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Vermont health insurance marketplace: history and news of the state’s exchange

Most uninsured Vermonters can get free Bronze plans for 2019; state's individual mandate will take effect in 2020.

Highlights and updates

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 four 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.

In order to ensure that consumers would be able to continue to receive assistance from brokers, and to ensure that brokers would 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. Under the terms of Act 171, insurers no longer pay commissions to brokers, and brokers aren’t “selling” insurance; they’re providing guidance and advice instead. In return for that assistance, brokers’ clients (individuals or employers) pay them a fee. From 2014 through 2018, the standard broker compensation has been $20 per month for each employee or individual who enrolls in a plan through Vermont Health Connect with the help of a broker. Brokers are also allowed to set up “alternative contractual arrangements” with their clients, with an agreed-upon fee.

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.

Vermont’s uninsured rate was far lower than the national average in 2013, at 7.2 percent. By 2016, it had fallen to 3.7 percent, although it increased to 4.6 percent by 2017. That was still below the national average of 8.7 percent.

Open enrollment for 2019 plans ended December 15

Vermont Health Connect was one of just two state-run exchanges that began following the new, shorter open enrollment schedule in the fall of 2017. The exchange continued to use that schedule this year, so open enrollment for 2019 coverage ended on December 15, 2018.

But the exchange website notes that “wait times may be long as the deadline approaches but stay on the line or choose to get a call back. As long as you get in touch, we will keep working to get you into your preferred plan for January 1st.” In other words, as long as you’ve made contact with the exchange by December 15, they’ll make sure that your enrollment is processed, even if that ends up being after December 15. This is the standard procedure that’s been following in prior years as well, as volume tends to be very high in the days leading up to the end of open enrollment.

State-run exchanges have the flexibility to use special enrollment periods to adjust their enrollment windows. Ten of the 12 did so for 2018 coverage, and seven of them have done so again for 2019 coverage. But Vermont Health Connect (and Idaho’s exchange) opted to use the November 1 – December 15 window starting in the fall of 2017, 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 in 2018 (including through the exchange and full-cost direct enrollment) ended up virtually the same as prior years.

Approved rate increases for 2019 are smaller than Vermont insurers proposed

On May 11, 2018, Vermont’s Green Mountain Care Board announced that the state’s two insurers had submitted rate proposals for 2019. Public comments on the rate filings were accepted by the Board, and public hearings were held in late July, with the Board reviewing the rates until early August, when final rates were announced.

As described below, Vermont’s insurers have added the cost of cost-sharing reductions (CSR) to silver plan premiums for 2019, rather than having to simply absorb the cost as they did for 2018. This is resulting in larger premium subsidies in Vermont for 2019, making coverage more affordable than it would otherwise be for most people who get premium subsidies (79 percent of Vermont Health Connect’s individual market enrollees received premium subsidies in 2018, and the exchange has noted that most uninsured Vermonters can qualify for free bronze plans in 2019 due to the size of the premium subsidies).

In August, the Green Mountain Care Board announced that they had completed their review of both insurers’ proposed rates, and had approved rate increases that were smaller than the insurers had proposed. The final approved rate increases are:

  • MVP (25,223 members in the individual and small group market): 6.6 percent — but after accounting for the larger premium subsidies due to silver loading the cost of CSR, the average effective rate increase will be just 1.9 percent. MVP had proposed an average rate increase of 10.9 percent, with an effective average rate increase (after accounting for the larger premium subsidies) of 6.4 percent. But the average rate increase was reduced by the Green Mountain Care Board in August.
  • BCBSVT (53,664 members in the individual and small group market): 5.8 percent — but after accounting for the larger premium subsidies due to silver loading the cost of CSR, the average effective rate increase will be just 3.2 percent. BCBSVT had initially proposed an average increase 7.5 percent (with an effective rate hike of 5.3 percent after accounting for the larger subsidies), and had revised the rate filing in July 2018, requesting a 9.6 percent average increase. But in August, the Green Mountain Care Board approved an average rate increase of just 5.8 percent.

Those are the overall average approved rate increases, but it’s worth noting that the average increases for silver plans are much more significant, due to the added cost to cover CSR. The filing for MVP noted that their silver plan rates would increase by between 25.3 and 30.7 percent. And BCBSVT’s filing called for an average increase of 16 percent on silver plan rates. That was before overall rates were adjusted downwards by the Green Mountain Care Board, but it’s indicative of how much larger the rate hike is on silver plans for 2019 (in most states, this large jump in silver plan rates happened in 2018).

