Highlights and updates
- 2018 enrollment: 27k on-exchange & nearly 7k direct-to-carrier enrollments
- 8.5% average rate hike is lower than insurers proposed
- Approved 2018 rates were based on assumption CSR funding would continue
- Approved rates were implemented, despite elimination of CSR funding
- But impact of CSR funding cut is modest in VT, thanks to merged risk pool
- Reduced navigator funding, but increased overall in-person assistance
- Both insurers remained in the exchange for 2018
- Open enrollment is now November 1 – December 15
- State funds additional cost-sharing reductions
Vermont exchange overview
Vermont has a state-run health insurance exchange (Vermont Health Connect), and has long been a pioneer in health care reform. Initially, Vermont was planning to switch to a single-payer system as of 2017, but abandoned that plan in late 2014. More than 27,000 people enrolled in individual market plans through Vermont Health Connect during the open enrollment period for 2018 coverage, in addition to 6,900 people who enrolled in the same plans directly through the two insurers that offer ACA-compliant plans in the state.
Vermont is one of only two states that has merged its individual and small group risk pools, and one of only a few states that has continued with the original plan to include groups of up to 100 employees under the definition of “small group” as of 2016, despite the federal PACE Act that became law in the fall of 2015 and allowed states to keep groups of more than 50 employees classified as large groups.
For 2016, Vermont began to allow people to enroll in individual market coverage directly through an insurance company (prior to that, all enrollments were through the exchange). In 2017, they began encouraging that pathway for all applicants who aren’t subsidy-eligible, in an effort to reduce costs and improve customer service (details below). As of January 2018, enrollment in on-exchange plans stood at roughly 27,000 people, in addition to 6,900 people enrolled in full-cost direct enrollment through the state’s two insurers, and 46,000 people enrolled in small group plans.
For perspective, as of May 2016, there were 28,049 people enrolled in individual health plans through Vermont Health Connect, along with 44,881 people enrolled in small group plans through the exchange. The majority of the exchange’s enrollees — another 144,436 people — were enrolled in Medicaid.
2018 enrollment: Very similar to 2017 enrollment, despite shorter enrollment period
Open enrollment for 2018 coverage in Vermont ended on December 15, 2017, lasting only half as long as open enrollment for previous years. A few days later, Vermont Health Connect reported that total enrollment in individual market qualified health plans for 2018 stood at about 34,000, with 23,000 people receiving premium subsidies, and 11,000 paying full price.
But those 11,000 people paying full price include on and off-exchange enrollees. Vermont used to require all individual market plans to be sold only through Vermont Health Connect, but they relaxed those rules in 2016, allowing direct-to-carrier enrollments for people who aren’t eligible for premium subsidies (there are more details below about how this works). Vermont Health Connect confirmed that effectuated enrollment as of late January 2018 stood at:
- 22,923 people receiving premium subsidies
- roughly 4,300 people paying full price on-exchange
- roughly 6,900 people paying full price off-exchange (full-cost individual direct enrollment).
So enrollment in private plans through Vermont Health Connect for 2018 stood at roughly 27,223 as of January 2018, and an additional 6,900 people had full-cost individual direct enrollment coverage.
As of February 2017, enrollment in on-exchange plans stood at 28,775, in addition to 5,662 people enrolled in full-cost direct enrollment through the state’s two insurers. As noted above, Vermont Health Connect has been encouraging people who aren’t eligible for premium subsidies to use the full-cost direct enrollment pathway. So while enrollment in the exchange is slightly lower in 2018 than it was in 2017, enrollment in full-cost direct enrollment plans has grown. The result is that total enrollment in qualified health plans is very similar to where it was in 2017, despite the shorter enrollment period.
Open enrollment: November 1 to December 15
Open enrollment for 2018 coverage was much shorter than it had been in previous years, running for just over six weeks in the fall of 2017 (November 1 to December 15). The open enrollment window was originally set to continue until the end of January and switch to the shorter window in the fall of 2018, but the Market Stabilization Rule that CMS finalized in April 2017 laid out the new dates.
State-run exchanges had the flexibility to use special enrollment periods to adjust their enrollment windows this fall, and 10 of the 12 did so. But Vermont Health Connect (and Idaho’s exchange) opted to use the November 1 – December 15 window, and will continue to use it in future years.
