Exchange may hike care cost for some
By Peter Hirschfeld
Vermont Press Bureau | October 14,2012
MONTPELIER — Thousands of working-class Vermonters could see their out-of-pocket health care costs skyrocket when the hallmark of the Affordable Care Act — an online marketplace called the “exchange” — goes into effect late next year.
And as advocates warn against the ill effects on low-income residents already struggling to afford basic care, administration officials are still trying to determine what it will cost to hold those Vermonters harmless, or whether they’re willing to spend taxpayer money to do so.
“Access to health care could become a very real challenge for many of these people,” says Donna Sutton Fay, policy director for the Vermont Campaign for Health Care Security.
The federal government late next year will spend billions of dollars to lower health care costs for middle-class Americans who buy their insurance through a government-regulated “exchange.”
Robin Lunge, director of health care reform for the Shumlin administration, says Vermonters will, on the whole, benefit heavily from the new regime.
But because the transition to the exchange will usher in the end of two state programs that have long subsidized coverage for Vermonters living within 350 percent of the federal poverty level — about $80,000 for a family of four — lower-class residents face what many say could be a perilous benefits cliff.
“We have some big challenges ahead of us in figuring out how we’re going to maintain access for some lower-income people,” says Rep. Mike Fisher, a Lincoln Democrat who chairs the House Committee on Health Care. “I have a real concerns about making sure this doesn’t end up taking us backward in access for those populations.”
At stake, advocates say, are health care benefits for many of the approximately 48,000 residents enrolled in either VHAP or Catamount.
Sutton Fay estimates that about 80 percent of the 37,000 people now in VHAP will become eligible for Medicaid, where they’ll actually end up receiving better benefits than they get now.
But for the approximately 7,400 VHAP enrollees that won’t get rolled into Medicaid, and for the entirety of the 10,700 people in Catamount, Sutton Fay says, health care costs could become prohibitive when Vermont flips the switch on the exchange.
That’s because federal subsidies in the exchange pale in comparison to what’s available in the soon-to-be-defunct state programs.
For example, an individual living at 200 percent of the poverty level — about $22,000 annually — out-of-pocket exposure could jump from $1,770 per year under Catamount to nearly $3,500 in the exchange. And the disparity only widens as incomes rise.
For a couple making $45,300 per year — 300 percent of the federal poverty level — out-of-pocket expenses could more than double, from about $7,000 in Catamount to more than $16,800 in the exchange.
“You’ll begin to see one of two things happen,” Sutton Fay says. “Either people will look at the numbers and just not get insurance in the first place. Or because co-payments and deductibles and out-of-pocket expenses are so high, they’ll have the insurance but won’t actually get any care.”
Lunge says the administration is aware of the potential impact, but that budget-writers are still trying to put a number on the problem.
A preliminary analysis commissioned by the state from a team of researchers at the University of Massachusetts Medical School, according to Lunge, has delivered some heartening numbers. But she says it’s still too early to know whether the study has captured the breadth of liabilities Vermont would have to pick up if it wants to offset cost increases for VHAP and Catamount enrollees.
“We’re costing out a number of different scenarios, and we just don’t have the number yet,” Lunge says. “You could provide premium assistance up to 200 percent, up to 300 percent, 350 percent. You could have it be an across-the-board sliding scale.”
Lunge says the state has a number of other items on its heath care “wish list” vying for some of the same money that might otherwise go to those lower-income residents.
“It’s important to look at this in the context of all the moving pieces, because right now there are a number of different initiatives the general public is interested in,” Lunge says.
“For example, we hear great interest in having dental coverage be a part of the essential benefit package, but we know the cost range for that is pretty great,” she adds. “The budget won’t be able to accommodate everybody’s wish list, so we need to look at the big picture and then prioritize what’s most important to move forward with in 2014.”
Fisher too says it’s too early to make any promises.
“I can’t at this moment say we should devote funds to any one single thing over another,” Fisher says. “What I can say is that we understand this could be a very real problem for people in (VHAP and Catamount) and I’m going to keep my eye on it.”