Every year since 2014, the Green Mountain Care Board has approved lower-than-proposed rate increases for MVP and BCBSVT. Demonstrators and speakers had asked the Board to prevent any rate increases for 2019, noting that coverage and care are already unaffordable for many people. Ultimately, the Board allowed modest rate hikes, but the increases were smaller than the insurers had requested.

BCBSVT’s initial rate filing memo noted that the federal government’s proposal to expand access to Association Health Plans and short-term health insurance plans “could significantly disrupt the single risk pool,” but the insurer didn’t initially price that into the proposed 2019 rates, opting instead to assume that associated rate increases would be necessary for 2020 instead. BCBSVT revised their filing in July 2018, requesting a larger rate increase, primarily due to the fact that the Association Health Plan rules had been finalized by the Trump Administration after the initial rates were filed, and would allow healthy small groups to purchase non-QHP coverage via association health plans (thus harming the risk poor for ACA-compliant coverage).

BCBSVT also clarified that 2.2 percentage points of the proposed 2019 premium increase was due to the fact that Congress has eliminated the ACA’s individual mandate penalty after the end of 2018, and that fewer healthier people are thus expected to purchase coverage in 2019 (as described below, Vermont will have its own individual mandate in place as of 2020, but there is no mandate penalty in Vermont for people who are uninsured in 2019). But they also noted that the suspension of the federal insurer fee for 2019 has resulted in a 2 percent reduction in rates for 2019, nearly offsetting the increase in premiums due to the elimination of the individual mandate penalty.

MVP’s rate filing memo also stipulated a 2 percent premium increase associated with the elimination of the individual mandate penalty, and they noted that it’s only in the individual market (as opposed to the small group market) that some healthy people are likely to drop their coverage once the mandate penalty is reset to $0 (again, this situation should be remedied as of 2020, when Vermont’s individual mandate takes effect).

The approved rates for both BCBSVT and MVP allowed a 1.6 percent increase in premiums due to the elimination of the federal individual mandate penalty.

MVP’s memo also noted that they expected the 2019 approach to CSR funding (ie, adding the cost to silver plan premiums) will result in some members becoming eligible for free bronze plans and/or some gold plans that cost less than some silver plans. These phenomena were widespread in 2018 in many other states, and Vermont residents will have access to the same sort of increased affordability for bronze and gold plans in 2019. The exchange confirmed this in a letter published in December 2018.

New legislation allows Vermont insurers to load cost of CSR only onto on-exchange silver plans for 2019; most uninsured residents are eligible for free plans as a result

A 45-year-old in Burlington, Vermont earning $30,000 in 2019 will qualify for a premium subsidy of $453/month. That’s large enough to fully cover the cost of the four lowest-priced plans — he can sign up for any one of those four plans and pay nothing in premiums each month. Or he can pick from six other bronze plans that are all priced at less than $60/month. And he can choose from gold plans priced as low as $130/month (for comparison, the lowest-priced silver plan is $145/month).

Deals like those were not available in Vermont prior to 2019. The new bargains are a result of how the state is handling the cost of cost-sharing reductions.

For 2018 coverage, Vermont, North Dakota, and the District of Columbia were the only states that didn’t allow insurers to add the cost of cost-sharing reductions (CSR) to premiums after the Trump Administration cut off federal funding for CSR. In most states, insurers were allowed to either add the cost of CSR to all silver plan premiums, to all on-exchange silver plan premiums, or, in a few cases, to all metal-level plan premiums. But in Vermont and North Dakota, insurers simply had to absorb the cost of CSR, estimated at $12 million a year in Vermont.

The impact of adding CSR to premiums, if it had been allowed for 2018, would have been much smaller in Vermont than the national average, due in large part to the state’s combined individual and small group risk pools. This is described in more detail below. But even with a fairly small impact, it’s not sustainable to expect insurers to continue to absorb the cost indefinitely. Without federal funding allocated to reimburse insurers for the cost of CSR, adding the cost to premiums is the only solution that makes sense.

If the cost of CSR is going to be added to premiums, adding it to only on-exchange silver plan premiums is the solution that benefits the most consumers, since it allows the additional cost to be borne almost entirely by larger premium subsidies (which are tied to the cost of silver plans). If there are off-exchange silver plans available that don’t include the cost of CSR in their premiums, people who don’t get premium subsidies can purchase those plans instead of the on-exchange silver plans, and avoid having to pay the added premium to cover CSR. People who buy plans at other metal levels avoid the cost altogether, since it’s only added to silver plans. And if they get premium subsidies, those subsidies are larger due to the higher cost of silver plans in the exchange and the commensurately larger premium subsidies.

