Vermont Healthcare Policy Memo


VermontHealthcare Policy Memo

TO:Honorable Peter Shumlin, the Vermont State Governor

FROM:Jacob James, Bennington County health insurance officer

October 2, 2014

SUBJECT:The Tradeoffs in expanding Medicaid

Theobjective of writing this memo is to urge you to embrace andimplement the AffordableCare Act (ACA)in Vermont. I am a health insurance agent in Bennington County withten years’ experience. I have seen many poor people succumbing totreatable diseases as they could not afford the treatment cost. Ibelieve the ACA will significantly prevent unnecessary deaths ordiscrimination of vulnerable customers such as individuals withpre-existing conditions. The aim of this memo is highlighting on thetradeoff of expanding the Medicaid program, as well as the pros andcons of expansion programs of premium support plans such as the onesIowa and Arkansas proposed.

TheACA is the recently endorsed healthcare program intended to assistthe poor people in the United States to access affordable healthcare.President Obama signed the policy into law in 2010. However, theSupreme Court passed that individual states could decide whether toimplement the policy or to ignore it. I understand that the VermontState chose the latter. In fact, the state is financing a campaign todiscourage people from signing up with the program.

Froma healthcare professional angle, the decision will hurt many poormany people with income that is under 138% Federal Poverty Level(FPL). Although the Vermont State can adopt the Obamacareprogramin the future, it will receive reduced earnings. The federalgovernment is offering 100% federal match now, but the amount willreduce to 95% by 2017, 94% by 2018, and 93% by 2018. The grants willreduce at a rate of one percent every year until it reaches zero.This means that states that will adopt the programs will get limitedfunding.

Thepoor Vermont residents will continue languishing in poverty and poorhealth since they cannot access subsidized health insurance plans.Besides, the insurers will continue exploiting or even failing togive insurance policies to persons with pre-existing conditions. ACArecommends that insurers should charge should give a flat premiumrate to people of the same age and region irrespective of theirpresent health condition. This regulation will ensure that manypeople suffering from previously uninsurable diseases can getaffordable healthcare plan at a reasonable price. In addition, theact states that unmarried children below twenty-six years can benefitfrom their parents’ health cover. The old health insurance coverthat the state is recommending does not offer this advantage.

Inaddition, failure to implement the ACA policy, Vermont will beillegible for the HealthInsurance Exchanges.The policy functions as an avenue for small businesses andindividuals from different states can compare and buy insurancepolicies from companies with the best deals.

SinceI understand that you are opposing the recommended public Medicaidprogram, I would like to bring to your attention an innovativepremium support strategy the Iowa and Arkansas governors haveadopted. They are using the Medicaid expansion capital to purchasehealth insurance policy from private insurers. The key advantage ofthis program is giving prospective customers with severalalternatives. In addition, the policies are easily accessible sincethe state has many reliable insurance providers. The plan will savethe state millions of dollars it spends on uninsured people, a plancalled uncompensatedcare.Lastly, the state would pay almost a billion dollars to localinsurance companies, and the money would be subject to tax. Thisimplies that the state will redeem a significant percentage of themoney it will use to purchase in purchasing health care plans for itspatients.

However,the premiumassistanceplan may be unsuitable in some states because private insurance plansare very expensive. In fact, the plans are financial risk to statebudgets on long term since the cost of policies might keepincreasing. Besides, many private insurers are for-profit businesseswhile the public Medicaid is a non-profit program. This implies thatthe plan can be a financial risk to the target customers because thecost of policies might increase steadily while the government’sassistance decreases.

Inthe Vermont State, 27% ethnic and racial citizens are uninsured whileonly 15% whites have no health cover. The Hispanics have the highestuninsured rate of 33%. Expanding the Medicaid program cansignificantly reduce the racial and ethnic health disparities sinceit would ensure a larger number of people are covered.

Insummary, Medicaid expansion is necessary for Vermont. Both public andpremiumassistanceplan are applicable in this state, but the public program would bebetter since it is cheaper and sustainable on long term. In addition,the plan guarantees that formerly discriminated patients with analternative healthcare plan. However, various financial experts havealso approved the premium assistance as an efficient plan for thestates that does not want to expand the Medicaid assistance using theproposed ACA program. I will be glad to hold further discussion onthis issue during the next state congress meeting.