Commentary: The Vermont Exchange Train Wreck (October, 2013)

by John McClaughryJohn McClaughry

“The so far unworkable Vermont Health Connect threatens tens of thousands of Vermonters with no health insurance coverage come January. But there is a way out of the train wreck.”

On September 12 the nationally-known consulting group Gartner, Inc. delivered a report to the federal Center for Medicare and Medicaid Services. The report assessed the operational readiness of the various state health insurance exchanges as the ObamaCare mandated launch date – October 1 – approached.

Vermont Health Connect, the state’s $170 million exchange, is “one of the most functional in the country”, according to Gov. Shumlin. That’s conceivably true, since most if not all of the other exchanges are in serious trouble, but the Gartner report concluded that Vermont Health Connect “should be considered in RED status due to significant risks to meeting the October 1st deadline for Go-Live.”

The statutory deadline of October 1 has long since gone by, but Vermont Health Connect remains essentially inoperative. You can review the ObamaCare-approved insurance plans offered for 2014, but you can’t buy one. Kyle Midura of WCAX-TV observed on the October 18 Vermont This Week program that site visitors “almost inevitably get an error message”.

Gov. Shumlin first dismissed Vermont Health Connect’s  missed opening date as a “nothing burger”. He then said the exchange would be operative by November 1, and that unspecified people were “working 24/7” to get it going. Most recently, he waffled on the November 1 deadline as well, saying it might be ready by November 3. Midura noted that administration officials view this as a “soft deadline” – more a suggestion than a requirement that triggers real-world consequences.

But for many tens of thousands of Vermonters there are real-world consequences to not being able to buy health insurance on Vermont Health Connect.  Thanks to an unique monopoly feature of Vermont’s Act 171 (2012), Vermonters who are thwarted by an inoperative exchange site cannot choose to continue their present coverage with their present insurer. This monopoly feature, in force in no other state, applies to currently insured individual purchasers and small business groups of up to 50 employees.

The reason for the monopoly is that Gov. Shumlin and his single payer allies are trying everything possible to lure or force people into the exchange before 2017. On that date state-run, taxpayer-financed Green Mountain Care is supposed to replace all health insurance.

This $3+ billion single payer plan will be financed in large measure with a Federal block grant equal to the sum of all the ObamaCare tax credits paid on behalf of the people buying through Vermont Health Connect. (GMC will also require an enormous payroll tax increase, as the Governor has recently admitted.) Forcing the insured into the exchange will maximize that hoped-for (but by no means assured) Federal payment.

Fortunately the 2012 law contains an emergency clause.

On October 22 the Ethan Allen Institute sent a letter to all legislators. It described the situation and concluded: “If these problems are not worked out well before December 31, it seems unavoidable that thousands of Vermonters will wake up on New Year’s Day to find themselves and their families without health insurance coverage – unable to buy what they are required to buy, and with no legal alternative to turn to. But there is a solution.”

“The 2012 legislature… inserted Sec. 41a into Act 171. This section authorizes the Commissioner of Financial Regulation to ‘allow for the extension of a small group and association plan beyond their renewal date in order to ensure a smooth and orderly transition from health plans offered in the small group and association markets in 2013 to health plans offered in the small group market through the Vermont health benefit exchange in 2014.’”

The EAI letter asked legislators to use an enclosed post card to show their support for the Commissioner of Financial Regulation to invoke this emergency clause “no later than November 18, if by that date Vermont Health Connect is not fully functional.”  So far the Commissioner has made no public comment on the issue.

In an incisive and scathing article on The Daily Beast (10/22), former Vermont resident Stuart Stevens foresees a “unique train wreck” developing in Vermont, due to a failed exchange designed as an essential gateway to the single payer system.

Stevens concludes: “As this great health insurance experiment proceeds, Vermont bears watching. If this small, healthy state can’t make Obamacare work to a high degree of satisfaction, it doesn’t bode well for more difficult challenges.”

He might have added, “it certainly won’t bode well for Vermonters.”

- John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).

{ 1 comment… read it below or add one }

CHRIS April 24, 2014 at 9:59 pm

After moving to Vermont I have spent an incredible amount of time and effort trying to get insured but due to a system that does not work, through no fault of my own, I am still unable to get uninsured.

I’ve spent days on a site that will not stop crashing. I cannot submit an application.

When I called, I spent hours on the phone but it seems the workers simply use the same system and could not get past the same screen. After hours of calls, a representative named Tony told me that they had “done all that they could do” but that they would fix it and call me back as soon as it was working so they could make sure I get insurance. Tony made a personal promise that they wouldn’t let me fall through the cracks. That was 43 days ago!

I am very busy with work and this terrible system I never chose to be apart of has already cost me. I’ve also spent subsequent time calling around to see if there is any free market alternative to “Vermont Health Connect”

This is what happens when there’s “no choice”. I can’t believe Vermonters would let their system deteriorate to the point where 100% of the population has to go through the a singular dysfunctional organization.

I have no insurance and I have no recourse.

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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