But this was not an option in Vermont for 2018, since the state didn’t allow insurers to add the cost of CSR to premiums at all, and the plans that were for sale outside of Vermont Health Connect were identical to those sold within Vermont Health Connect, and thus equally priced. People who aren’t eligible for premium subsidies are encouraged to enroll directly through BCBSVT and MVP, using the full-cost direct enrollment pathway described above, but the plans are the same as the ones offered through Vermont Health Connect, and prior to 2019 there was no difference in pricing.

For 2019, however, Vermont has addressed the situation, and insurers are now allowed to add the cost of CSR to premiums for 2018. Vermont enacted legislation (Senate Bill 19, signed into law in February 2018) that codifies the process that insurers use, allowing them to add the cost of CSR to on-exchange silver plans, and offer “reflective silver plans” outside the exchange, without the cost of CSR added to the premiums for the reflective plans. The off-exchange reflective silver plans are similar to the on-exchange silver plans, but with at least one variation, which allows for differential pricing, letting the insurers add the cost of CSR only to the on-exchange versions.

In December 2018, Vermont Health Connect published an open letter detailing the effects of the change in how the cost of CSR is handled in Vermont:

  • Premium subsidies are much larger than they were in prior years.
  • Most uninsured Vermont residents now qualify for zero-premium bronze plans
  • Many enrollees would be better served by switching to a plan at a different metal level, or by switching from an on-exchange silver plan to a silver plan sold directly by MVP or BCBSVT.

Vermont governor signs legislation to implement an individual mandate starting in 2020; working group is sorting out enforcement details

In March 2018, the Vermont House of Representatives passed H.696 to implement an individual mandate in the state of Vermont. The Senate also passed the legislation, but without the January 1, 2019 effective date that the House had included. Ultimately, members from both chambers formed a conference committee and agreed on a compromise, calling for the state’s individual mandate to take effect on January 1, 2020. The bill was sent to Governor Scott on May 22, and he signed it into law on May 28.

So there is no individual mandate penalty in Vermont for 2019 (since the ACA’s penalty resets to $0 after the end of 2018), but that will change the following year, with the implementation of Vermont’s state-based individual mandate. Although there will not be an individual mandate in Vermont in 2019, the legislation called for the Department of Vermont Health Access to “engage in coordinated outreach efforts to educate Vermont residents about the importance of health insurance coverage and shall assist Vermont residents with identifying the coverage options for which they are eligible and with selecting and enrolling in coverage” both before and during open enrollment for 2019 plans (November 1, 2018 through December 15, 2018).

The specifics of how Vermont’s individual mandate will work were not part of the legislation, however. The House’s initial version of the bill included those specifics (it would have been largely identical to the ACA’s individual mandate, including the same penalty amounts), but the version of the bill that the House passed eliminated all of the details.

Instead, the House opted to leave the specifics of the mandate implementation and enforcement up to a working group, which met in the summer and fall of 2018 and published a final report in November. The House’s legislation simply stated that Vermont would have an individual mandate as of 2019, and tasked the working group with developing “recommendations regarding administration and enforcement of the individual mandate to maintain minimum essential health coverage.”

But the Senate was concerned that since the working group’s report wouldn’t be complete until late 2018 (with recommendations to be worked out by lawmakers in the 2019 session), the House version of H.696 would result in the state kicking off 2019 with a mandate in place, but no statutory language detailing how the mandate would be enforced. So the Senate has passed a version of the bill that didn’t include an effective date for the individual mandate.

The conference committee pushed the effective date to 2020, but kept the concept of the working group. The group included representatives from both insurers (MVP and BCBSVT) as well as representatives from the Green Mountain Care Board, the Office of the Health Care Advocate, and the Departments of Tax, Financial Regulation, and Human Services. They published their final report in November 2018, noting that they had not reached a consensus in terms of all of their recommendations for how the mandate should be structured and enforced. But the report includes a wealth of information and numerous recommendations that lawmakers will be able to use as a reference during the 2019 legislative session when they finalize the details of how the state’s individual mandate will be implemented.

