Exchange letter to legislators

by Darcie Johnson

Dear Representative Heath and Senator Kitchel:

Thank you for taking the time and for doing the hard work to ensure the financing for Vermont Health Connect, VHC (the Vermont Exchange) meets all the federal requirements in order to get a ‘green light’ from the federal Center for Medicaid and Medicare Services (CMS), and is sustainable for Vermonters.

A financing plan for VHC was due on January 15th 2013. That is more than 63 days ago.

At this time, Governor Shumlin is asking you to approve a financing plan based on his assurances that the administration has developed a sound projection on these costs. The administration has failed to produce accurate cost projections on several key capital projects, such as the ANR offices at National Life, and Vermont’s share of the cost of the new State Hospital.

The administration’s plan exceeds $18 million in additional annual expenditures for FY 2014. This is over and above the $118 million in start-up costs supplied by the federal government. This new request comes at a time when the legislature is poised to approve an increased budget and substantial broad-based tax increases.

The financing plan must be sustainable without federal funding in future years. Therefore, it is imperative that the overall plan be well thought out so that the state offers insurance products that Vermonters can afford, and adequately reimburses providers for services.

I bring this to your attention because Vermonters for Health Care Freedom (VHCF) understands you are building the financing foundation for the exchange as well as the future single payer system, Green Mountain Care. Green Mountain Care will require at least $1.6 billion in additional tax revenue, according to the UMass report commissioned by the legislature. Therefore, all revenue sources used to finance the exchange will likely be expanded to fund single payer, coupled with other significant new revenues.

In addition to the cost pressure of the budget and tax increases slated for FY 2014, most economists are concerned about Vermont’s shrinking labor pool. And you should be also.

In a Vermont Digger article this week Representative Branagan expressed her concern, that originally, savings expected from the exchange would fund the operating costs. Now we see that those savings do not exist.

Indeed, far from providing savings to the state or to consumers, costs will increase for purchasers of insurance due to increased rates and a possible claims tax, which is being considered to fund the $18 million operational cost of the exchange.

Commissioner Larson’s testimony on the high costs per capita to develop and run the exchange in Vermont should give you pause about moving forward with its implementation this year. You are being asked to commit tremendous state resources into a program which might be better operated by a larger entity with lower per capita costs—linking to the federal exchange, or perhaps a larger state.

We believe it is not too late to slow the process in order to make the best decision for Vermont and we encourage the legislature to do just that – put the funding on hold for VHC as a stand- alone exchange. This is a health care system that does not demonstrate savings over current costs and will create severe premium price hikes and out of pocket cost increases for many individual Vermonters and small businesses, who cannot afford to pay more for health care coverage. These premium increases can only result in more Vermonters going uninsured, an outcome in direct conflict with the legislature’s expressed intent under Act 48.

We strongly recommend that the Vermont legislature allow the federal government to set up the Vermont Health Care Exchange as they are doing in 31 other states. The power to make the cautious decision is indeed in your hands and is your responsibility. There will be time to participate in the ACA and the Exchange concept. Rushing this decision should not come at extreme and unnecessary cost to Vermonters, and must not result in an increase in the number of uninsured.

Thank you for time and consideration of this request.


Darcie L. Johnston
Vermonters for Health Care Freedom

CC: Speaker Smith
Representative Turner
Senator Campbell
Senator Benning
Representative Branaga