Vermont Health Connect’s Sean Sheehan explained that the state’s low uninsured rate and use of automatic renewal minimize the need to extend open enrollment. Vermont Health Connect was one of the few state-run exchanges that did not issue end-of-open-enrollment extensions for the last few years, so it was unsurprising that the exchange opted not to extend open enrollment for 2018 coverage. And ultimately, total enrollment (including through the exchange and full-cost direct enrollment) ended up virtually the same as prior years..
Approved average 2018 rate increase just 8.5%, based on assumption that CSR funding would continue
There are two insurers that offer individual and small group plans in Vermont. Both proposed rate increases for 2018 that were smaller than those proposed by insurers in most other states.
In August 2017, after 90 days of review and public hearings, the Green Mountain Care Board (GMCB) announced the approved rate changes for MVP and BCBSVT. In both cases, the approved rate change was smaller than the insurers proposed.
- MVP Health: proposed a 6.74 percent average increase, but regulators approved just 3.5 percent, cutting the proposed rate increase nearly in half (MVP had 4,618 members on small group plans, and 5,687 members on individual plans in 2017).
- Blue Cross Blue Shield of Vermont: proposed 12.69 percent average increase, but regulators approved a 9.2 percent increase (BSBSVT had 41,325 members on small group plans, and 28,710 members on individual plans in 2017). The Vermont Office of the Health Care Advocate had used its own calculations to recommend a rate increase of 8.7 percent for BCBSVT; the final average rate increase ended up a little higher than that, but much closer to the lower number than the originally filed rate proposal.
It’s worth noting that this was the fourth year in a row that GMCB finalized lower-than-proposed rates (details below for each year).
Across the full individual and small group market, the weighted average approved rate increase was just 8.47 percent, which is far lower than other states saw for 2018 (for reference, the average pre-subsidy premium in Vermont’s exchange in 2017 was $488/month, which was only a little higher than the $476/month average in states that use the federally-run exchange).
For both insurers, the approved rates were based on the assumption that federal funding for cost-sharing reductions (CSR) would continue.
Rates changes implemented as planned, even after CSR funding was eliminated. But CSR impact was fairly minor in Vermont
On October 12, the Trump Administration announced that funding for cost-sharing reductions (CSR) would end immediately. Insurers in many states had already prepared for this eventuality in their rate filings, although some states scrambled in the subsequent days to revise rate filings to add the cost of CSR to 2018 premiums. Vermont, however, stuck with the rates that they approved in August.
Those rates were based on the assumption that cost-sharing reductions (CSR) would continue to be funded by the federal government. BCBSVT and the Green Mountain Care Board confirmed at the time that there was no contingency built into the initial rate filings to account for a lack of CSR funding. There was also no official protocol in place for what will happen if CSR funding were to be eliminated. And as of late October, that is still the case.
Both Vermont Health Connect and the GMCB noted in early September that insurers were not likely to be allowed to file revised rates, even if CSR funding were to be eliminated.
Both Vermont insurers noted in their initial rate filings that if federal funding for cost-sharing reductions were to be eliminated, the rate filings would need to be revised, although as noted above, that option had been mostly taken off the table by the time the rates had been finalized. But even if insurers had been allowed to file new rates, the additional amount that would need to be added to cover CSRs (assuming federal funding were to be eliminated) is much smaller in Vermont than it is in most other states.
In the states that use HealthCare.gov, the Kaiser Family Foundation estimated that premiums for silver plans would have to increase by 19 percent to make up for a lack of federal funding. But even if CSR had been eliminated before the rates for 2018 were filed and/or approved, the Green Mountain Care Board noted that the additional premium increase for silver plans would only have been about 3 to 7 percent in Vermont.
If the rate hike were to be spread across all plans (instead of being concentrated on silver plans), BCBSVT indicated that their rates would only have to increase by an additional 1.5 to 2 percent if cost-sharing reductions aren’t funded; the Green Mountain Care Board noted that MVP’s rate increase (spread across all plans) would have been a little higher, at roughly 3.5 percent.
