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Vermont health insurance exchange / marketplace

Exchange makes major improvements; 5.5% average rate increase

  • By
  • contributor
  • October 1, 2015

On track for a successful open enrollment

Third time’s the charm? It appears that way for Vermont Health Connect, which has struggled for its first two years with technology problems that caused significant backlogs in the system.  In May 2015, there was a backlog of more than ten thousand change of circumstance requests that needed to be processed – quite significant given that effectuated enrollments in June stood at just 33,306.

But on October 1, Governor Peter Shumlin announced that Vermont Health Connect has made huge strides.  The change of circumstances backlog has been cleared (except for 186 cases that have been assigned to customer service representatives who are handling the cases and will have them completed by mid-October), and customers will be able to begin using online reporting for many change of circumstances situations beginning on Monday, October 5. The technology upgrades that Vermont Health Connect needed have been completed, and they’ll be tested throughout October.  Staff will also be trained on all of the new upgrades prior to open enrollment, which begins on November 1.

The change of circumstances backlog was among the most vexing problems for Vermont Health Connect, and the new system appears to be a significant upgrade over the manual work-arounds the exchange has been using for the past two years.  Shumlin noted that the exchange receives about 125 change of circumstances submissions per day, but staff members have been able to keep up with new submissions while also dealing with the backlog over the summer.  Going forward, enrollees who submit a change of circumstances request by the 15th of the month will see the changes reflected on their next invoice.

The carriers that offer plans through Vermont Health Connect – Blue Cross Blue Shield of Vermont, MVP Health Care, and Delta Dental – have expressed optimism regarding the exchange’s technology upgrades, and have “worked closely with the health insurance marketplace to integrate the new technology.”

Governor’s ultimatum

In a March update about Vermont Health Connect, Governor Shumlin didn’t mince words: the exchange would solve their technological problems on a tight deadline, or else other options would be pursued – including a switch to or the possibility of piggy-backing on Connecticut’s successful exchange.

Shumlin’s administration announced a timeline for improving the exchange:  By the end of May, technology must be in place to “significantly reduce” the amount of time it takes to complete account changes (things like an address change, adding or removing a dependent, cancelling coverage, etc.).  And by October, improvements must be finalized to allow for smooth plan renewals heading into the 2016 open enrollment period that starts on November 1.

On June 1, Gov. Shumlin announced that the exchange had met the first deadline successfully.  Change-of-circumstances adjustments to accounts could be made automatically, albeit only by exchange staff.  At that point, the goal was to have online change-of-circumstances updates available to the public by October (as of October 1, it appears that they have successfully met that target), but throughout the summer, staff were able to make requested changes to customer accounts automatically.  The first order of business was to tackle the 10,000 backlogged cases that needed adjustments, and staff worked throughout the summer to address them using the new automated functionality.  By mid-August, the backlog had dropped to 4,200, and Governor Shumlin noted at the time that he was “cautiously optimistic” that the backlog would be fully cleared by the time open enrollment begins in November.  Shumlin’s October 1 announcement confirms that they have successfully dealt with the backlog.

But the fix came with a price tag.  Vermont Health Connect had anticipated federal funds to cover 90 percent of the cost of the system upgrade, but found out in August that the federal government would only pay 55 percent of the bill.  That means the state may have to pay up to $2.7 million more than expected for the software updates that were completed in the first part of 2015.

In early August, Lawrence Miller, Vermont’s chief of health care reform, outlined a contingency plan that the exchange will use if they’re not able to get the online renewal system running smoothly by October.  It would have required an additional 200 staff members, and could have cost up to $3.5 million to implement.  Fortunately, it won’t be needed.

Also in August, Vermont officials announced that the exchange will pay BCBS of Vermont $1.6 million because of the technological problems with Vermont Health Connect in 2014 that resulted in past-due premiums and the carrier paying claims that shouldn’t have been paid.  That sum covers the errors that occurred between October 2013 and December 2014, although an additional payment may be necessary once the data for 2015 is reconciled.

