Vermonter for Health Care Freedom
Vermonters for Health Care Freedom is continuing through our newsletters to provide information to client businesses and newsletter recipients, designed to help you wade through the morass that is the Vermont Exchange, otherwise known as “Vermont Health Connect”.
According to recent reports, it is not at all clear that the Exchange’s computer system will be up and running by October 1 to process Vermonters’ health plan applications. Already the Shumlin Administration is lowering expectations. State health reform director Robin Lunge has publicly stated that they will process all the applications by hand if necessary. All the 100,000+ that they are expecting? What kind of a mess that will be remains to be seen. We are following it closely and will keep you updated in upcoming newsletters.
Do You Believe in Unicorns?
Green Mountain Care, the so-called “single payer” plan (which is not a single payer plan), is based on the faulty premise that the Feds will keep the money rolling in, year after year after year after year. To some that may be a comforting thought. To us, not so much. First of all, it’s a ludicrous proposition just on its face. Has anyone noticed that the Feds are broke? Secondly, with a number of Congressional seats up for reelection, and several key Democrats retiring, the political landscape may well be different next year – or certainly by 2017.
Although Senator Ted Cruz’ recent pitch to defund ObamaCare or shut down the government did not exactly resonate with the base, the general concept has not gone away. The House just took their 40th vote to repeal ObamaCare.
Which leads us to……
What is Shumlin’s Plan B and Where Is it?
Remember the old adage, “Too big to fail”? We certainly learned recently that no enterprise is too big to fail. Not banks, not brokerages, not real estate companies, not the auto industry. Absent the Federal funds to create and keep “single payer” up and running after 2017, the huge cost of providing “health care for all” will fall squarely on the shoulders of Vermonters and Vermont businesses. Vermont state government has looked at this idea at least twice in the past, and determined it was not doable because as a state, we couldn’t afford it. Note that we couldn’t afford it on our own without federal funds.
Since there is no guarantee that this thing can work over the long term, are the Governor and the Legislature derelict in their duties to Vermonters, by not having developed a Plan B? You decide. Leadership is stewardship. Health care coverage is too important to be left to the whims of Washington. Yet Shumlin appears to be willing to do so. And, who actually expects him to still be the state after 2017, when all this comes down?
And Just In Case You Weren’t Sure
In an article in the 7/28/13 issue of Vermont Digger, Shumlin is quoted as saying, “I am bound and determined to pass the first sensible single payer health care system in the country, and that’s going to be the most ambitious policy lift in Vermont history.” So there.
Unfortunately that sounds more like an ego trip than reality. Notice he said “sensible” and not “affordable”. It may be a “policy lift” for him, but it is our health care he is talking about.
The unspoken message is, “No matter what it costs, no matter whether it is affordable for Vermonters, no matter the ire of Vermonters when they learn we can’t afford it (after I’ve forced it through), no matter if it doesn’t work, no matter that I have no Plan B in case it tanks…”
Remember,Vermont Act 48 calls for AFFORDABLE….health care.
The article went on to say: “The exchange is not the single payer system the administration has in mind. It is a market that is being created in accordance with the Affordable Care Act, aka Obamacare”.
Theoretically, yes; but in Vermont, no. A market is something you can walk in and out of. Vermont’s Exchange is a one way street with no other streets available. And you can’t walk out and go to the next store (although you are supposed to be able to).
The Affordable Care Act calls for an open marketplace to shop for health coverage, and if you don’t like what you see there, you can purchase outside the Exchange. Shumlin’s warped version forces individuals and small businesses with <50 lives to purchase health coverage through the Exchange, or not at all.
To accomplish this, the Democratically-controlled Vermont Legislature passing a statute that prohibits health insurers from selling plans to individuals or small businesses outside the Exchange. This, of course, force feeds people into the Exchange. And in 2016, the mandated group will grow to include employers with <100 employees. More people with nowhere else to go. And by then, the premiums may well be whopping.
Nothing open about that.
Counting On The “Young Invincibles”
If the Exchange premiums are any precursor to “single payer” costs (and we think they are lower), then buyer beware. Remember that today’s premiums will be tomorrow’s taxes, plus some.
The Exchange must rely in large part upon signing up young healthy people (good claims risk). This is universally true for all state exchanges. But in other states, the entire health insurance system has not been stripped away as it has here. Residents are not hamstrung. If the Exchange rates are unaffordable, they can shop outside the Exchange. At least they have a choice. Vermonters are captive to this bizarre Exchange construct.
This fact cannot be stressed enough. Absent the good risk who are paying premiums but not running up claims, premiums will very quickly escalate. Not can, but will. Think what your auto insurance would cost if there were no – or very few – good drivers.
Let’s take an example of the costs for a single person who enrolls in the least expensive plan offered on the Exchange. We are using MVP’s premiums as an example, but we are not picking on MVP. Blue Cross’ premiums are about the same.
According to the Vermont Health Connect website, the premium for a single individual willing to take the risk of paying 50% of their hospital bill, is $336.13 per month (MVP Bronze Plan). Premiums will cost $4,034 out of pocket in 2014. There is a $3,500 medical deductible to meet, and a separate $200 deductible to meet for drugs. This plan has an out-of-pocket maximum expense (max out of pocket) , of $6,350 per year for medical plus $1,250 for drugs. Deductibles do not count toward the max out of pocket. So the annual financial exposure for this single person can be: $4,034 + $3,500 + $200 + $6,350 + $1,250 = $15,334.
Many “young invincibles” with lower paid jobs are going to look at $4,034 in premiums and a $3,700 in deductibles, and say, “No way” – or in today’s parlance – “Whoa!”!. Yes, there will be some Federal subsidies but not for everyone. And after all, $336.13 a month is a car payment! And $15,334 could almost buy a car! Remember when you were that age?
On the family side, MVP’s premium for the high end Platinum Plan is $1,670 per month for 90% coverage where you pay 10% of the bills. That’s $20,040 out of pocket each year for premiums, plus 10% of your health care costs, up to $5,000 maximum out of pocket per family ($2,500 for medical; $2,500 for drugs – and these maximums are not integrated) . The monthly premium alone is more than many peoples’ mortgages. For those who can afford it, it’s good coverage. But it’s a lot of out of pocket cash for a small business owner.
Without sufficient “young invincibles”, Exchange premiums will be in for a big hit in 2015 and 2016. And so a house built on sand is a house built on sand. The irony is, when the premiums escalate because of the faulty construction of the Exchange, Shumlin will be able to say, “See? I told you we needed single payer! Just look at those premiums. Egad!”
But you need to remember – the only reason this will happen in Vermont – and not in other states – is because the Vermont health insurance industry has been jury-rigged to force people into the Exchange. That hasn’t happened in other states. They still have an open Exchange. They can go down another street. Or walk out and shop in another store.
And Finally, Speaking of Costs
On July 22, 2013 economists Jeff Carr and Ton Kavet briefed the Legislature’s Joint Fiscal Committee on Vermont’s sluggish economic recovery. One of their key points was that insurance taxes, a major source of general fund revenue ($55m last year), are expected to decline dramatically, with the loss of taxable health care business. Kavet predicts a near elimination of this revenue stream, as the state moves toward a single payer system.
So let’s see: The young and the restless are not likely to sign up in the numbers needed to balance out the Exchange premiums. Families and older people are more likely to join, and they will have claims. In that scenario, premiums will not keep pace with claims, and premium rates will certainly escalate as a result. And concurrently, the state will lose $55m annually in general fund revenues, due to its own actions.