The smaller impact of CSR funding in Vermont is due in large part to the fact that the individual and small group risk pools are combined in the state, meaning that an increase cost situation that impacts rates for the individual market is spread across the small group market too, resulting in a more stable rate situation.
Navigator funding cut, but overall in-person assistance more than double what it was in 2015
Navigators are employed by the exchange (HealthCare.gov or state-run exchanges like Vermont Health Connect) to help people enroll in coverage. The Trump Administration announced that HealthCare.gov navigator organizations would receive significantly less federal funding heading into the open enrollment period in the fall of 2017: about $36 million as opposed to the $63 million they got in 2016.
State-run exchanges can choose to fund their navigator programs at the level they deem appropriate, as that funding is now state-based (for the first two years, state-based exchanges had federal funding they could use for their navigator programs, but they’ve been funded with state money since then). The VT Digger reported in August 2017 that Vermont had reduced funding for the state’s navigator program to just $50,000 for the current fiscal year (starting July 1, 2017), down from $200,000 in the 2017 fiscal year, and as much as $500,000 in prior years.
This was alarming for groups that rely on navigator funding to facilitate enrollment among Vermont residents who need in-person assistance, particularly given that open enrollment was much shorter for 2018 (and future years). But Vermont Health Connect’s Sean Sheehan explained that while funding was being reduced for the navigator program, the Certified Application Counselor (CAC) program was growing, with Vermont Health Connect actively reaching out to suitable organizations throughout the state to encourage them to have a staff member go through the CAC training.
Sheehan noted that there would be a total of 180 navigators and CACs in Vermont by the end of September, after trainees completed their certification. This was roughly 60-70 percent more than the total number of in-person assisters in the state two years ago. So although there were fewer navigators, there were a lot more CACs, who go through the same training as navigators. But while navigators are paid by the state, CACs are paid by the hospitals and clinics and various advocacy organizations where they work. A clinic might have one of its medical assistants or receptionists go through CAC training, for example, so that uninsured patients can have on-site assistance with the process of getting enrolled in Medicaid or a qualified health plan in the exchange.
The new system encourages more buy-in on the part of all the organizations in the state that benefit from having more insured residents, although there are concerns that CACs are really only set up to help the clientele that their employer serves (or could potentially serve, as might be the case for an uninsured person who seeks enrollment assistance a clinic that could then become his or her medical home) rather than any person who walks in off the street needing assistance. This is why the navigator program is being maintained to some degree, so that there will still be some independent navigators available throughout the state.
Critics of the shift from navigators to CACs are concerned that there will be too many people who need navigators and don’t qualify for CAC help at the local organizations that will have CACs available. But the increased number of CACs means that more organizations will have them available, and overall, the total number of in-person enrollment assisters in Vermont during the open enrollment period for 2018 coverage was slated to be more than double what it was two years earlier.
It’s also important to note that while in-person assistance will always be important, demand for it is no longer as high as it was in previous years. Early on, the whole system was new, and a lot of people needed help signing up. In addition, Vermont went through the process of redetermining Medicaid enrollees’ eligibility for coverage, which resulted in about 10 percent of previous Medicaid enrollees switching to Vermont Health Connect qualified health plans in 2016 — a process that required a lot of in-person assistance. But that has largely stabilized at this point, and many people are able to simply renew their coverage (or pick a different plan) during open enrollment, rather than having to enroll from scratch.
State-funded CSRs make silver plans especially valuable in Vermont
In every state, the Affordable Care Act includes a provision to lower out-of-pocket costs for people who qualify based on household income (no more than 250 percent of the poverty level), and who select a silver plan through the exchange. But in Vermont, cost-sharing reductions are also funded by the state, via a program called Vermont Premium Assistance. Thanks to the combination of state and federal funding, cost-sharing reductions are available to Vermont Health Connect enrollees with incomes up to 300 percent of the poverty level, as long as they select a silver plan.
In early 2015, there were concerns that the budget proposal for Fiscal Year 2016 wouldn’t include state funds for cost-sharing reductions past the end of 2015. But in June 2015, Governor Shumlin signed Senate Bill 139 into law (Act 54). The Act provided funding (about $761,000) to maintain the additional cost-sharing reductions provided by the state of Vermont in Fiscal Year 2016.
