Dropping Vermont Health Connect has consequences

Amanda Coulman is so fed up with Vermont Health Connect that she's cancelled health insurance for her and her husband.

Troubles for the South Burlington mother of two began in November, when she contacted the health insurance exchange to update her income. She found out that instead of being listed as a family, she, her husband and their children were counted as individuals.

“I sat on the phone for eight hours,” she said, but still got no resolution. She kept making her premium payments, but received tax documents saying she hadn’t. The additional $12,000 a year her family makes because of Coulman's new job has caused them to lose subsidy money.

She received bills for hundreds of dollars, but when she called Vermont Health Connect, they told her she only owed $14 -- and then said they'd need to have a third party review her records to decide how much money she owed.

Coulman was enrolled in a high deductible plan without her knowledge. With a $2,500 deductible and $560 in premiums a month, she decided she'd rather save her money for health expenses.

At this point, Coulman said, she thinks it might be more cost-effective to get rid of her insurance for her and her husband and pay the penalty. Her children are insured through Dr. Dynasaur, which is also administered through the exchange.

Coulman is one of many Vermonters who are frustrated with Vermont Health Connect, the state’s insurance exchange. While the administration of Gov. Peter Shumlin says to stay the course, others in the Statehouse and health care community are calling for an independent review of the options, which include switching to the federal exchange and adopting technology from other states.

“From beginning to end it’s been a complete mess,” Coulman said. “I think it’s such a waste of taxpayer money.”

Calls for independent review

The voices asking for an independent review of Vermont Health Connect have been getting louder since last month.

In February, Frank Petrus, head of independent consulting firm Gartner Inc., testified that Vermont should stop investing in new Health Connect technology and instead commission a review of the health exchange and its problems.

Gartner has consulted for the Shumlin administration on Vermont Health Connect.

But Shumlin administration officials were quick to point out that Petrus had not supported moving to a federal exchange, the issue at the heart of the review — whether Vermont should keep working to improve its state-based marketplace, move to the federal exchange, or use another state's technology.

BlueCross BlueShield of Vermont, the state’s biggest insurer, wants an independent assessment.

“This isn’t a political issue for us, it’s a health policy issue,” said Cory Gustafson, the director of government relations for the insurer.

The state has been trying to fix these issues for three years, Gustafson said, and he doesn’t think continuing to spend money on Vermont Health Connect without an independent assessment would be wise.

The biggest problem is that data from Vermont Health Connect isn’t making it into the BlueCross BlueShield databases, Gustafson said. That creates a risk that Vermonters might go to their doctors and find that their insurance information isn't correct, or even in the system at all.

Costs of switching

The Shumlin administration has estimated that a move to the federal exchange would cost $24 million, and cost Vermonters $5 million a year after that.

Part of that cost will be for building a new system for Medicaid and Dr. Dynasaur, the state health insurance program for children. Both are administered through Vermont Health Connect, but switching to a federal exchange would mean Vermont would have to come up with a new way to administer them.

The federal government also charges a 3.5 percent user fee on top of premiums to fund the exchange.

The fee would hit lower-income families especially hard, and even a small cost increase could affect a family's ability to afford health insurance, said Sean Sheehan, a spokesman for the Department of Health Access.

Instead of a user fee, Vermont currently assesses a tax on employers who fail to offer insurance to their employees.

The biggest argument against moving to a federal exchange, according to Robin Lunge, director  of health care reform for Vermont Health Connect, is that Vermonters would lose subsidies the state now offers on top of federal assistance to help pay premiums.

The increased cost could come to as much as $1,000 a year for a family of four with an annual income of $70,000.

Lunge also is worried that Vermont’s uninsured rate, currently at 3.7 percent, would rise if people had to re-enroll in a federal marketplace and be forced to deal with multiple systems, for example, if they are eligible for Medicaid or if their children are enrolled in Dr. Dynasaur.

Heather Howard, an expert on the Affordable Care Act and insurance exchanges who teaches at Princeton University, also said switching could limit Vermont's ability to try innovative approaches to health care. Being on the federal marketplace means no longer qualifying for waivers that allow states to opt out of certain requirements in the ACA if they offer “innovative” health care solutions to their residents.

Other state experiences

Vermont is far from the only state to experience problems with a state marketplace.

Minnesota appointed a task force to explore switching to the federal exchange, but concluded that the move would limit the state's ability to offer subsidies that make health insurance more affordable to Minnesotans.

The task force did say that a “partially-privatized” model, where the state contracts with a private vendor to run the exchange, could work, but suggested waiting to see how a similar experiment in Oregon works out.

Gartner consultant Petrus cited Hawaii as an example of a state that tried a state-based marketplace, but ended up going with the federal exchange.

Too few people bought insurance on the state exchange to make the system financially viable, said Laurel Johnston, deputy chief of staff in the Hawaii governor's office.

Hawaii is a unique case, Johnston said. The state has a decades-old mandate requiring employers to buy health insurance for employees, which meant the number of uninsured people who needed to use the exchange to buy insurance was very low.

Political battlefield

Shumlin announced last year that he would not seek reelection, and as the gubernatorial race heats up, Vermont Health Connect is shaping up to be an important issue.

Republican candidates Bruce Lisman and Lt. Gov. Phil Scott have both spoken about the need for a review. Lisman supports transitioning to the federal exchange. Scott says he wants to explore all the options.

“This is a lot like walking through the desert with no water in sight,” Lisman said about the state's struggle to get Vermont Health Connect working smoothly without an independent review.

Scott compared the situation to buying a used car.

“Do you take the owner’s word that the car is in good shape or in need of a few minor repairs and just buy it?"  he said. "Or do you take it to someone with experience who can give you an unbiased opinion on what shape the car is in, and then decide whether the car is worth the asking price?”

Both Democratic candidates also said they support an independent assessment of the exchange.

Matt Dunne said he wants to keep all options open until he had more information, but leaned towards keeping Vermont Health Connect.

“I do not believe that our first step should be to rely on the federal government for something as important to Vermonters as their health insurance," he said, "nor do I think it's a good idea to turn over our exchange to a larger state."

Sue Minter, who uses Vermont Health Connect to buy her health insurance, said she wants to know how much a fix would cost before deciding whether to give up on the system.

"I’m not ready to jump to a federal exchange until I know that our exchange cannot work," she said.

The House Health Care Committee, which hears regular updates on Vermont Health Connect, has recommended the Joint Fiscal Office conduct an independent review

Jack Tremblay of St. Albans supported the state's insurance marketplace at first, but his optimism has turned to disappointment.

Tremblay has been struggling just to get Vermont Health Connect to recognize that his wife, Heather, has signed up.

“I’m embarrassed for the state that they couldn’t implement it better,” he said.

Contact Jess Aloe at 802-660-1874 or jaloe@freepressmedia.com. Follow her on Twitter at www.twitter.com/jess_aloe