Exchange Newsletter #8

Vermonters for Health Care Freedom

Vermonters for Health Care Freedom is continuing our newsletter series on the Federal and Vermont Health Care Exchanges. Our aim is to provide useful information to our client businesses and newsletter recipients, to help you wade through the Vermont Exchange, known as “Vermont Health Connect”, and to keep you updated on related happenings at the federal level.

Breaking News:

Shumlin Proposes Huge Payroll Tax Hike to Fund Single Payer

Well, now we know. Governor Shumlin has been heretofore unwilling, or seemingly unable, to articulate just how he proposes to finance his huge health care reform plan in 2017. However, last week in an interview with Times-Argus editor Steve Pappas the Governor finally admitted that a substantial payroll tax on all Vermont businesses would have to be a part of his financing scheme.

Shumlin says that he pays about 18% of payroll for health care premiums for his family business, Putney Student Travel. And he thinks that 18% is a good place to start. Maybe it’s a good place for him to start, but we doubt that it’s a good place for Vermont employees and employers to start. Recall that in 2011 Harvard professor William Hsaio recommended an 11% payroll tax on employers and a 4.5% payroll tax on employees. In his report, Hsaio estimated that the cost of health care for employers and employees would be 17.5% of payroll in 2015, should single payer start by then.

Any way you look at it, this level of tax increase would be a huge hit for Vermont’s employers and employees, especially smaller businesses, some of whom are already struggling now.

Shumlin went on to say that opponents will say that this will be the biggest tax increase in Vermont history, but that it will be the biggest health care premium reduction in American history. “We’re just going to swap a health care premium for a publicly financed health care premium.”

Okay, let’s examine that statement. First of all, the basic intent of “single payer” was to provide coverage for 47,000 uninsured Vermonters. That could have been accomplished in any number of other ways (some of which we included in last week’s newsletter), without turning Vermont’s entire health care industry on its head.

Secondly, if all that is truly necessary is to convert premium already being paid to a payroll tax, then how will the uninsured be paid for? And the “underinsured?” For the truly underinsured, they are paying low premiums for skimpy health care plans. How will those low premiums magically buy them full coverage now? It seems like “voodoo economics” to us. It is obvious that Shumlin’s statement is inaccurate at best, and somewhat glib. It will take a much deeper dive into the pockets of Vermonters and Vermont businesses to fund this thing. If a payroll tax is to be a major component of the funding mechanism, we are all going to pay dearly, perhaps in ways that we have not yet imagined. For more on the payroll tax, see Vermont Digger’s 9/9/2013 article, “Shumlin plan to use payroll tax to fund single payer unpalatable to many In business.”

In order to replace the federally mandated Exchange with “single payer” in 2017, Vermont must obtain a waiver from the Feds. We understand from Administration sources that Vermont will have to prove that it can replicate the benefits of the Exchange plans and continue funding an Exchange-equivalent “single payer” plan on an ongoing basis, year after year. One of the Feds’ requirements is that Vermont submit a 10 year cost projection and funding plan. If indeed the first year will require an 18% payroll tax, or anything near that, we can only imagine what the out years will look like.

It takes a gigantic leap of faith – and some naivete – to believe that the purported “savings” from this system will be even close to sufficient to offset the rising costs of health care, along with covering the un-and under-insured at the same time. The system will cost more and more, and even at its outset, it looks unaffordable for many Vermonters and Vermont businesses.

Vermonters for Health Care Freedom will keep hammering away at the funding issue, and we will keep you apprised of what we learn.

When Obamacare “Navigators” Ask You If You’re Qualified, You Should Ask Them About Identity Theft

As we reported last week, Attorneys General from thirteen states have sent a letter to HHS Secretary Kathleen Sebelius asking among other things, who will be in charge of monitoring the Navigators, who is going to be liable if someone’s identity is stolen, and who is responsible for educating the Navigators on fraud prevention.

In a September 9, 2013 commentary alert, the Galen Instiitute reports that the House Energy and Commerce Committee is also concerned about how Navigators will use your personal health information. They are rightly worried about identity theft and fraud as consumers reveal Social Security numbers, employer information, income, home addresses, childrens’ names, health habits and much more.