In Vermont, cost-sharing reductions are the same as other states for people with incomes up to 200 percent of the poverty level. But the state provides additional cost-sharing reductions (on top of what’s covered by federal funds) for people with incomes between 200 and 250 percent of the poverty level, and also provides some cost-sharing reductions for people with incomes between 250 and 300 percent of the poverty level (that group doesn’t get federal cost-sharing reductions at all).
Although Medicaid enrollment in Vermont has declined as the state works to verify eligibility, the number of Vermont residents receiving state-based cost-sharing subsidies has climbed (presumably as some people who were previously enrolled in Medicaid have been switched to private plans during the push to accurately verify Medicaid eligibility).In January 2016, there were 14,893 residents receiving state-based subsidies, and that had grown to 17,915 by January 2017. As of February 2017, 76 percent of Vermont Health Connect enrollees who were eligible for Vermont Premium Assistance were enrolled in silver plans (the assistance is only available to those who are eligible and also pick a silver plan).
In early September, the GMCB noted that it is still not entirely clear how the Vermont Premium Assistance program would work if federal funding for the ACA’s cost-sharing subsidies were to be eliminated (and indeed, the federal funding was eliminated in October 2017). They indicated that it was possible, based on the wording of the legislation that created and funded the Vermont Premium Assistance, that the state-based program might have to expand to make up for the lack of federal funding. But they clarified that this was far from certain, and that Vermont’s insurers might just have to absorb the cost of providing the ACA’s cost-sharing reductions in 2018 if federal funding were to be eliminated.
2017: enrollment higher, and systems working much better
By the time open enrollment ended on January 31, enrollments in Vermont Health Connect stood at 30,682. That’s a 4.2 percent increase over the 2016 enrollment (29,440), despite the fact that full-cost direct-to-carrier enrollments were being encouraged during open enrollment for people not eligible for subsidies. As of February, there were 28,775 people with effectuated enrollment in private plans through Vermont Health Connect.
And although the future of Vermont Health Connect is uncertain (details below), the fourth open enrollment period was by far the best they’ve ever had. Don George, President of Blue Cross Blue Shield of Vermont, noted in April that the 2016 open enrollment period “was Vermont Health Connect’s first fully automated open enrollment and all the customer renewal and changes were completed on time.” George explained that in prior years, many of the renewals and changes were not completed until well into the year.
Changes in store for Vermont Health Connect?
Despite Vermont’s longtime dedication to healthcare reform, the state-run exchange struggled with IT problems from the beginning. Many of them have since been resolved, but some remain, even in the third year of exchange operation.
Former Governor Peter Shumlin, a Democrat who supported Vermont Health Connect, did not run for re-election. Republican Phil Scott won the gubernatorial election in 2016, with 52 percent of the vote, and took office as Vermont’s Governor in January 2017. During the campaign, Scott said that he wanted to switch Vermont to Healthcare.gov for individual plan enrollment, and keep Vermont Health Connect for Medicaid and Dr. Dynasaur eligibility determinations and enrollment.
But after the election, Scott said “we’ll wait and see” in terms of future health care reform changes in the state, since the long term future of the Affordable Care Act is up in the air now that the Trump Administration is in office. As of September 2017, nothing has changed about the ACA, however. Repeal legislation has thus far failed; premium subsidies and cost-sharing reduction subsidies are still available and will continue to be available in 2018, and both of Vermont’s insurers have filed plans to continue to participate in the exchange in 2018.
In March 2017, Governor Scott said that he was looking at various options that would allow the state to move away from the current Vermont Health Connect system. Although the details have not yet been clarified, Scott wants to make changes by the end of 2017.
Off-exchange enrollment became available in 2016, being promoted in 2017
In 2014 and 2015, Vermont was the only state (in addition to DC) where off-exchange plans were not allowed to be sold – all non-grandfathered individual and small group plans in Vermont were on-exchange plans (although small groups enroll in Vermont Health Connect plans directly through the state’s two carriers – see more details below).
But starting in 2016, Vermont introduced “full-cost individual direct enrollment” which essentially created an off-exchange market in the state. People have the option of enrolling in qualified health plans (QHPs) directly through Blue Cross Blue Shield of Vermont or MVP, with the understanding that no subsidies are available if they enroll directly with the carriers rather than through the exchange (in every state, enrollments completed outside the exchange are ineligible for subsidies).