Regulators get 2016 rate hikes down to 5.5%

In Vermont, regulators approved a 5.5 percent weighted average rate increase for the individual market for 2016. The two exchange carriers submitted proposed 2016 rates with a weighted average rate increase of 7.75 percent (8.06 percent for the small group market), but regulators reduced the rate hikes before finalizing them:

  • BCBS of Vermont had proposed an average rate increase of 8.6 percent, which regulators reduced to 5.9 percent
  • MVP had proposed an average rate increase of 3 percent, which regulators reduced to 2.4 percent.
  • Vermont does not allow the sale of off-exchange plans, so those two carriers represent the full individual market in Vermont.

This marks the second year in a row that Vermont has approved rates lower than proposed for both carriers.  And although the Green Mountain Care Board was able to reduce the proposed rate hikes during the review process, supporters of Vermont’s push for a single payer system were quick to note that a rate increase of nearly six percent is not commensurate with the much smaller income increases that people are likely to get in the coming year.  Although 64 percent of Vermont exchange customers receive premium tax credits (subsidies) offset their premiums, the other 35 percent will bear the full brunt of the rate increases for 2016.  And although Vermont abandoned it’s progress towards a single payer system at the end of 2014, many proponents are pushing to resurrect it.

At the end of June, the exchange announced that five navigator organizations would receive grants to fund the enrollment assistance process from July 1, 2015 through June 30, 2016, including the 2016 open enrollment period that begins November 1.

96.3 percent of Vermont residents insured

In 2012, Vermont’s uninsured rate was 6.8 percent – far lower than the national average, but Governor Shumlin knew the state could do better.  Although Shumlin’s administration pulled back last month from their push for single-payer coverage in the state, they’ve come very close to achieving universal coverage.  The uninsured rate in Vermont is now just 3.7 percent – the second-lowest rate in the country.  Only Massachusetts, which implemented healthcare reform several years ahead of the rest of the country, has a lower uninsured rate.

Only 1 percent of Vermont’s children are without health insurance, which is the lowest in the nation.

2015 enrollment numbers

By the end of the day on February 15, Vermont Health Connect had 45,280 total enrollees for 2015, including private plans and Medicaid.  This was an increase of nearly five thousand people since February 9, and includes:

  • 6,211 new private plan enrollees (3,471 had paid for their plan already)
  • 25,341 private plan renewals (20,442 had paid for their plan already)
  • 9,211 new Medicaid/Dr. Dynasaur enrollees
  • 4,517 Medicaid/Dr. Dynasaur renewals

Of the 31,552 enrollees in private plans, 75.7 percent (23,913 people) had paid for their coverage as of February 15.  And of the people who had completed their enrollments by February 21, 62 percent are receiving premium subsidies.  This is much lower than the percentage in most states, but Vermont is one of only two exchanges (DC is the other) where all new plans must be purchased through the exchange – there are no off-exchange plans for sale in Vermont, although a bill currently in the legislature would change that.

Officials had predicted somewhere between 3,000 and 8,000 new enrollees in Vermont for the entire open enrollment period.  With 6,211 new private plan enrollments, the exchange clearly met their target.

By the end of March, total effectuated private plan enrollment in Vermont Health Connect stood at 34,923, and that number had fallen to 33,306 by June 30.  Attrition is a normal part of the individual health insurance market, particularly when the bulk of enrollments are confined to one quarter of the year.

Until early January, Vermont Health Connect had been lumping their Medicaid enrollments in with private plan enrollments rather than separating them out the way most states do.  This caused some discrepancies between the state reports and the HHS report, but Vermont has been reporting Medicaid enrollments separately for much of 2015.

2015 premiums and renewals

Two health insurance carriers – Blue Cross Blue Shield of Vermont and MVP Health Care – are offering nine plans each in Vermont Health Connect.  Rates in Vermont’s exchange were the fifth highest in the nation in 2014, due in part to the low number of carriers participating, and also to the fact that Vermont has the second-oldest population in the country and utilizes community rating, with no variation in premiums based on age.

