,” Larson said, adding, “It’s not radically different than the way we shop for a lot of other products these days.”
But although there will be some differences in what consumers can choose — notably in how high they want their deductibles and out-of-pocket expenses to be, choices that will affect the cost of the plans — the plans themselves will remain essentially the same.
Vermont’s new Green Mountain Care Board, following guidelines in the 2010 federal Affordable Care Act (ACA), has required that all plans offered by insurance companies must contain 10 basic health care provisions, including coverage for emergencies, prescription drug costs, hospitalization, chronic ailments, maternity and infant care, preventative care, mental health care, and more. (See related story.)
These requirements are in addition to the basic ACA mandates that insurance companies may not refuse to cover customers with pre-existing conditions or drop customers who develop health problems.
“They don’t have a choice. This is based on federal law,” Larson said. “These are the rules of the market.”
Small businesses — those with 50 employees or fewer — and consumers will be able to tailor the plans to their needs, however.
The Exchange will also help consumers determine eligibility for Vermont’s state-sponsored health plans for low- and moderate-income residents, according to state websites.
Larson said the Exchange — which will also be accessible by phone and in person for those without Internet service — will offer both business owners and individuals “easily found, side-by-side comparisons” for four tiers or public and private insurance plans.
As called for in the ACA, Exchanges in Vermont and the other 49 states will offer bronze, silver, gold and platinum plans that range from least to most expensive, respectively, even though the benefits are identical.
Larson said deductibles and out-of-pocket expenses are the variables: They will be higher for the bronze plan and gradually decrease until they are the lowest for the platinum version.
Eligible smaller companies can thus choose which plans — now expected to be offered at least by Blue Cross/Blue Shield, MVP and Cigna — they can afford to offer, he said.
“Employers will have the opportunity to provide what kind of range of options you want to provide,” Larson said.
And individual consumers can choose which plan makes sense for them. For example, Larson said a consumer who knows he or she “is going to use a lot of health care” — due to a chronic illness or regular expensive medication, for examples — might find it cheaper to pay more up front for a more costly plan.
Even the plans with higher co-pays and deductibles will have strict out-of-pocket limits. According to Larson’s presentation, the limit for total cost-sharing for a family will be $12,500.
According to state websites, the most a Vermonter insured by one of the qualified health plans would have to pay for care annually is $5,950 in deductibles, co-pays, and co-insurance. The law scales these out-of-pocket maximums based on income; for example, a single Vermonter making between $15,000 and $22,000 annually would be liable for a maximum of $1,983.
Many individuals, primarily those who work for firms that employ more than 100 or many who are in the public sector, are expected to still be covered through employer plans.
For consumers who are not, aid will be available as they work their way through the Exchange. The $104 million federal grant Vermont received last week to establish its Exchange (the ACA mandates all states to create them) included funds for human “navigators,” who will be available online, by phone and even in Vermont communities to help people sort through their options.
A major question for consumers will be their eligibility for federal tax credits to help them pay for health insurance, which will be required by the federal government for its citizens in 2014, unless they choose instead to pay a federal penalty.
Larson said individuals and families will be eligible for those credits if their incomes are less than four times the federal poverty level, on a sliding scale. The cutoff adjusted gross income for a family of four is $92,000, meaning most Vermont families will be eligible for some level of tax credit.
The navigators can help determine how much, and there will be tools on the website to help consumers determine the numbers on their own.
Unlike many tax credits, those eligible for these credits will not have to wait until the end of the tax year to enjoy them, Larson said.
He said credits would take the form of monthly subsidies — individuals and families would see lower monthly payments rather than having to wait to receive a refund.
“It’s upfront. It’s going to be taken off every premium every month,” he said.
Meanwhile, there are already changes in the law in place to help many small businesses afford coverage.
According to Exchange outreach and education coordinator Emily Yahr, small businesses that employ 25 or fewer with average salaries of less than $50,000 are eligible for a tax credit of up to 35 percent of the cost of providing insurance until 2013. In 2014, that percentage will bump up to 50 percent. In both cases, businesses must contribute at least 50 percent of employees’ annual health premiums to be eligible for the credit, Yahr said.
Small businesses are not required to provide coverage, however.
“There are no penalties to small businesses (50 or fewer full-time employees) that do not provide coverage,” Yahr said. “The small business is not obligated to provide coverage, and if they do not, their employees can receive coverage through the Exchange.”
At the Ilsley, Larson acknowledged the small business rules are complex.
“It is unfortunately more complicated than we want it to be, but it is helping small businesses access health care coverage for their employees,” he said.
The navigator system is not up and running. Yahr said small business owners may contact the state’s Department of Financial Regulation for assistance with insurance questions at email@example.com or 802-828-3301.
At Ilsley last week, Larson fielded a few other questions, but not before noting that about a third of the state’s population, 200,000 people, are now uninsured or underinsured.
One attendee, Anna Benson, questioned the omission of eye and dental care from the essential requirements of the plans that will be offered.
“It’s funny eyes and teeth are not considered part of people’s bodies,” Benson said.
Larson agreed, especially given that poor dental health can affect people’s overall health. But he said the federal guidelines were modeled on the majority of health plans, which do not include such benefits.
“It’s an example of where the health care system is screwed up,” he said.
Addison County Chamber of Commerce Executive Director Andy Mayer, whose organization does offer group health insurance benefits to its members, asked one question on the minds of many.
“The big question is what are the rates going to be,” said Mayer. “The sooner the rates are known … then tough decisions can be made.”
Larson said the question cannot yet be answered: His agency is now preparing information to submit to insurance carriers, who will then propose rates that must then be reviewed by state regulators. He expects rates to be available by next summer.
Responding to a question about Medicare, Larson noted it would be unchanged, except that among other improvements to the program the ACA closes the so-called “doughnut hole.” That is a quirk in the system that means out-of-pocket drug costs seniors must pay goes up before coverage kicks back in.
“Medicare stays unchanged … (Except) there are things that will improve Medicare coverage,” he said.
Larson was also asked about school employees’ plans, especially given that health insurance makes up a high percentage of school budgets — more than $1 million of the roughly $9 million Vergennes Union High School budget, for example.
Larson said the same rules will apply to public and private sector employers, subject to collectively bargaining agreements, and that some school health insurance plans will be grandfathered because they meet the federal criteria.
The real change could come if Vermont successfully moves to a single-payer system by the target date of 2017 (see related story.) At that point, he said, local property taxes would almost certainly no longer pay for school employees’ health benefits.
“At that point we’ve moved into a publicly financed system,” Larson said.
Larson said that the Exchange’s technological infrastructure is being designed to support the single-payer system that is planned to follow the Exchange system. (See related story.)
“It is a really good step forward,” he said, “but I don’t think it is the end of the journey.”
Andy Kirkaldy may be reached at firstname.lastname@example.org.