April 24 2021 Legislative Update

We are entering what has been promised to be the last four weeks of the session. Senate committees have passed (or will, by Monday) the big money bills for the state budget and the capital construction budget. Those will be debated in conference committees for alignment and this is the sign that the end is in sight.

I was very happy to see that the Senate made no changes to the language my health care committee wrote for the capital bill. The administration sought, and received, the authority to begin construction of a 16-bed locked facility for individuals who no longer need inpatient psychiatric care but are not yet ready – for safety reasons – to return home. While we agreed to that, our concern was the severe shortfalls in other parts of our health care system for mental health needs. We added a requirement to the bill that a statewide assessment be made for those needs along with review of whether the emergency federal infrastructure funds could be used for the highest priorities identified.

It was prescient. If you saw the WCAX report this past week, it turns out that the longstanding issue of waits in the emergency room because of a log jam in diversion programs and inpatient beds has worsened significantly. We held a hearing to focus on children caught in this limbo, bringing the administration, hospitals and parents to the table.

The update we received was staggering. Last week, there were 19 children stranded in emergency rooms across the state. Fourteen of them had been waiting between one and six days. Three had been waiting seven or more days. Yes, days – not hours.

Children in a mental health crisis so severe that they need inpatient hospitalization, waiting an average of three days each, confined to a single emergency room bay without treatment, without anywhere to go. Four hospitals reported that between 20 and 35 percent of their ER beds were being occupied by patients waiting for a transfer for admission.

I’m going to copy an excerpt from a letter I received as a submission to Counterpoint, the mental health newspaper I edit as my “day job,” because it was that letter that was the red flag that led to our committee’s hearing: “[W]hile I walked through the ER to my own room waiting for [lab] results, I could see the lines of safety workers in front of doors to other patients. The doors were half open and I could see the children, the young teens, the lost blank stares of ones who had been waiting too long for help and were instead locked in as boarders of the ER. A young girl about ten sat on a bed, her eyes wet with tears, the safety worker at the door plugged into the internet, the young girl's gaze settling on me for just a moment. She knew I was just walking by, no lift of hope, no realized dream that I could help her out of the limbo she was in.”

The language we placed in the capital bill can help ensure that the need for crisis beds for kids rise to the top of the future priority list, but it does nothing for the children waiting next week or next month. We have directed the Department of Mental Health to come back this week with an emergency response plan. If we can put up emergency hospital wings for COVID standby in two weeks’ time, surely, we can do better for our children.

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Pensions

It isn’t news for me to tell you that our state employee and teacher’s pension funds are in crisis. This past week the House passed a bill that will begin to address it. I wasn’t happy with the bill, because it, once again, delays real action while the shortfall grows exponentially every month that it is not addressed. The bill creates a legislative task force to report back for legislative recommendations for action next January. However, because we failed to achieve any consensus on how to move forward immediately, it became the necessary next step, and I voted for it. As far as I was concerned, the one proposal that was placed on the table earlier was unacceptable. You don’t renege on commitments already made. You fix it going forward.

There was one improvement made, because a significant part of the problem has been that the investment decisions over the past decade have returned only about half the average returns in the market. The bill makes the investment board an independent commission and adds two financial experts to its ranks.

There was quite a kerfuffle over whether the task force was “stacked” against labor, and I heard concern from several constituents on this issue. It’s important to know what that argument was. The task force has six members from employee union groups (state workers, teachers, and state police), two members from the administration, one member from the Treasurer’s office, and six legislators. The only way that is “stacked” is if you count it as six versus nine, in other words, the legislators are a part of management. But they aren’t, and neither is the state Treasurer. This also is not a bargaining group. It’s a brainstorming group, to bring a proposal back to the legislature, and the overall public interest – employees and taxpayers alike, represented by the legislators – needs to be fully present.

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Bottle Bill

I was all in favor of the bottle bill expansion until I found out what it actually included. I think most folks thought – like I – that we were expanding the deposits to include the other single-serve beverages (water, iced tea, and so forth) so often littering our byways. Come to Green Up Day on Saturday and see for yourself.

The bill passed by the House last week goes way outside of those lines. If the Senate agrees, you’ll be paying the nickel deposit on any size beverage bottle – everything but milk or local cider. That includes a gallon of OJ or the 3-quart fruit juices; wine is added in as well. The large sizes will be a nightmare for our redemption centers, but an amendment to remove the large containers failed. Ironically, the local cider exemption was added in for local farmers who would be challenged in collecting and returning those nickels, but without a thought to include other local farm-produced beverages such as iced tea or lemonade.

