The Health Care Affordability Act
H.861 Committee of Conference – May 5, 2006
What are the key parts of the act?
What is a chronic disease?
A chronic disease is a condition that is expected to last a year or more and requires ongoing care. Examples include diabetes, high blood pressure, cancer, and spinal cord injuries.
Why do we need to change the health care system?
Our health care system focuses on the treatment of acute illnesses (conditions that last a short time, and can usually be cured). Over the last 50 years, chronic conditions have represented an increasing share of health care costs. Today, about three quarters of all health care spending is on care for people with chronic conditions, but only 55 percent of this care is the right care at the right time. If chronic conditions are managed well, the need for expensive care, such as hospitalizations, can be reduced, and people can lead healthier lives.
How does Catamount Health work?
There are two parts to Catamount Health. The first is the creation of a new insurance market especially for people without insurance, who do not have adequate insurance available to them from an employer. Insurers will be invited, not required, to offer products in this market. Two insurers, Blue Cross Blue Shield and MVP have already indicated that they would like to participate.
There will be one standard plan. It will look a lot like the typical insurance plan that is offered in Vermont today, with one major difference. In order to make it as easy as possible for people to get the care they need, there will be no cost to the patient for preventive care such as mammograms or for recommended services for chronic illness, such as eye exams for people with diabetes.
People who are uninsured and not eligible for adequate coverage through employment will be eligible to purchase Catamount Health, and anyone under 300% of poverty (about $60,000 for a family of four) will receive assistance with their premiums from the state. Uninsured means that the individual either has been without coverage for 12 months, or has lost coverage for reasons such as job loss, divorce, dissolution of a civil union, or death of the primary policy holder.
The second major part of Catamount Health is a mechanism to provide coverage for people who are uninsured, but eligible for insurance through their employers, if the insurance meets coverage standards. In this case, the state will help with the employee share of the premiums, and with cost sharing (deductibles, coinsurance) for care related to chronic conditions.
Will Catamount Health be more affordable than other insurance?
Yes, for two reasons. First, the state will provide assistance with premiums, based on family income. Second, payments to providers under Catamount Health will be less than what private insurers pay, but more than Medicaid and Medicare, so Catamount Health will not contribute to the cost shift. In fact, because people who previously had no insurance will now be covered, the cost shift will be reduced (less bad debt and free care).
How will Catamount Health be paid for?
The state will apply to the federal government for permission to include Catamount Health in Vermont’s “Global Commitment to Health” Medicaid waiver. If permission is granted, that will mean that the federal government will pay about 60 percent of the cost of Catamount Health. The state’s share will come from two increases in the cigarette tax, from $1.19 to $1.79 next year, and to $1.99 in 2009 and from an assessment on employers for employees who either are not offered insurance or who are offered insurance, chose not to enroll, and are uninsured.
Will this make the Medicaid deficit worse?
No. Catamount Health is adequately funded from the new revenue sources. In fact, it will help reduce the Medicaid deficit by changing the way health care is delivered. Many Vermonters with chronic conditions are on the Medicaid program, so improving their care and saving money will help Medicaid’s financial situation.
What happens next?
The state will spend some time planning the implementation of these changes. Since the changes are complex, there will be evaluation of how well all the parts of the act are meeting the legislature’s goals. Next steps will be based on the successes of the act.