2006 Legislative Updates:

 April 4, 2006

The Senate Health and Welfare Committee met on a snowy April 4th afternoon to hear testimony from Steve Kappel (Joint Fiscal Office) and Jim Reardon (Commissioner of Finance and Management, Agency of Administration) to discuss employer sponsored insurance (ESI). Later, Steve Klein (JFO) presented forecasts for Medicaid deficits. Here is some of the testimony:

Senator Jim Leddy (D - Chittenden): JFO and the administration have been working for the last ten days in a very collaborative way to see what the numbers are for the governor's employer sponsored insurance (ESI) proposal. This work is ongoing and we are here today because I prefer to have issues out sooner than later.

Steve Kappel (JFO): This is a work in progress for two reasons. First, BISHCA has just released preliminary results from their new study -- Vermont Family Health Insurance Survey. Second, we have made some policy assumptions that you might do differently as you develop legislation. The new question in the survey is "Are you personally eligible for ESI?" According to the survey there are now 61,000 uninsured in Vermont.

Senator Kevin Mullin (R - Rutland): Where did the House number of 70,000 come from?

Kappel: Those were based on projections from the 2000 survey.

Jim Reardon (Commissioner of Finance and Management, Agency of Administration): Our original budget was based on projections from 2000. When the ESI concept was being seriously considered, we hurried up to finish the survey. My gut is that the numbers are higher than the preliminary results and we still need to do more work on the numbers. I still believe ESI should be integral to health care….

Reardon: We originally estimated there would be more savings from ESI. Even though those eligible for ESI coverage is down, there are still Medicaid savings. Moving children on Dr. Dynasaur onto ESI would be optimal since families are better served when everyone is on the same family plan -- however, we are not requiring this.

Senator Mullin: What is the cost of Catamount Health?

Reardon: All the numbers in H.861 deserve the same scrutiny -- I would hope Catamount would have the same scrutiny as ESI.

Kappel: Catamount has not yet gotten as much scrutiny.

Senator Mullin: Is Finance and Management working with JFO on this?

Reardon: Not yet.

Kappel: We would certainly welcome their help.

Senator Sara Kittell (D - Franklin): What is the cost of ESI now?

Reardon: I heard that the House calculated the ESI cost to employers at $45m. But that is now not the case with these new numbers since the estimate of transferees is down. I am still comfortable with ESI going forward.

Senator Kittell: So the total is 50% of the original numbers?

Senator Leddy: The range is 5,700 - 7,400 and this is less than 50% of the original numbers (17,250).

Reardon: That is right.

Senator Mullin: Not good news, that is bad news.

Senator Leddy: I'm trying not to categorize that.

Senator Mullin: Now we will pay a higher amount to cover more people (Medicaid enrollees not transferring to ESI).

Senator Ginny Lyons (D - Chittenden): What do we do with these folks?

Reardon: We are using JSI (consultant hired by the administration) for the adoption rate (for people moving from Medicaid to ESI). This is a critical component, a critical assumption.

Senator Leddy: How many on Dr. Dynasaur?

Kappel: Depends on your definition of Dr. Dynasaur.

Senator Leddy: I want an answer without "depends on".

Kappel: Dr. Dynasaur only or all children on Medicaid?

Senator Leddy: You define it…..

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Reardon: The administration and JFO have worked in a collaborative way along with the good work by BISHCA. We would like to continue that effort and come back with better numbers but it won't be any time soon.

Kappel: Since the plan doesn't go into effect until FY2008, maybe we can do a study to get you better numbers.

Reardon: We don't need a study -- we can just work together.

Senator Kittell: The original projections were going to save money but with the delay in implementation, the savings will decrease.

Kappel: This is not a change from your original time frame.

Senator Mullin: I don't want to vote on something from the Senate floor when there are no numbers. Where are the numbers coming from and when will you be back?

Senator Kittell: We are going to spend less.........

Senator Mullin: No -- less by employers, more by government.

Senator Leddy: Folks, the questions are out there -- we will get the numbers. But there will be fewer people in ESI than the original estimates. So this will cost more. I'm not looking at it as good news.

Senator Mullin: What is the cost for the outreach program (to move more eligible uninsured people into Medicaid)?

Reardon: Let me ask Herb Olson.

Herb Olson (General Counsel, BISHCA): There is money in the budget for OVHA (Office of Vermont Health Access) -- about $140,000.

Senator Mullin: Did this survive the House?

Senator Leddy: Didn't survive us.

Senator Mullin: There are 30,000 eligible for Medicaid. What is the cost if we sign them up?

Olson: Not able to estimate that. We didn't anticipate new enrollment in Medicaid.

Senator Kittell: Well, OVHA is getting six new employees.......

Senator Leddy: ... and more funds for IT. This has implications for us. We have a range -- we could work on that. Larger question is how to handle increased uninsured not eligible for ESI? This is not a day to see light.

Senator Lyons: The tunnel just got darker. My question is how to deal with the new uninsured folks. What are the characteristics of the folks going to ESI? Does the administration have plans for Medicaid coverage as the federal government drops its funds?

Senator Leddy: I ride to Jim Reardon's rescue. We will ask the administration to come to us and tell us their plans. I'm not expecting any more answers today but this was a necessary discussion.

Reardon: As an administration representative, I know we will work with the legislature. There are some things we would like to see in the bill but we will continue to work with you.

Senator Kittell: How bad are the storm clouds out there?

Senator Jeanette White (D - Windham): How bad are the storm clouds in this room?….

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Steve Klein (JFO): I talk fast and tend to confuse people. So, slow me down if you need to. The Medicaid deficit is $1.69m -- all state funds -- for FY2007. The House uses the cigarette tax to cover some of this. The FY2008 deficit is $43.7m. The House doesn't start Catamount for several years but the cigarette tax starts earlier. So they use it for the next two years of deficit....

Klein: Cumulative projections for FY2011 are a deficit of $242m. This makes for a major Medicaid problem.

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Vermont Health Care for All would like to thank VPIRG for their generous support of the 2006 Legislative Updates. They are also available on the VPIRG website http://www.vpirg.org. They will be produced throughout the 2006 Legislative session by Paul Forlenza. Forlenza can be contacted at paul@forlenza.us or 802-453-3592.