Herding everyone into the exchanges

by Robert Mayanrd

On April 17th an article  was posted on True North Reports noted that Vermont’s new Health Insurance Exchange will have the highest per person cost of any state in the nation.  If the state is to have any hope at all of making this thing work, they will have to herd as many people as possible into it.  With that in mind one should take with a grain of salt the Administration’s recommendations that small business employers direct their employees into the exchanges.  In a response to such advice, the Vermont Business Roundtable cautions small business owners not to assume that going into the exchange is necessarily the best thing for their employees:

Small employers in Vermont have a decision to make before January of 2014 – whether to keep their employer-sponsored insurance or drop it altogether and direct their employees to the state’s new Health Insurance Exchange as individual purchasers. The Administration is recommending that small employers drop their health insurance coverage. Instead, we encourage businesses to evaluate their options and consider the implications on not only their own bottom lines, but the impact on working Vermonters. We believe there is no single right answer for employers and we feel that many Vermonters may be better off keeping their current employer-based insurance plan.

The Administration has cited the individual market exchange as a more affordable option for the employees of small businesses than their current employer-sponsored coverage. While this may be true for some people, it is most likely not true for all. Some employees could face significantly higher health insurance costs that will make it very challenging to maintain their health insurance coverage. The result? Less affordable coverage for middle-income Vermonters and an increase in the number of uninsured Vermonters.