In early September, the Green Mountain Care Board made reductions to the proposed rate increases for both of the carriers that participate in the state’s exchange.  BCBSVT (which covers more than 90 percent of the exchange’s enrollees) had submitted 2015 rates with an average increase of 9.8 percent, and the board cut that down to 7.7 percent.  MVP Health Care had proposed a rate increase of 15.3 percent, which was reduced to 10.9 percent during the review process.  The vast majority (about 97 percent) of the plans sold so far have been from BCBSVT, so the weighted average rate increase for 2015 is about 7.8 percent.

Enrollees who had a 2014 plan through Vermont Health Connect were able to automatically renew their coverage and applicable subsidy into 2015.  But it was recommended that enrollees take some time to compare the 2015 plans before the end of open enrollment (February 15).  The average rate increase for the benchmark plan (second-lowest-cost silver plan) in Vermont is 8.3 percent, regardless of whether people switched carriers or not.

New leadership

Mark Larson, Commissioner of the Department of Vermont Health Access (DVHS), and the person who oversaw the roll-out of Vermont Health Connect in 2013, stepped down from the Shumlin Administration in March 2015.  DVHS oversees Vermont Health Connect, along with other Vermont health programs.  Governor Shumlin announced on February 9 that he had selected Rhode Island’s former Secretary of HHS and lawmaker, Steven Costantino, to be the new Commissioner of DVHS.

Lawrence Miller had been in charge of daily operations at Vermont Health Connect, but Vermont’s Human Services Secretary, Harry Chen, took over that role in January so that Miller could work more closely with the legislature.  Miller’s official capacity is Chief of Health Care Reform, so his time is devoted to legislation while lawmakers are in session.

Costs higher than anticipated

For the 2015 fiscal year that runs through June, Vermont Health Connect is expected to cost $9.7 million more than originally projected.  The overage mostly stems from switching vendors and all of the manual processing that has been necessary in order to keep the exchange functional when its automated systems weren’t working.

$3.5 million of the additional funding is expected to come from Vermont’s general fund, but the rest will be picked up by the federal government via grants and Medicaid funding.

Improving the exchange

To address the web problems that the exchange experienced in 2014, Vermont Health Connect temporarily shut down its website for repairs in mid-September 2014, and it remained off-line for two months.  During that time, interactive tasks like enrollment (triggered by a qualifying event) and payments could not be processed through the website (visitors had to contact the call center instead).

The problems were mostly resolved and the exchange website was up and running again as of November 15, just in time for the second open enrollment period.

For much of the first open enrollment, premiums could not be processed online and instead had to be sent by mail.  That was eventually resolved and starting on March 3, online payment became available through Vermont Health Connect.  50 percent of new enrollees were using the e-pay feature after it became available.

In early June 2014, Vermont Health Connect hired IT contractor Optum to help with the “change of circumstances” backlog stemming from a flaw in the exchange website.  The transition from CGI to Optum is explained in this August 4 press release from Vermont Health Connect.

2014 enrollment numbers

At the end of the 2014 open enrollment period, Vermont was the clear leader in terms of the percentage of eligible residents who had enrolled in the exchange (85%; 38,048 people had completed their private plan Obamacare enrollments in the Vermont exchange by April 19.  An additional 41,704 were eligible for Medicaid by that date).  

This is more than double the second place state (California, with 42%), but Vermont is the only state (other than the District of Columbia) that has required everyone to enroll through the exchange, with no off-exchange plans available, so it’s understandable that the exchange has enrolled such a high percentage of eligible residents. 

In early August, the state’s Chief of Health Care Reform, Lawrence Miller, explained that they are considering the possibility of direct-to-carrier enrollment for people who don’t qualify for subsidies, but noted that adding this option is “not as simple as flipping on a switch” and cautioned that people who enroll in plans outside the exchange are locked out of subsidies for the whole year unless they have a qualifying event, even if their income drops mid-year.  This is certainly a valid point, and has been an issue in 2014 for people in other states who enrolled in off-exchange plans.