By February 2017, there were 5,662 people enrolled in full-cost individual direct enrollment plans in Vermont. HHS estimated in October 2016 that there are 1,000 people in Vermont enrolled in off-exchange coverage who would be eligible for subsidies if they switched to on-exchange plans.
Vermont Health Connect has gone to great lengths to explain that subsidies are not available via the full-cost individual direct enrollment path (indeed, even using the term “full-cost” in the name). It’s essential that people only select that pathway if they’re 100 percent certain that they will not qualify for any subsidies during the year. If in doubt, the exchange is the safer way to go, as that allows people to keep the option of claiming the subsidies on their tax returns, even if they don’t want to take them up front throughout the year.
Once Governor Scott took office, he announced that more enrollees would be purchasing Vermont Health Connect plans directly from BCBSVT and MVP, in a move intended to take some volume and pressure off the customer service team at Vermont Health Connect, and simultaneously save the state an estimated $2.8 million per year.
I spoke with BCBSVT about this, and they explained that people who receive premium subsidies still have to enroll through the exchange, and that the direct-to-carrier enrollment is the same full-cost individual direct enrollment that has been in place since 2016. But the state is now putting more emphasis on promoting that path, encouraging non-subsidy-eligible enrollees to enroll directly through the carriers, while subsidy-eligible enrollees continue to sign up through Vermont Health Connect (this was one of the recommendations made by the Strategic Solutions report that was presented in late 2016; details below).
In 2016, about 70 percent of Vermont Health Connect’s 27,883 enrollees were receiving premium subsidies. The year before, it had been 64 percent, but the total enrollment had been higher, at 34,923. Full-cost individual direct enrollment became available in 2016, resulting in a smaller number of people enrolled through the exchange, but a higher percentage of them being eligible for subsidies (since the people who enrolled directly through the carriers were mostly people who weren’t eligible for subsidies).
It’s likely that the percentage of Vermont Health Connect enrollees who are receiving premium subsidies has increased again for 2017, and that the number of people enrolled in full-cost individual direct enrollment plans has also grown. However, Scott’s team didn’t announce the changes until near the end of open enrollment, so the change might not be dramatic.
Independent study recommends keeping Vermont Health Connect
As a result of the challenges that Vermont Health Connect has faced, lawmakers authorized an independent study to be conducted in 2016, aimed at determining the best course of action going forward. Three companies submitted bids to conduct the study, and Strategic Solutions won the bidding. The company gave their first report to lawmakers in September, noting that there were still a considerable number of problems facing Vermont Health Connect, less than two months before the start of open enrollment for 2017 began on November 1, 2016.
The full results of the study were presented in December 2016. Strategic Solutions recommended keeping Vermont Health Connect in place, but with modifications and adjustments, including the aforementioned switch to having non-subsidy-eligible applicants complete the enrollment process directly through BCBSVT and MVP. There have been some criticisms of the study, as observers have noted that Strategic Solutions works to help fix health insurance exchanges, so there’s a potential conflict of interest, since it’s in their best interest to keep the exchange operational.
The study considered several options, including keeping Vermont Health Connect as-is, joining with other states to create a regional exchange, or switching to Healthcare.gov. Ultimately, they determined that since the vast majority of Vermonters ineligible for employer-sponsored health insurance are actually eligible for Medicaid, the state would still have to take an active part in enrolling those people and would see little gain from switching to HealthCare.gov.
In late September, outgoing Governor Shumlin reiterated his position that the state should keep Vermont Health Connect, and highlighted the improvements that had been made in advance of the fourth open enrollment period. In October 2016, more than 80 percent of callers to Vermont Health Connect waited less than 24 seconds on hold before their calls were answered, and the exchange had their backlogged change of circumstances down to just 1,200, from 10,000 earlier in 2016 (most change of circumstance requests are now processed smoothly, rather than being added to the backlog).
Uniform broker commissions
In order to ensure that consumers can continue to receive assistance from brokers, and to ensure that brokers can remain impartial in the assistance they provide, Vermont’s legislature established standards in 2012 to ensure uniform broker compensation for all Vermont Health Connect enrollments.