In general, the recommendations of the working group are similar to how the ACA’s individual mandate penalty was designed and enforced, but with some changes:

  • The group recommended that the exemption for a short gap in coverage be extended to three months or less (as opposed to the federal exemption for a gap of less than three months) to match the state’s rules for short-term plans (although there are no short-term plans available in Vermont, due to the state’s strict regulations.
  • BCBSVT recommended that people with health care sharing ministry coverage NOT be exempt from the individual mandate penalty (under ACA rules, there’s an exemption for people with health care sharing ministry coverage).
  • Some members of the group felt that the best approach to enforcement would be a financial penalty modeled on the federal penalty that was used until the end of 2018. Others preferred a focus on outreach and enrollment assistance with ongoing monitoring of the situation.

Massachusetts has had an individual mandate since 2006, and a few other states considered individual mandates during the 2018 legislative session. Individual mandate bills were enacted in New Jersey and DC (effective 2019), as well as Vermont (effective 2020). Other states may follow suit in future years.

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.

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 2018 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, 2018 (less than three weeks before the start of open enrollment) 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, which is what ended up happening.

Both Vermont Health Connect and the GMCB had 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 had 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 had been spread across all plans (instead of being concentrated on silver plans), BCBSVT indicated that their rates would only have had to increase by an additional 1.5 to 2 percent to cover the cost of CSR; 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.

As described above, Vermont insurers were allowed to add the cost of CSR to on-exchange silver plans for 2019, under the terms of S.19, and have created “reflective silver plans” (sold outside the exchange) that are slightly different from the on-exchange silver plans, and which do not have the cost of CSR added to their premiums.

Navigator funding cut, but overall in-person assistance in 2018 was 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. Funding was reduced even more, to $10 million, in the fall of 2018.

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 have them available, and overall, the total number of in-person enrollment assisters in Vermont during the open enrollment period for 2018 coverage was 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 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, and to 18,727 by early 2018. 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).

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.

Off-exchange enrollment became available in 2016 and is being promoted as an option for people who don’t qualify for subsidies

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 were 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 in 2017, 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).

By 2018, enrollment in private plans through Vermont Health Connect stood at 27,595, while 6,440 people were enrolled in plans purchased directly from MVP and BCBSVT. And the exchange is actively encouraging non-subsidy-eligible enrollees who want silver plans to use the full-cost direct enrollment pathway in order to obtain lower-cost plans for 2019.

2016 independent study recommended keeping Vermont Health Connect

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 had to be in place to “significantly reduce” the amount of time it took to complete account changes (things like an address change, adding or removing a dependent, canceling coverage, etc.). And by October, improvements had to 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 returned temporarily in 2016 due to a delayed software upgrade).

As a result of the challenges that Vermont Health Connect had 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 2016, 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 were 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.

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 was up in the air once the Trump Administration took office (Scott was opposed to legislation that GOP lawmakers considered in 2017, as he felt that it would be a step backwards for the coverage gains that Vermont had made under the ACA). Ultimately, federal GOP legislation to repeal the ACA Federal legislation to repeal the ACA failed, and the ACA remains largely intact — that’s likely to continue to be the case with Democrats in control of the House as of 2019.

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. But those efforts remained stalled as of 2018, and Vermont Health Connect is very much alive and well heading into 2019.

7% weighted average rate increase approved for 2017

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 carrier 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, but that was not accepted by regulators.

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.

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 had 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 always 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.

2016 enrollment

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 were the following footnotes on the bottom of the third page of the 1332 waiver proposal:

  • As of January 2016, BCBSVT had 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 had 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 left 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 also audited 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 initially 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 continued through October 2016.

Vermont submited 1332 waiver to avoid SHOP portal, it was deemed incomplete and the state has continued to use direct-to-carrier enrollment for SHOP

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 was 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 was seeking permission 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 never 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, 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. That system has worked well in Vermont, and especially given Vermont’s early IT struggles with the individual exchange, they were 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. But the state never responded with additional information, so the 1332 waiver never progressed through the approval process. 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, and that continues to be the case heading into 2019.

Regulators got 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.

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.

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.

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 envisioned Vermont with a single-payer health care system as soon as 2017, although reports surfaced in April 2014 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 at that point. It would have come with an 11.5 percent increase in payroll taxes and a 9 percent increase in income taxes. Not surprisingly, reactions were mixed after Shumlin’s announcement, with single-payer advocates deeply disappointed in the decision, while other groups welcomed the news.

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 technical 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.

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 — were unaffordable for many VHAP and Catamount members, since the out-of-pocket costs on the new plans were significantly higher.

Vermont health insurance exchange links

Vermont Health Connect
855-899-9600

Vermont Health Care Reform


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.