June 6, 2006
VERMONT HEALTH CARE LEGISLATION
By: John Kasprak, Senior Attorney
You asked for information on Vermont's recently adopted health care coverage legislation.
In May 2006, the Vermont General Assembly passed, and the Governor signed, legislation establishing a new state-funded insurance program for the uninsured and requiring employers to pay assessments if they do not offer health coverage to their workers. The new program, called “Catamount Health,” will offer health care coverage to 20,000 to 30,000 uninsured state residents who do not qualify for other public programs. Coverage will be sold by private companies and the state will subsidize premiums on a sliding scale based on participants' income. Catamount Health will also subsidize employer-sponsored insurance for eligible people.
Vermont's legislation focuses on managing chronic illnesses in the hopes of improving the quality of care, while reducing the rate of growth in health care costs. The plan will have no cost-sharing to the patient for preventive care or recommended services for chronic illness. Catamount Health will also subsidize employer sponsored insurance for eligible people. Funding for the program derives from an increase in state tobacco taxes, employer assessments, premium payments, and from federal matching funds if the federal government permits including Catamount Health in the state's Medicaid waiver.
It also establishes a commission to monitor the state's health care reform activities.
The Vermont health reform initiative is actually comprised of two pieces of legislation, H. 861(“An Act Relating to Health Care Affordability for Vermonters”) and H. 895 (“An Act Relating to Catamount Health.”) These can be viewed at http://leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/bills/passed/H-861.HTM and http://www.leg.state.vt.us/docs/legdoc.cfm?URL=docs/2006/bills/passed/H-895.HTM respectively.
VERMONT HEALTH CARE AFFORDABILITY ACT
Health Care Reform Principles
The Vermont General Assembly adopted the following guidelines as a framework for reforming heath care in the state.
1. It is the state's policy to ensure universal access to and coverage for essential health care services for all Vermonters.
2. Health care coverage needs to be comprehensive and continuous.
3. Vermont's health delivery system must model continuous improvement of health care quality and safety.
4. The financing of health care in Vermont must be sufficient, equitable, fair and sustainable.
5. Built-in accountability for quality, cost, access, and participation must be the hallmark of Vermont's health care system.
6. Vermonters must be engaged, to the best of their ability, to pursue healthy lifestyles, to focus on preventive care and wellness efforts, and to make informed use of all health care services throughout their lives (H. 861, §1).
Only uninsured Vermonters are eligible for Catamount Health. The act defines an “uninsured person” as someone who:
1. does not qualify for Medicare, Medicaid, Vermont Health Access Plan (VHAP, a health insurance program for uninsured adults not eligible for Medicaid), or Dr. Dynasaur (a state program offering health care insurance for children and teenagers up to 18 and pregnant women);
2. has not had private or employer-sponsored insurance that includes both hospital and physician services for the last 12 months;
3. lost private or employer-sponsored coverage during the last 12 months because of loss of employment, death of the principal policyholder, divorce or dissolution of a civil union, no longer qualifying as a dependent under the plan of a parent or caretaker relative, or no longer qualifying for COBRA or state continuation coverage; or
4. lost college or university-sponsored health insurance because of graduation, leave of absence, or other termination of studies.
An individual 18 or older who is claimed on a tax return as a dependent of a resident of another state is not eligible for Catamount Health.
Catamount Health Basics
Catamount Health, which is voluntary, has two major parts. First, it is designed to create a new insurance market especially for people without insurance who do not have adequate insurance available to them from an employer. Insurers will be invited, not required, to offer products in this market. (Two insurers, Blue Cross Blue Shield and MVP have indicated they would like to participate, according to the Committee of Conference Report on H. 861.) There will be one standard plan with no cost to the patient for preventive care such as mammograms or for recommended services for chronic illness, such as eye exams for people with diabetes.
The state will require hospital or medical service corporations and nonprofit HMOs to offer Catamount Health if no carriers offer it voluntarily.
People who are uninsured and not eligible for adequate coverage through employment will be eligible to purchase Catamount Health and anyone under 300% of poverty (about $60,000 for a family of four) will receive state assistance with their premiums from the state.
The second major part of Catamount Health is a mechanism to provide coverage for people who are uninsured but eligible for insurance through their employers, if the insurance meets coverage standards. In this case, the state will help the employee pay for premiums and cost sharing (deductibles, coinsurance) for care related to chronic conditions.