For 2017, the standard broker compensation is $20 per month for each employee or individual who enrolls in a plan through Vermont Health Connect with the help of a broker.
7% weighted average rate increase approved
The proposed weighted average rate increase for the combined individual and small group markets in Vermont was initially 8.3 percent for 2017, but some new rates were later filed, public hearings were held, and state regulators ultimately approved lower-than-filed average rate increases for both carriers:
- MVP: 3.7 percent increase (the carriers initially requested an average rate increase of 8.8 percent, later revised that to 6.3 percent).
- BCBS of Vermont: 7.3 percent increase (the carrier initially requested an average rate increase of 8.2 percent, later revised that to 8.6 percent).
The Green Mountain Care Board initially responded to the rate filings in July. They seemed inclined at that point to agree with the justification for BCBSVT’s proposed rate hike, but recommended that MVP’s rate increase should only be 3.7 percent. MVP filed a counteroffer later in July, requesting a 6.3 percent rate increase.
BCBSVT had 91.4 percent of the combined individual and small group market in the state in 2016. A BCBSVT representative confirmed in March 2017 that the carrier still has the majority of the state’s enrollees.
70.2 percent of Vermont Health Connect enrollees were receiving premium subsidies in 2016. The subsidies offset some or all of the rate increases for subsidy-eligible enrollees. It’s essential that people who are eligible for subsidies—or who might become eligible during the year—enroll through Vermont Health Connect rather than using the full-cost direct individual enrollment option. The direct-to-carrier route makes enrollees ineligible for subsidies, and that option cannot be changed outside of open enrollment or a special enrollment period.
For comparison, the carriers had requested a weighted average rate increase of 7.75 percent for 2016, but regulators only approved an average increase of 5.5 percent.
As of April 2016, Vermont Health Connect’s enrollment report indicated that the exchange had 28,167 people enrolled in QHPs, along with 4,606 people who were enrolled directly through the carriers, utilizing the full-cost individual direct enrollment option.
By July 2016, enrollment had grown slightly, to 29,069 on-exchange enrollees, and 4,775 people enrolled in full-cost individual direct enrollment plans. Overall, that’s a total individual market enrollment of 33,844, which is 6.5 percent higher than the total individual market enrollment of 31,776 a year earlier (all of whom had coverage through the exchange, since the full-cost individual direct enrollment pathway didn’t roll out until the end of 2015).
The enrollment report from the federal government indicated that Vermont Health Connect had 27,883 effectuated enrollees as of March 31, 2016.
According to the 1332 waiver proposal that Vermont submitted in March, 44,347 Vermont residents were covered under small group plans as of January 2016, all of which were Vermont Health Connect-certified (this number does not count grandfathered small group plans, but even in 2012, there were “very few” grandfathered plans in Vermont, and there are no grandmothered/transitional plans in Vermont).
There are the following footnotes on the bottom of the third page of the 1332 waiver proposal:
- As of January 2016, BCBSVT has a total small employer and individual count of 69,794 lives (this had grown to 70,423 by the time BCBSVT filed their rate proposal for 2017).
- As of January 2016, MVP has a total small employer and individual count of 5,816 lives (this had grown to 6,614 by March 2016).
These are the only two carriers in Vermont, so the total enrollment count as of January 2016 was 75,610. If 44,347 of those enrollees were in small group plans, that leaves 31,263 enrolled in individual plans.
That’s more than 1,800 higher than the open enrollment total reported by HHS (29,440) for Vermont Health Connect. The reason Vermont Health Connect’s enrollment total is lower than the total individual market enrollment as of January is of course due to the availability of full-cost direct individual enrollment in 2016.
Vermont has also been auditing their Medicaid program, and ascertained that approximately 87 percent of the adults enrolled in expanded Medicaid in Vermont were actually eligible for the program. Because of the technology problems that Vermont Health Connect has experienced the state automatically moved about 30,000 people from VHAP and Catamount (prior state-sponsored health insurance programs) to Medicaid in 2014, and re-enrolled them for the following two years without requiring eligibility verification. But starting in early 2016, the state began sending out notifications to enrollees alerting them to the need to verify eligibility. The verification process will continue through October.