A letter signed by 15 Republican members of the House Energy and Commerce Committee requests information from 51 of the 104 organizations sharing $67m in implementation grants. In part, the letter asks these Navigator organizations to show:

  • how the work will be performed;
  • how the information obtained will be utilized, including but not limited to descriptions of safeguards of an individual’s personal and medical information, and any prohibitions on the use of the information;
  • processes and procedures in place to monitor, review, or otherwise supervise your employees, volunteers or representatives

In the face of vigorous protests by Democrats, Energy and Commerce Vice Chairman Marsha Blackburn, R-TN, replied, “We are simply asking these organizations who received Navigator grants – tell us how you will spend the money and how you will protect personal financial and health information during the enrollment process. It is our job to ask these questions.”

Closer to home, we posed similar questions this week to Vermont Health Access Commissioner Mark Larson. As you read his responses, you might want to recheck the list of Vermont Navigators that were published at

We asked: (on the process for vetting Navigators),

“Were background checks done or fingerprinting? Who bears the liability if fraud or a crime is committed through this process? Please confirm that VHC and the organizations that received grants have taken all the (necessary) actions.”

Commissioner Larson responded:

“All Navigator organizations are required to conduct criminal background checks on each individual Navigator upon hire. Finger printing is done as part of criminal background checks. If the navigator has lived in VT for the past five consecutive years, a state check is done, if the navigator has lived less than five years in Vermont a federal criminal background check is required.

The liability for crimes rests with the wrongdoer. Liability for civil fraud would rest with the doer of the fraud and under the particular facts of the situation may rest with employers, and others as well.

Navigator organizations are responsible for the financial cost of conducting the background check for each Navigator. The terms of the grant agreement require awardees to keep the criminal conviction report on file.”

So, it appears that VHC provides no state-level oversight of Navigators or Navigator organizations, even though the State was the recipient of the Navigator funding. VHC has delegated this significant responsibility to the Navigator organizations themselves. These include Open Door Clinic in Middlebury, Planned Parenthood, Spectrum Youth and Family Services, Vermont Businesses for Social Responsibility and Community Action Centers. VHC has issued “guidelines” for the organizations to follow.

While we are in no way knocking these important community-level entities, Commissioner Larson’s response does not engender a lot of confidence. Some organizations will undoubtedly take all necessary precautions and “monitor, review or otherwise supervise their employees, volunteers or representatives,” as the House Energy and Commerce Committee calls for.

However, identity theft is on the rise and it only takes one occurrence to make someone’s life miserable forever. We believe that Vermonters deserve more rigorous oversight of the use of their personal and medical data. VHC should include state-level monitoring, and the state should be accountable, rather than an individual or a nonprofit which, in all likelihood, could not be sued.

Surely the tens of millions of dollars the Feds have given Vermont Health Connect can support the hiring of a few state-level Navigator overseers, to ensure that the Navigator organizations are monitoring and supervising their Navigators. That’s only good business practice.

We strongly urge individuals to check first with the heads of any navigator organizations they intend to use, to find out if the organization has completed the required background checks, including fingerprinting, before providing any personal health information.

For our small business clients, we continue to recommend that you not use a Navigator, but instead use a knowledgeable broker to assess your situation, needs, and options. Several small businesses we have talked with have found that the VHC website tool either does not answer all their questions, or leaves them without sufficient information to make a decision on coverage.

For more information on concerns about Navigators:

“Navigating the ACA” Article includes a chart of states that are requiring licensure, certification or restrictions on offering advice by Navigators.

Signing People Up for Obamacare? House Republicans have some questions for you.”

Take advantage of this great opportunity to voice your concerns about the impact the Exchange may have on you, your family and/or your business.

On 9/9/13 Seven Days (@Seven Days) tweeted:

Hey everyone – we’re looking for sources! Specifically, we need individuals and families from Vermont who are willing to be interviewed about their current health care situation and how it may be impacted by the state’s new health insurance exchange, which goes live on October 1. We are looking for people who “do not” receive their health insurance through a large business or institution; i.e., 51 or more employees.

We are especially interested in those who:

  • have a household member with a disability or chronic medical or psychiatric condition.
  • someone who owns his or her own small business, i.e., fewer than 50 employees
  • a professional (e.g. doctor, lawyer, accountant, software developer) who is either self-employed or works for a firm or practice with fewer than 50 employees.

These will be relatively brief interviews and require no prior knowledge of (how) the health exchange will work. All we ask is some familiarity with your current insurance, if any, such as annual deductibles and co-pays.

Please contact Ken Picard at or (802) 865-1020, x25, for more information.