State officials: GOP health plan could have dire consequences

MONTPELIER — Vermont’s top health care officials on Friday detailed dire consequences, including the loss of as much as $200 million in annual federal funding, if the Republican health care plan proposed in Congress is enacted.

Agency of Human Services Secretary Al Gobeille, along with Department of Vermont Health Access Commissioner Cory Gustafson and Director of Health Care Reform Mary Kate Mohlman briefed reporters on the impact the American Health Care Act, or Trumpcare, as some have taken to calling it, will have on Vermonters. Gobeille said the trio were not advocating for or against the proposal, but they had few positive points to make about the GOP proposal.

Agency of Human Services Secretary Al Gobeille, right, and Department of Vermont Health Access Commissioner Cory Gustafson, left, brief reporters on the impacts of a Republican health care proposal in Congress. (VPB/Neal Goswami)

Agency of Human Services Secretary Al Gobeille, right, and Department of Vermont Health Access Commissioner Cory Gustafson, left, brief reporters on the impacts of a Republican health care proposal in Congress. (VPB/Neal Goswami)

President Donald Trump and Republicans in Congress campaigned heavily in last fall’s election on repealing the Affordable Care Act, or Obamacare. The plan introduced earlier this week by Republicans in Congress seeks to do that.

Gustafson said the GOP proposal “will make it hard in the future for people to be on Medicaid,” the state-federal program that helps low-income people obtain health insurance coverage. Based on preliminary information the state has compiled this week, he said the state stands to lose as much as $200 million per year in federal funding when the program is scaled back in 2020 as the GOP plan proposes.

“These are estimates, and these are our best estimates, based on limited information from the bill,” Gustafson told reporters.

The proposal seeks to place a cap on Medicaid spending per person based on 2016 per patient per month spending, or PMPM. Gobeille said the 2016 level in Vermont amounts to about $312 dollars per month in federal funding and about $600 per month when combined with state funding. The current federal PMPM is about $401, not including state funds, according to Gobeille.

Vermont stands to lose money under the GOP proposal because its 2016 PMPM was “artificially low,” according to Gobeille. Vermont did not perform redeterminations for Medicaid for about two years as it struggled to implement the Affordable Care Act. That meant that many healthier people remained on Medicaid longer than they should have. Since the state began performing redeterminations last year the number of people enrolled in Medicaid is dropping — from about 205,000 in 2016 to a projected 186,000 in 2018.

Gobeille said the state’s Medicaid caseload is projected to get smaller, but the people remaining on the program are expected to have more medical needs, driving up the PMPM.

“That low [2016 PMPM] number, when used as a base, puts the state in a bad position,” he said.

Gustafson said the 2016 PMPM the GOP proposes to use as the base of Medicaid funding beginning in 2020 is a snapshot in time, and “for Vermont, not a particularly good snapshot.”

The state will have few choices if the GOP proposal is implemented.

“What are the choices? You could lower provider rates. You could lower benefits. There are not a lot of great options. That’s why this is so serious,” Gobeille said.

The state is in the process of creating an all-payer model of health care, which would shift payments to providers from a fee-for-service system to one where providers are paid based on health outcomes. Under the all-payer model, providers would receive a capped payment for each person, as the GOP proposal seeks to do with Medicaid.

The difference, however, according to Gobeille, is that the all-payer model attempts to determine the health needs of people in the system. The GOP proposal does not, he said.

“This is basically doing it in a way that is not as careful, and some states could be hurt by this,” the secretary said. “The block grant basically cuts funding to Medicaid. Typically if you were going to do that you would trade that for flexibility. They are saying the flexibility will come next. It’s hard to accept that.”

Gobeille said the only positive aspect of the GOP proposal on Medicaid is that it will not eliminate Disproportionate Share Hospital Payments. Under current law, DSH Payments are made to qualifying hospitals that serve a high number of Medicaid or uninsured patients.

