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VBSR Testimony - House Health Care Committee, Re: Governor’s Budget Proposal

VBSR Testimony to House Health Care Committee
January 30, 2013
Daniel Barlow, VBSR Public Policy Manager

Providing health insurance to employees continues to be the most uncontrollable cost facing VBSR businesses.  Year after year, the double-digit increase associated with the employer-sponsored health insurance system is the main obstacle to the success of VBSR businesses. The system we have is not working for employers or Vermonters.

Essential to building a sustainable health care system will be cost containment.

Vermont needs to move to a system that eliminates redundancies, decreases unnecessary medical use and is more affordable for Vermonters. Real cost savings have not been realized yet and VBSR’s health insurance rates for our members went up double digits again this year. If we don’t get our arms around this problem, any system we build will face some of the same fundamental problems as our current system.

VBSR Policy Poll (2012): Will Vermont’s health care reform plans be good or bad for your business? Good: 41%; Bad: 11%; No Change: 17%; Not Sure: 32%.

Medicaid Cost Shift
VBSR supports the Governor’s proposal to increase the state’s Medicaid reimbursement rate by 3%. When the government underpays for services, that cost is shifted over to those who are paying into the system, including many businesses. We encourage the Legislature and the Green Mountain Care Board to ensure that this small fix does bring about the estimated $25 million in savings.

VHAP/Catamount Populations
We continue to be concerned that the transition of these Vermonters into the Exchanges could lead to an increase in the state’s uninsured, regardless of federal tax penalties under the Affordable Care Act.  This problem facing the Legislature this year makes it clear just how dysfunctional our piecemeal health care system is and why we need to move toward a system that is funded sustainable and fairly based on a person’s ability to pay.

Catamount Assessment
Act 191 of the 2006 Legislature requires employers with more than 4 FTEs to pay into a state health care fund if they are not contributing to their employees’ health insurance plans. Meanwhile, Act 171 of the 2012 Legislature requires employers with less than 50 employees to purchase insurance through the Exchange.

The Legislature and the state has promoted the idea that it may be beneficial for some of these employers to drop their private coverage and allow workers to purchase on the Exchange as individuals – subsidized by the federal tax credits authorized under the 2010 Affordable Care Act.

VBSR is concerned that employers using this mechanism – a step toward a system that decouples insurance and employment – will then face fines through the existing Catamount assessment, despite that the program no longer exists. Vermont should not suggest these businesses drop coverage and then punish them for doing so. This disconnect needs to be addressed before the Exchange enrollment begins.

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