Single payer no longer on the table for 2017

Vermont created a health benefit exchange to comply with the Affordable Care Act, but the state had plans to go well beyond that. A 2011 state law envisions Vermont with a single-payer health care system as soon as 2017, although reports surfaced in April of a memo from consultant Ken Thorpe (hired by the Vermont legislature to help them wade through the ins and outs of creating the single-payer system) regarding the possibility of a less-robust system that would let people purchase supplemental coverage through private plans in the exchange rather than relying solely on a single-payer model.

But after four years of working towards the single payer goal, Governor Shumlin announced on December 17, 2014 that the “time is not right” to continue to pursue a single payer system for Vermont.  Although Shumlin had pushed for single payer harder than just about any high ranking elected official, it ultimately came down to money, and there was just no way that Vermont could afford the switch to single payer for now.  It would have come with payroll taxes about 11.5 percent higher than they are now, and income taxes about 9 percent higher.  Not surprisingly, reactions were mixed after Shumlin’s announcement, with single payer advocates deeply disappointed in the decision, while other groups welcomed the news.

For the time being, it’s not clear if or when Vermont will re-examine the issue of single payer healthcare.

No grandmothered plans in Vermont

Vermont’s 2012 Act 171 required that all non-grandfathered existing individual and small group policies terminate at the end of 2013 and be replaced with ACA compliant plans.  Unfortunately, Vermont’s exchange was plagued with technological difficulties and was still not operational as of the beginning of November 2013, a full month into open enrollment.  As a result, Governor Shumlin opted at the end of October to utilize a contingency plan that was built into Act 171, allowing for existing policies to be extended into 2014 in order to avoid lapses in coverage.  The Governor allowed existing individual and small group policies to be extended until March 31, 2014, and residents had until that time to enroll in a policy through Vermont Health Connect.

In November 2014, Governor Shumlin won the popular vote over Republican Scott Milne by roughly 2,400 votes.  But neither candidate received over 50 percent of the vote, so the final decision was left to the state legislature.  In early January, the state legislature voted for Shumlin, and he began his third two-year term as governor.

Vermont Health Connect history

Vermont received $172 million in four federal grants designated for creation and implementation of the exchange as well as outreach efforts to get as many people enrolled a possible.  Vermont received more federal funds for its exchange than any other state.  As of mid-June 2014, the exchange had spent about $72 million of that money, leaving them with about $100 million to work with as they head into the 2015 open enrollment period.

Vermont Health Connect was authorized by the state legislature and signed into law by Governor Shumlin in 2012. Vermont used a 2012 federal grant of $104.2 million to design a technology system that supports the state-based health insurance exchange (and would have transitioned to single payer in 2017 had the state continued on that path).

Vermont’s health insurance assistance programs VHAP and Catamount ended on March 31, 2014 and members needed to transition to Vermont Health Connect by March 15 in order to have new coverage as of April 1.  There was concern that the new plans – even with heavily subsidized premiums – are unaffordable for many VHAP and Catamount members, since the out of pocket costs on the new plans are significantly higher.

Coverage for small businesses

Vermont had intended for all new individual and small group policies to be purchased through the exchange beginning in 2014, but on January 14, the state announced that small businesses that had not yet purchased their plan through the exchange could buy one directly through Blue Cross Blue Shield of Vermont or MVP Health Care.  The state has confirmed that small businesses will continue to be allowed to purchase insurance directly from carriers for 2015 plans.

Blue Cross Blue Shield of Vermont covers 3,500 groups through Vermont Health Connect – about 96 percent of the exchange’s small business volume – and announced in September 2014 that it would be launching an improved web portal on October 15 where groups would be able to update and change their Vermont Health Connect policies.  If employers allow it, the Blue Cross portal will let employees choose from the full suite of Blue Cross small group plans.

Individuals still must purchase their policy through the exchange, although that may change in the future.

Vermont health insurance exchange links

Vermont Health Connect

Vermont Health Care Reform