Shumlin administration officials have recommended BlueCross BlueShield (BCBS) of Vermont as the “benchmark” plan for benefits to be offered under the federally required insurance “exchange.”
The state's two other health care insurance companies - Cigna and MVP Health Care - must match the BCBS benchmark for coverage offered in the exchange.
The recommendation is another step in the Shumlin administration's long climb toward health care insurance reform under the Affordable Care Act. In a little more than a year, the state will be required to offer a health care “exchange” for about 74,162 Vermonters - or about 12 percent of the state's population.
Individuals and businesses with fewer than 50 employees will be required to purchase insurance through the exchange starting Oct. 1, 2013. Coverage begins in 2014; at that point, the federal government will offer subsidies for individuals who earn less than $92,500 per year.
Vermont is the only state to require small businesses to participate in the program. Gov. Peter Shumlin administration officials have suggested that companies with fewer than 50 employees drop coverage of workers so that the workers can qualify for individual subsidies.
Robin Lunge, the director of health care reform for the Shumlin administration, and Mark Larson, the commissioner of the Department of Vermont Health Access, recommended BCBS as the benchmark plan to the Green Mountain Care Board last Thursday.
The board will decide which insurance plan will serve as the model for the exchange. Two other insurers besides BCBS have been considered: MVP, based in Schenectady, N.Y., and Cigna, a global health insurance company with offices in Burlington.
Lunge said the state analyzed about 500 plans offered by the state's three insurers. Officials determined that despite the large number of plans available in Vermont, there is very little difference between the benefits packages for consumers.
The Affordable Care Act requires individual and small group health insurance plans to cover what are known as “essential health benefits.”
Under the federal law, the “benchmark” plan must cover the following: emergency care, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, chronic disease management, lab tests, wellness and prevention, pediatric care, and rehabilitative services for adults and habilitative services for children with developmental issues.
Lunge and Larson said using BCBS as the “benchmark” would be the least disruptive option because 77 percent of Vermonters who are currently in the small group or individual markets use the nonprofit insurer. The MVP plan is virtually identical to the benchmark, but fewer Vermonters use this carrier.
“We are choosing something as our baseline that is very traditional in the market today,” Larson said.
Cigna insures state employees, and some advocates have held up the Vermont State Employees Association benefit package as the preferable option for the exchange. Despite the perception that the Cigna plan for state workers is a “richer” plan, Lunge said an analysis from the state shows there is a 1 percent difference between the state employee package and the BlueCross BlueShield “benchmark” plan.
The 1 percent difference? State employees receive coverage for infertility treatments and adult vision, Lunge said.
Once the Green Mountain Care Board settles the benefit “benchmark” question, insurance carriers will determine how much it will cost to offer the package based on “cost-sharing” mechanisms consumers would be required to pay for - a mix of co-insurance, deductibles and co-payments.
Under the federal law, deductibles in the exchange are limited to $2,000 for individuals and $4,000 for families. Premium prices will be based on the actuarial value, or consumer cost-sharing level.
The plans, approximately 10 to 20 in all, will also be rated by actuarial value.
The Affordable Care Act has set up standards for four categories, based on the ratio of the amount paid by insurers and consumers: bronze (60 percent covered by insurance/40 percent by consumers), silver (70 percent insurance/30 percent consumers), gold (80 percent insurance/20 percent consumers), platinum (90 percent insurance/10 percent consumers).
The benefits offered in the exchange will be identical - no matter what the actuarial value, Lunge and Larson said.
Apples to apples
The exchange is designed to make it easier for consumers to make apples-to-apples comparisons between plans, Larson said. The information will be available on a state website.
Vermont Public Radio reporter Bob Kinzel asked if the administration was requiring businesses to take a leap of faith by letting workers fend for themselves when there is uncertainty about the law.
“One of the challenges is there is always uncertainty in terms of future policy,” Lunge said. “We have to make decisions about what we know and what is likely to happen.”
Since the U.S. Supreme Court ruled in June to allow the individual mandate provision of the Affordable Care Act to stand, more states are planning an exchange, Lunge said.
“To me, it doesn't make sense to make decisions based on unknowns,” she said.
Jeffrey Wennberg, director of Vermonters for Health Care Freedom, an anti-single payer group, doesn't oppose the exchange per se, though he said the reason there is so little variation in benefits from one insurer to another is because the Vermont Legislature has “mandated coverage of a great many health benefits over the years.”
Wennberg tied the mandates to a dramatic increase in premiums over time. “This is also a major reason why Vermont health insurance premiums are high compared with other states,” he wrote in a statement.
In 2016, the exchange will include businesses with 51 to 100 employees. After that, the Shumlin administration hopes to bring large employers into a single-payer style plan.
Wennberg said at that point Vermonters will no longer be able to choose between insurers. “Notably absent from the administration's talking points was the fact that within three years of the establishment of the exchange all choice will be outlawed and everyone who was forced into the exchange will be herded into the single payer government monopoly plan,” Wennberg said.
Donna Sutton Fay of the Vermont Campaign for Health Care Security, an affordable health care advocacy group, called the benchmark recommendation a “landmark first step in Vermonters learning about what health care will look like in 2014.” She said BCBS offers better coverage for mental health and substance abuse treatment than MVP.