Overall, the GOP proposal would force the state to reconsider many aspects of its Medicaid program, according to Gustafson.

“Tough choices … would have to be made by the administration, the Legislature,” he said.

The proposal would have negative impacts on Vermonters who receive federal subsidies for federally qualified health plans, too. The proposal seeks to replace federal subsidies with tax credits based on age and income. Mohlman said about 4 percent of Vermonters currently receive federal subsidies, but that number is constantly changing as Vermonters income change. People who earn less than 400 percent of the poverty level — $35,000 for an individual and $72,000 for a family of four — qualify for subsidies.

The tax credits proposed in the GOP plan would be less advantageous to younger and poorer people, according to the state’s analysis, Mohlman said. Vermont currently brings in about $100 million in federal subsidies. Under the GOP proposal, tax credits would amount to between $80 million and $95 million, she said.

“As you increase your income the tax credits become more advantageous,” she said.

According to data provided by Gobeille, a 27-year-old earning $25,307 currently receives a subsidy of $4,534. Under the GOP proposal, the same person would receive a tax credit of $2,995. Under the median income of $37,144 for a two-person household, the current subsidy is $9,547, while the GOP’s proposed tax credit would amount to $6,240.

Director of Health Care Reform Mary Kate Mohlman (VPB/Neal Goswami)

Director of Health Care Reform Mary Kate Mohlman (VPB/Neal Goswami)

Mohlman noted that the GOP plan would provide tax credits to individuals making up to $75,000 per year that under the current system receive no federal subsidy for health insurance. People with lower income, however, will see less assistance.

Gobeille said several elements of the tax credit proposal make it “a particular problem for Vermont.”

“One is that we don’t … adjust by age. The second is that we are a high premium cost state. The third is that we are a high median income state as compared to some states. So $2,000 in Vermont is not the same as $2,000 in other states. The combination of those three work against Vermont in a powerful way,” he said.

The state might need to consider adjusting the cost of health insurance premiums based on age to avoid punishing younger and lower-income Vermonters if the GOP proposal is passed, something the state has not done in decades, according to Gobeille.

State officials are also concerned that Vermonters will no longer buy health insurance because of disincentives built into the GOP proposal. Health insurance will no longer be mandated like it is under Obamacare, but the GOP proposal includes a 30 percent penalty on top of their premium for anyone lets their coverage lapse for more than two months.

“Vermonters have been clear with us that the Affordable Care Act to many has not been affordable. Making it less affordable will not encourage folks to remain signed up or get signed up,” Gobeille said.

He said the state’s 3.7 percent uninsured rate — the second-lowest in the nation — would be in jeopardy under the GOP proposal

“We don’t want to see that degrade, but this would head in that direction,” Gobeille said.

Federal funding for women’s health care services at Planned Parenthood would also be cut under the GOP proposal. In Vermont, about $2.5 million in federal Medicaid money helps women pay for health care needs other than abortion, which federal funds cannot be used for. Gobeille said the Scott administration strongly opposes the additional restriction.

“Let’s be clear about something — women’s health care is a priority for the governor. This bill, as proposed, doesn’t help that. That’s a problem for us. The question then becomes … what does the state do about that?” he said.

Gobeille said state officials have heard from many Vermonters that current health insurance under the Affordable Care Act is not affordable, and that Vermont Health Connect, the state’s online insurance marketplace set up under ACA, has been troublesome. He said the administration was hopeful Congress would help address those key issues.

“It was the hope that any attempt to work on legislation for Vermont would address those two points,” he said.

Gobeille said he remains hopeful Congress will adjust the plan so it meets the needs of Vermonters.

“My biggest fear is that this is a tremendous opportunity for the United States and for Vermont to actually fix problems we all know we have with our current health care system, and we’ll just miss the opportunity,” he said. “I don’t think there’s anything inherently wrong with the tax credit … if it was the right amount and done in an informed way.”

“There’s a chance to fix this. I hope we don’t miss the opportunity,” Gobeille added.

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