The legislation takes a step-by-step approach to increasing enrollments, with the intent of establishing a “successful track record” before adding people over time (Committee of Conference report-Details). The act requires the Commission on Health Care Reform, which the act creates, to review the Catamount Health market for cost–effectiveness no earlier than October 1, 2009.
Mandatory insurance will be considered if the goal of 96% coverage is not achieved by 2010. The commission would be responsible for determining the needed analysis and criteria for implementing a mandatory health insurance requirement by January 1, 2011 if the goal is not met. The commission would have to address methods of enforcement, proof of insurance, and any other criteria necessary for the mandate to be effective in achieving universal health care coverage. (See below for more information on the commission.)
More detail on Catamount Health (i.e., benefits, co-pays, co-insurance, deductibles, reimbursements etc.) is provided in Attachment “A”.
Catamount Health will be financed in a number of ways: premiums paid by individuals based on income, an assessment on employers, an increase in tobacco taxes, and matching federal dollars.
Premiums. Under Catamount Health, individuals pay premiums based on income. An uninsured resident with income up to 300% of the federal poverty level ($29,400 annually for one person) pays premiums on a sliding scale. People with higher income pay the full premium price (see Attachment “B”).
Employer Assessment. The employer assessment is based on three employee groups: (1) all employees of employers who do not offer insurance to anyone; (2) employees of employers who offer insurance to some employees , but who are not eligible themselves; and (3) employees who are eligible for coverage through their employer plans but choose not to enroll and are uninsured.
The assessment is calculated quarterly and based on full time equivalents (FTEs). An FTE employee works 40 hours a week for 13 weeks. Employees who work part time, or not for the entire quarter, are converted by dividing their actual hours worked by 520 (40 hrs X 13 weeks). The first eight FTEs are excluded from the calculation of the assessment in 2007 and 2008. For example, if a firm has 10 FTEs who do not have coverage, the assessment is based on two employees. The exemption is adjusted to six employees in 2009 and four in 2010.
The employer assessment, which begins April 1, 2007, is $365 per FTE in the first year and will increase at the same rate as the premiums in Catamount Health. The administration will recommend possible changes in treatment of seasonal employees in January 2007.
Tobacco Taxes. The act increases the tax on cigarettes from $0.60 to $1.79 per pack on July 1, 2006. It goes up an additional $0.20, to $1.99, on July 1, 2008. Little cigars and roll-your-own tobacco will be taxed as cigarettes. The tax on moist snuff is changed from 41% of the wholesale price to a per ounce basis.
Federal Matching Funds. The state will apply to the federal government for permission to include Catamount Health in Vermont's “Global Commitment to Health” Medicaid waiver. If permission is granted, the federal government will then be paying about 60% of the cost of Catamount Health.
The act provides for an enrollment cap for Catamount Health assistance to protect the state's fiscal integrity.
Chronic Care Management
The act makes chronic care management available to every resident, whether privately insured, covered under a public program, or currently uninsured. This will include early and coordinated screening for chronic conditions; better management of chronic disease; emphasis on patient self-management; and payment to providers that rewards quality and disease management, not just quantity of treatment.
A chronic condition is defined as an established clinical condition that is expected to last a year or more and requires ongoing clinical management. Examples include diabetes, high blood pressure, cardiovascular disease, cancer, asthma, pulmonary disease, substance abuse, mental illness, high cholesterol, and spinal cord injury.
The act also codifies the Vermont “Blueprint for Health” prevention and chronic disease management plan and directs chronic care management in Medicaid and Catamount Health through contracted services that, based on experiences in other states, will include a guarantee of net savings to the state or will put contractor fees at risk if costs are not reduced (a “pay for performance” demonstration project).
Health Care Reform Commission
The commission is charged with monitoring health care reform initiatives and recommending to the General Assembly actions needed to meet health care reform. It is under the direction of co-chairs appointed by the House speaker and the Senate president pro tempore. Other members include four representatives appointed by the speaker, four senators appointed by the Committee on Committees, and two nonvoting members appointed by the governor. The commission must monitor the development, implementation, and ongoing operation of health care reform initiatives as defined in previously enacted legislation and this act.
The commission receives administrative, fiscal, and legal support from the Vermont legislature's Joint Fiscal Office and the Legislative Council. It may also, with the approval of the House speaker and Senate president, hire one or more consultants or experts knowledgeable in health care systems, financing, or delivery to assist in its work.