Vermont submits 1332 waiver to avoid SHOP portal
In March 2016, Vermont became the first state to file a 1332 waiver with CMS (Hawaii and Massachusetts had both created 1332 waiver drafts, but Vermont was the first state to officially submit a waiver proposal to CMS). Vermont’s 1332 waiver proposal is a request to waive the ACA’s requirement that exchanges include an online portal for small businesses to enroll in health plans (SHOP).
Instead, Vermont wants to maintain the system they’ve been using since 2014, which requires direct enrollment through the two carriers that offer small business plans in Vermont. Although Vermont has not yet established a working online SHOP exchange portal, all small business health plans available in Vermont are certified by Vermont Health Connect, the state-run exchange – there are no off-exchange individual or small group plans for sale in the state.
1332 waivers, also known as “innovation waivers” are permitted under the ACA, with effective dates of 2017 or later, and allow states to propose alternatives to many of the ACA’s provisions, as long as residents would still have access to health insurance that’s no less affordable or comprehensive than what’s available without a waiver. Under a 1332 waiver, a state would also have to cover at least a many people as would be covered without the waiver, and 1332 waivers cannot be any more costly to the federal government than the current system. Vermont’s waiver proposal states that it meets all of the requirements laid out by CMS.
Vermont’s small group enrollment in 2014 (33,696 employees and dependents) was by far the highest of all the state-based exchanges. Vermont was the only state that didn’t have an online SHOP enrollment portals, but all of the other states (with the exception of DC) also had competition from off-exchange plans.
Despite the fact that enrollment in SHOP plans in Vermont is conducted directly through the carriers, employers have the option of offering plans from both health insurance carriers, and employees can select from among any of the plans offered by the carrier or carriers chosen by the employer. The current system is working well, and especially given Vermont’s IT struggles with the individual exchange, they’re concerned that switching to an online SHOP portal might disrupt the existing small group market.
CMS responded in June 2016, notifying Governor Shumlin that the 1332 waiver proposal was incomplete in some areas. Nothing further has been posted on the CMS page that tracks pending 1332 waivers. The Strategic Solutions report in December 2016 noted that the CMS waiver (not a 1332 waiver) that allows Vermont small businesses to enroll directly through carriers (as opposed to using a SHOP portal) remained in place for 2017.
Exchange backlog below target number
In 2014 and 2015, Vermont Health Connect struggled 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.
On October 1, 2015 Governor Peter Shumlin announced that Vermont Health Connect has made huge strides. The change of circumstances backlog had been cleared (except for 186 cases that have been assigned to customer service representatives who were handling the cases and expected to have them completed by mid-October), and customers were able to begin using online reporting for many change of circumstances situations on Monday, October 5. It appeared that the exchange was heading into the third open enrollment period with a much improved system.
But on January 19, Vermont Public Radio reported that the backlog had returned, and was up to 3,000 people. The problem stemmed from the delayed delivery of a software upgrade for the plan renewal process. It was supposed to be ready in December, but as of mid-January it had not yet been implemented. The exchange noted that they expected it to be ready “within weeks” and said that the problems surrounding the 2016 renewal process shouldn’t reoccur in future years. They also explained that the current technology problems were also related to larger-than-normal number of Medicaid reenrollments being processed, and the fact that an exchange contractor went out of business last year.
But by mid-March, the backlog stood at around 4,200 people. The exchange said that the backlog was related to the third-party call center (Maximus) that the exchange uses, and noted that the call center is opening more change of circumstance service requests than they’re processing, which keeps the total count from declining.
By early June, the backlog had decreased to 3,236 people. But the exchange has noted that this doesn’t mean these cases are being held up in the system. They get about 4,000 change of circumstances requests each month, and the exchange considers a realistic ongoing target to be in the 2,500 to 3,000 range – meaning that those are in-process at any given time. They are close to their goal as of June, and are training call center reps to handle as many change of circumstances requests as possible over the phone with the customer, rather than adding them to the queue of pending changes.
By September 2016, the exchange reported that their backlog was down to only 1,200, well below their target range.
