2.24.2012 – The Health Care Benefits Exchange
NOTES FROM MONTPELIER
Rep. Carolyn Partridge
Feb. 24, 2012
This week we passed a health care bill that sets up a Health Benefits Exchange for the State of Vermont. To be very clear, this is required by the Affordable Care Act that was passed on the federal level, not by the Green Mountain Care bill we passed in Vermont. We could have chosen not to set up the Exchange, but the federal government would have done it for us and it seemed better, especially given our work on Green Mountain Care, to tailor the Exchange to meet our needs.
At this point, it would be valuable to review some of the aspects of the present health care picture to get some perspective. Health care costs have been skyrocketing for many years – in Vermont, health care costs have grown at more than $1 million every day. We have known for a long time that this is not sustainable – we need to bend the upward curve of health care costs.
More Vermonters and Vermont businesses find it impossible to afford comprehensive health care coverage for themselves and for their employees. It also puts a huge strain on municipal and school budgets. If we can find a solution to runaway health care costs, Vermont will be an even more attractive place for businesses to locate.
As we move forward with health care reform, there are several important goals. All Vermonters should have access to affordable, comprehensive health care that gives them the care they need when they need it, with a focus on preventive medicine that offers physicals and screenings, which save money in the long term. Health care should be paid for in the most cost-effective way with a minimum of administrative costs, and provider payments should be fair and reflect the cost of the service.
So what is the Health Benefits Exchange and how will it benefit Vermonters? The Exchange is a website that, starting in 2014, will give “apples to apples” coverage and cost information about available health care plans, and through which these plans will be purchased. In 2014, the individual and small group insurance markets will merge. With information from the website, Vermont small businesses (fewer than 50 employees) and individuals will be able to choose the level of coverage they want. There will be several levels to choose from but there is a minimum level of coverage, which is known as the Bronze plan. Under the Bronze plan, 60% of the cost of care will be covered by the plan, 40% will be covered by the individual.
Health care plans will be sold through the Exchange only. This was a point of contention during the debate. There was an amendment that would have allowed for the sale of plans outside the Exchange but it was rejected by the Health Care Committee and the House for a number of reasons.
One of the greatest values of plans sold inside the Exchange is that it gives “apples to apples”, transparent information so that employers and individuals can make informed choices about the coverage they want. An employer can decide what kind of contribution they want to make to their employees’ premiums and the employee can, in turn, choose the plan that is right for them.
Another great benefit is the portability offered – even if they lose their job, Vermonters will be able to keep their health care coverage.
The Exchange will provide tax credits to the employer for a percentage of their contribution to their employees’ premiums – up to 35% of their contribution. Individuals will receive tax credits depending on their income. A household of four will receive federal tax credits with a yearly income of $92,200 or less. An individual earning less than $44,000 per year will also qualify. Plans outside the Exchange would not allow Vermonters access to tax credits to help pay for their premiums and could be subject to brokers’ fees. Inside the Exchange there will be one set of administrative costs so expenses will be reduced.
Overall benefits include the fact that small businesses will no longer have to shoulder the burden of health care costs or administer health care for their employees and the State of Vermont will receive $18 million to set up the Exchange.
As we move from the current health care system, which is clearly broken, change is necessary and that is sometimes hard. It is imperative that we employ strategies that improve care for all Vermonters whether they are employed or not, reduce costs to individuals and employers, and pay providers fairly for their services. The Health Benefits Exchange is a step toward those goals