The other problem is that we passed our universal mandatory recycling law since the original bottle bill. Waste haulers invested in new infrastructure to handle it all. It has been so highly successful that Vermont is now the state with the highest rate of recycling in the country. If the more valuable plastics now are diverted from that recycling stream, the waste haulers can’t offset the costs of all the less cost-efficient ones, such as paper. The result will be increases in charges for recycling from your local transfer station or your pick-up service. So, you’ll pay a lot more for groceries unless you separately bring them in for redemption, and you’ll pay more for your regular recycling as well.

Taken as a whole, this could well result in a reduction in recycling -- the very opposite of the well-intended goal. That is why I ended up voting against it.

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Literacy

It was good to be passing a bill that invests some of our federal emergency dollars in literacy education. Our kids have suffered from a year of remote learning, and literacy skills were already a problem area. But one line in the bill caught my eye: it discussed educator training in “five key areas of literacy instruction as identified by the National Reading Panel, which are phonics, phonemic awareness, vocabulary, fluency, and reading comprehension.”

I’m really hoping that the idea that phonics is a key to literacy isn’t being identified as a new idea! I went to kindergarten and first grade in the D.C. public system at a magnet school that was experimenting with a return to phonics. They found that it worked. That was 60 years ago!

I hope we’re not just returning to phonics as a key to literacy now.

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It is an honor to represent you. Please contact me (adonahue@leg.state.vt.us) or Ken (kgoslant@leg.state.vt.us) any time for questions; you can also ask to get on my direct mailing list for these updates. Remember that you can access any of my updates from the past on my blog at representativeannedonahue.blogspot.com.

April 11, 2021 Update

The House Health Care Committee is looking at the question right now about when it is right to do something to help a whole lot of people, knowing that your action will negatively impact a few. There is very little that we can do to directly influence how people must pay for health insurance, because it is so heavily regulated by federal law. A specific part of the new American Rescue Plan Act gives us a window of opportunity, however, to help ease health care premium increases for small businesses, non-profits and municipalities next year. Understanding the opportunity gives a glimpse into the complexities of our current system of paying for health care.

I should begin by saying the most important part of ARPA for many individuals is that you stand to benefit tremendously from the increase in premium tax credits. If you currently buy health insurance as an individual, rather than through work, should be checking immediately at Vermont Health Connect to see whether you should change your plan. This is most important if you are buying a plan directly from Blue Cross/Blue Shield or MVP and receiving no tax credits.

It is highly likely that you are now eligible for some help, but it requires that you buy your plan directly through Vermont Health Connect. VHC is open right now for new enrollment in part for this reason. In addition, if you are going without insurance because it was simply unaffordable to you at full price, you may now be eligible for help. Please check!

The Deeper Dive

The first background piece about our opportunity to help small business groups is these new, increased tax credits. Regardless of my angst over the huge deficits we are taking on as a nation through the economic stimulus efforts, I strongly support the aspect regarding the new investments to help people with health care.

Another “regardless”: whether moving to some sort of universal coverage system would be a wise solution in the future or not, I think our current gross disparities in the ability of people to get coverage – which means getting access to health care itself – is unconscionable. Hardworking people making the same amount of money may pay virtually nothing, or huge percentages of their income, to get insurance. If you are very poor and eligible for Medicaid, you are in great shape. If you have a job that provides excellent benefits, you are in great shape. If for reasons outside of your control you are working for an employer who offers minimal coverage, or you are self-employed, you are in a highly inequitable position.

Ever since the Affordable Care Act passed, one such moderate income group was the folks buying their own insurance who fell “off the cliff.” Tax credits go up to 400 percent of the poverty level, and up to that point, the ACA standard was that someone should not have to pay more than about 10 percent of their income for insurance. Tax credits (and at lower incomes, premium subsidies) filled in the rest. At 400 percent, the supports were cut off, and those individuals could end up having to pay 15 or 17 or even a higher percentage of their income. You fell off a cliff.

Under ARPA (the new federal rescue plan), those credits have no cutoff. It sets about 8.5 percent of income as the “affordable” standard, and as long as the basic plan exceeds that based on your income, you can get help. That puts many folks on a more equitable footing, and the cliff is eliminated.