Initial optimism for technology improvements
The change of circumstances backlog was among the most vexing problems for Vermont Health Connect, and the new system that was put in place in 2015 appeared to be a significant upgrade over the manual work-arounds the exchange had been using for the past two years. Shumlin noted that the exchange receives about 125 change of circumstances submissions per day, but staff members had been able to keep up with new submissions while also dealing with the backlog during the summer of 2015.
When the Governor announced that the backlog had been cleared in the fall of 2015, he noted that going forward, enrollees who submit a change of circumstances request by the 15th of the month would 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 – expressed optimism regarding the exchange’s technology upgrades, and have “worked closely with the health insurance marketplace to integrate the new technology.”
But in January 2016, Blue Cross Blue Shield of Vermont – the largest carrier in the state – explained that the technology problems that had returned during open enrollment (related to processing renewals) had made it impossible for the carrier to process changes to BCBS enrollees’ plans. And by March 2016, BCBS was still finding that data from Vermont Health Connect was not being accurately transmitted to the carrier’s database.
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 was the second year in a row that Vermont 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 was not commensurate with the much smaller income increases that people were likely to see in 2016. Although 64 percent of Vermont exchange customers receive premium tax credits (subsidies) to offset their premiums in 2015, the other 35 percent had to 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.
Kaiser Family Foundation reported that the benchmark (second lowest-cost silver) plan premium in Burlington would be 7.3 percent higher in 2016 than it was in 2015. Benchmark premiums don’t tell the whole story of how rates are changing, but they do give us an idea of how subsidies in the area will change, since subsidies are tied to the cost of the benchmark plan.
In June 2015, the exchange announced that five navigator organizations would receive grants to fund the enrollment assistance process from July 1, 2015 through June 30, 2016.
In November 2015, Vermont Health Connect officials responded to the results of two audits that were critical of the exchange. One was conducted in 2014 by Grant Thornton, a national firm. The other was conducted by Vermont State Auditor Doug Hoffer’s office.
Exchange officials noted that many of the problems revealed in the 2014 audit had since been resolved, although they explained that there are ongoing issues that they’re still addressing, specifically the need to have written procedures in place for various exchange functions. Hoffer’s audit found security risks in the exchange, and although officials are working to resolve them, they noted that they’re within the parameters allowed by the federal government.
In a March 2015 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 Healthcare.gov 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.
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 – a target that was successfully met. 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 began in November. Shumlin’s October 1 announcement confirmed that they had successfully dealt with the backlog (although it has returned in early 2016 due to a delayed software upgrade).
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 August 2015, Vermont officials announced that the exchange would 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 BCBSVT is also seeking more than $6 million from Vermont Health Connect for unpaid premiums and overpaid claims from 2015, mostly caused by communication errors when plans were terminated by the exchange but that information wasn’t transmitted to BCBSVT.
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 ultimately pulled back from their push for single-payer coverage in the state, they’ve come very close to achieving universal coverage. The uninsured rate in Vermont as of early 2015 was 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 February 15, 2015, 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 included:
- 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 were 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 plans must be purchased through the exchange – there are no off-exchange plans for sale in Vermont, although lawmakers introduced a bill in 2015 to change that (it didn’t advance).
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 2015, 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 began reporting Medicaid enrollments separately in early 2015.
2015 premiums and renewals
Two health insurance carriers – Blue Cross Blue Shield of Vermont and MVP Health Care – offered nine plans each in Vermont Health Connect in 2015. 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 September 2014, 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 weighted average rate increase for 2015 was about 7.8 percent, owing largely to BCBSVT’s significant market share.
The average rate increase for the benchmark plan (second-lowest-cost silver plan) in Vermont was 8.3 percent in 2015.
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.
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, 2014, just in time for the 2015 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, 2014, 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 enrolled such a high percentage of eligible residents in 2014.
In August 2014, the state’s Chief of Health Care Reform, Lawrence Miller, explained that they were 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 in other states, 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 January 2015, the state legislature voted for Shumlin, and he began his third two-year term as governor. Shumlin announced in mid-2015 that he would not seek a fourth term in 2016; residents in Vermont will pick a new governor in November 2016.
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-2014, the exchange had spent about $72 million of that money, leaving them with about $100 million to work with as they headed 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.
Vermont health insurance exchange links
Vermont Health Connect