Legislative Update, Feb 1, 2020

Legislative Update

Rep. Anne Donahue

Feb. 1, 2020

In my last report, I tried to drill down into explaining OneCare, Vermont’s accountable care organization, created by hospitals and doctors to be able to accept lump sums to provide all of a person’s care instead of getting paid for each separate service they provide.

The important thing to understand is that this is payment reform, not financing reform.

When most people think about health care reform, they think about the financing issues: affordability and equity for those who pay for care, rather than how providers are being paid.

The amount of money people pay for their health insurance ranges from zero to 15 percent of their income or more. That is obviously not equitable.

What are we doing about that? Last year, we asked for a report on the disparities and how we might address them.

The vast majority of Vermonters have their care paid for through three avenues: either Medicaid (24 %) (very low income), Medicare (21%) (elders and those with disabilities), or an employer buying a commercial product in what we call the “large group” or self-insured market (32%.)

Only a small share – 7% -- of folks receive their insurance through the small group (employers with fewer than 100 employees) or individual markets (5%), which are combined under what we call the Vermont Health Exchange. No one else is on that infamous Exchange.

Insurance is generally more expensive for individuals because they are not mixed into a larger pool of people, so they present greatest risk for an insurer. Vermont has tried to help address that by combining individuals into the same pool with small employer groups.

We learned from the new report that if this market was split, small employers on the Exchange would be paying 5% less for insurance, and individuals would be paying 7% more.

We don’t want people who have to buy their own insurance to have an even greater cost burden, but it’s only a small slice of small employers who end up paying to help with that burden.

Even larger inequities come in two other places. Folks who are low income and buy individual plans get a lot of help with subsidies. At a certain tipping point, however, they lose all subsidies.

In 2019, the federally defined poverty level for a couple was $16,910. Because of subsidies, a couple earning 300% of poverty (each making slightly under minimum wage) would pay nothing for the lowest-cost Exchange plan and at 400% of poverty they would pay less than 3% of their income.

However, the same couple at just over 400% (that is, $67,600) would have to pay more than 15% (more than $10,000) of their annual income to pay the premiums in the lowest-coverage Exchange plan.

This is the cost for the premium only, and these numbers are for plans with a $6,000 deductible before coverage begins, with a $7,900 out-of-pocket cap, per person, so if either had any significant medical event, they’d be into well over 25% of family income.

The hidden group (the state doesn’t know what plans employers provide) are those who receive insurance from employers, but have plans that have those same very high co-pays and deductibles.

When we look at the cost of housing and other basic needs, the high costs and the variation in what people have to pay out of their income in order to get access to health care is profoundly inequitable.

It is because I think that this is a greater inequity and a greater need to address that I oppose both the family leave act. Family leave would be creation of a new social benefit when we haven’t invested yet in fixing access to a more essential social benefit.

What would it cost to help address some of these disparities – the question we asked for the report this year?

If we divided the individual and small markets, giving a boost to small employers to provide more affordable coverage, we could protect individuals who need to buy their own insurance by increasing subsidies for those who have to pay more than a certain amount of their income.

The study we requested tells us that for $2.2 million, we could reduce premiums by 10% for those between 400% to 500% of poverty (the “cliff”). For $10m, we could reduce all Exchange premiums by10% via state back-up insurance for high claims.

Where would money for market reforms or support like this come from? It would need to come in from others of us, in order to bring more equitable access for everyone.

For example, if we didn’t implement the family leave act but imposed the same tax that it is going to cost, $29 million would be raised for health access equity.

Another example could be an increase in the rate of the penalty we impose on employers who do not provide insurance for employers; that would level the playing field among those who do and don’t.

I’m hoping we can put together some concrete options for detailed fiscal analysis that could result in a plan to enact next year.

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Drug Pricing

We’ve heard two pieces of hopeful news regarding the ever-increasing costs of drugs.

The effort to create a multi-state buying pool for Canadian drugs that we initiated last year is moving from pie-in-the-sky to serious potential.  The feds are moving forward on rulemaking, and Vermont has submitted a concept paper.

And Blue Cross/Blue Shield has just formed a partnership with a non-profit pharmaceutical company that is going to begin producing several lower cost generic drugs.

Yes, you read that right. A non-profit pharmaceutical company. (It you’re interested in details, look up this company at CivicaRx.org)

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Data Sharing

Last year, we approved the change from an “opt-in” to “opt-out” system for Vermont’s Health Information Exchange. That’s the information data base that allows statewide health provider access to your medical information.

Opt-in meant you had to give affirmative consent, and because people weren’t being asked, not enough people were consenting to make it a useful tool for providers. Opt-out means your records are accessible unless you initiate the contact to say, “no.”

We approved this change only with insistence on an aggressive public information campaign and very easy and accessible ways for people to exercise the right to opt out. We have now received the report on how that is being done.

I admit to being pleased and impressed, because government doesn’t always do a great job with this sort of thing.

If you haven’t already seen the information on Front Porch Forum or elsewhere, go to this website for a highly consumer friendly explanation and a direct link for opting out: vthealthinfo.com

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Marijuana

The bill on a “tax and regulate” sales market for marijuana – which is currently legal to possess but illegal to buy or sell – is moving through evaluation on the House side, and came to my committee for input on health issues.

I though the best testimony came from a physician with the Department of Mental Health, who said, in effect, that the problem is not that marijuana presents extreme dangers but rather, that there is such casual dismissal of the health risks that actually do exist, in particular when it involves heavy use or use by youth.

We recommended that the required health warnings on packaging be provided directly by the Department of Health rather than – as the bill had proposed – listed information set by the (not-well-educated) legislature or a lay oversight board.

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Bill Sponsorships

I’ve had longstanding concerns about transparency and a lack of public confidence in how we review the use of lethal force by law enforcement. Last spring, California enacted a law that created a new standard of review, and I asked for a bill that proposes that Vermont look at that approach.

I think our law enforcement community is highly professional, but there is a lot of public misunderstanding about how these deaths are reviewed, based solely on the seconds before the use of force rather than any broader context.

We also look at whether the lethal force was “justified” rather than whether it was “necessary” to protect the police and public.

The bill was taken up for initial testimony last week, and our state Attorney General strongly urged that Vermont look at these potential revisions.

He is the one who has made most of the findings over the past decade that these deaths in Vermont were justified, and he said he is deeply concerned about the need for greater public trust in how we review them.

On other bills, I’ve co-sponsored new efforts to eliminate state taxation on social security and on military retirement pay, and for increasing hospital price transparency and ownership of medical data.

I missed the sponsorship sign-on but am supporting a bill introduced by Topper McFaun of Barre to eliminate co-pays and to significantly increase access to contraception.

This should be an area whether “pro-life” and “pro-choice” can unite. Preventing unwanted pregnancy prevents the need for a choice to end a life.

I have also co-sponsored a resolution stating apology for our state-sponsored eugenics movement in the 1930’s, under which we created a system of sterilization for society’s unwanted: the Abenaki people, immigrants, and people with disabilities.

I first brought this resolution forward some 10 years ago, but now others are helping to lead the effort and there is momentum to move forward.

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Feel free to get in touch any time during the session with Rep. Goslant and me. There is a lot more going on than we can summarize, so if you have questions about something – ask. We are buried in committee work and don’t always know what is happening in other committees, but we can find out for you. It is an honor to serve you. (kgoslant@leg.state.vt.us; adonahue@leg.state.vt.us) You can see my archives of legislative updates at www.representativeannedonahue.blogspot.com, and can sign up directly with me to receive them by email.