Small Groups

The individual market is always the most expensive. The smaller the market the higher the cost, because the risk cannot be spread out over as many individuals. The next market group is the small business market, those with fewer than 100 employees. There is a large group market as well, but very few employers are in it in Vermont (about 3% of Vermonters) because at that size, they flee to the “self-insured” market, because that is regulated solely by federal law. None of Vermont’s requirements and protections apply to that category.

Since the ACA, there has been a 40% shift of large employers to becoming self-insured, and that market is now 33% of private insurance in Vermont. Dividing the other biggest pieces of pie up, Vermont has about 25% under Medicaid, 22% under Medicare, 15% in the combined small group and individual market, and about 3% uninsured. The 15% is split about 55/45 between small group and individual.

I mentioned that the individual market is the most expensive. Vermont made a controversial policy decision at the start of the ACA, requiring small business to be combined with the individual market, called a “merged market.” This helped individuals save some money because the market was bigger.

Continued in part 2

 

Continued from Part

The savings comes at the expense of the small business group, which had to pay rates that are higher. Small business is subsidizing people who have to buy as individuals. When we did an analysis from 2018, we found that this saved about 7% of the premium cost for individuals, and cost small businesses about 5% extra. The numbers may have shifted since, but that’s the ballpark we have, to work with. It has always been unfair to do this – but the dilemma was that it would strand individuals if we “unmerged” this market, and we were blocked by federal law from spreading the cost further by including larger employers.

What Changed?

The increase in federal tax credits has changed this picture. If the individual market cost increases by 7%, the vast majority of those people will be 100% shielded from that increase because of the new credits. We can unmerge the market and reduce premiums for small businesses, non-profits, and municipalities and their employees without a negative impact on the individual market.

Wow! A win-win. Well, not 100 percent.

First, this tax credit boost only lasts for two years; it can only help small business without hurting individuals for one insurance coverage year. It does seem likely that public pressure across the country will prevent Congress from repealing this, and the small business community has testified to us that even if it is only a one-year break, it is still worth it for them.

Second, not quite everyone wins. People in the individual market who have an income high enough that results in a plan costing less than 8.5% of their income would see that 7% increase. That actually represents the actual cost within that market, but it would be a change from existing cost for them. That is estimated to be fewer than 10% of folks currently in the individual market, because most folks at this income level have robust employer coverage. (Currently, about 32% in the individual market do not receive credits or subsidies; the drop would represent the impact of the ARPA increases.)

An even smaller number of people could be hurt in a more complicated scenario from something called the “family glitch.” This is an inequity that was unintentionally created by the ACA. People cannot go to the individual market and get subsidies if they are offered employer insurance, unless that insurance is deemed “unaffordable.” Unaffordable is defined as basic coverage that would cost more than about 10% of the employee’s household income.

The glitch is that the percentage is based upon full household income, but in relation to the cost of an individual (single-person) plan. The federal administration is trying to find a way to address this glitch, but it is not clear whether it will get resolved. Thus, those folks may remain not eligible for tax credits if they go to the individual market, but might still want to, if it provides better coverage than their employer plan. If we “unmerge” the markets, that market plan would cost them that estimated 7% increase in premium. This is fewer than 300 people in Vermont, but it still means we cannot say that this change would only benefit people, and cost no one.

These two sub-groups would have to pay the actual cost of the very small individual market, without the current benefit of being subsidized by small businesses. It is still the right thing to do. The estimate is that the small group and its employees could save about $17 million in this one year. But we have to have our eyes open, and acknowledge that there will be some individuals whose premiums would go up as a result.

Other Bits of Action

A bill requiring anyone who does any project valued at more than $3,500 to sign up on a new state registry as a contractor passed the House last week. The registry ties into a slew of requirements. Picture a college kid doing a summer project for a neighbor who fails to keep the records for seven years, or doesn’t provide her email change within 30 days.

The potential penalty? A $5,000 fine. It that likely to ever happen? Of course not. But we ought not to put things in statute that we do not intend to ever happen on the premise that it’s “not likely.” I can claim direct credit for one thing. I pointed out that the bill also had a cross-citation that allowed up to a one-year jail term for failure to register. As a result, the committee amended the bill to remove that penalty.

It is an honor to represent you. Please contact me (adonahue@leg.state.vt.us) or Ken (kgoslant@leg.state.vt.us) any time for questions; you can also ask to get on my direct mailing list for these updates.