2006 Legislative Updates:

 April 14, 2006

[Note: Our legislative reporter, Paul Forlenza, was unable to file this week's report. In his absence Hunt Blair of the Bi-State Primary Care Association filled in.]

The Senate's amendments of H.861 passed Second Reading Thursday afternoon by a wide margin, with only four Republican "No" votes. Nonetheless, the bill's fate is far from clear.

While there is much talk of optimism (the Governor describes himself an eternal optimist), the line drawn in the sand by Administration Secretary Mike Smith makes it hard to understand how such compromise will be achieved.

On Tuesday afternoon, Smith unleashed a bombshell letter slamming the Senate version of H.861 with a detailed list of complaints and assertions. By Wednesday morning, legislative consultant Ken Thorpe, PhD., had a detailed rebuttal.

Challenging the Senate position that Catamount Health will help reduce the cost shift and have a dampening effect on the rise of commercial insurance prices, Secretary Smith's letter contends the Catamount Health proposal "will actually increase health insurance premiums for most Vermonters." Thorpe's reply describes that as a "wild assertion" with no data or analysis to back it up. He refutes Smith's assertion with statistics from the federal Office of Management and Budget (OMB) and Congressional Budget Office (CBO) to bolster his case that Catamount will reduce the cost shift.

The administration's contention is that Catamount is "too rich a benefit that underpays providers." Thorpe responds that since Catamount, a program for "currently uninsured" Vermonters, will pay 113% of costs, providers will by definition be ahead of where they are today, since the "payment to cost ratio" for the status quo uninsured is only 30%. Instead of getting no payment -- or only a partial payment -- for services provided to uninsured, the Catamount plan pays 110% of costs. (The 113% cited above is a weighted average taking into consideration those eligible for Catamount who opt for subsidized Employer Sponsored Insurance, or ESI, commercial plans that currently pay an average of 144% of costs.)

At heart is what the administration characterizes as a "fundamental philosophical difference." The Governor and his staff contend that only a fully private approach, even if it requires BISHCA mandating that Vermont insurers provide a "basic" health plan, is acceptable.

The legislature proposes options that range from the state bearing all of the risk for Catamount to a contract for shared risk with a vendor or a fully private model approach. The RFP for Catamount described in legislation is open to all three models. Nonetheless, when questioned closely by Senate Finance members in their packed-to-overflowing Committee room Wednesday afternoon, Secretary Smith repeatedly held his ground on the private only approach. He insisted that while the administration hopes to reach a compromise, some items are non-negotiable.

While the Governor has accepted the idea of using an increase in the cigarette tax to help fund Catamount, he looks less favorably on the employer mandate to pay a "Massachusetts style" annual assessment of $365 on employees who are not offered or do not have health insurance. A lower revenue stream would mean a lower benefit level for Catamount, and/or more patient cost-sharing in the form of a high deductible, health savings account (HSA) style plan, but many contend that HSA's are not viable for low-income uninsured.

In response to Smith's call Wednesday for the legislature to match the Governor's compromises, Finance Chair Ann Cummings (D, Washington) responded that the Legislature had already moved a great distance from last year's broad-based tax-funded universal care approach. The bill her Committee voted out Wednesday evening was not significantly different from the one Secretary Smith declared "would not become law as written."