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Small businesses gird for transition to health insurance marketplace

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Posted on September 26, 2013 |
By John Flowers



DanforthGuy9105.jpg
DANFORTH PEWTER CEO Bram Kleppner, who has been evaluating the Vermont Health Connect insurance marketplace, says the Middlebury company will offer its workers health insurance. Vermont Health Connect is accepting enrollees beginning Oct. 1. Independent photo/Trent Campbell

ADDISON COUNTY — State officials have spent almost three years tuning up Vermont Health Connect (VHC), a new insurance marketplace designed to make sure all Vermonters have access to “quality, affordable” health care coverage.

On Tuesday, Oct. 1, many Vermonters and small businesses will start taking the new system — triggered by the federal Affordable Care Act — for a test drive.

Oct. 1 is the date on which individuals and businesses with 50 or fewer full-time employees start comparing a series of health insurance options to be offered under VHC and select one that fits their budget. Coverage under VHC is slated to begin this coming Jan. 1. State officials have spent a lot of time publicizing VHC and key dates for its implementation, because insurance plans offered to individuals and small businesses in 2014 will only be available within Vermont Health Connect.

The program will specifically count its enrollees from the ranks of the uninsured; Vermonters who currently buy insurance for themselves; citizens who have Medicaid or Dr. Dynasaur (for children up to 18); those currently enrolled in the state’s Catamount or Vermont Health Access Plan (VHAP) programs; Vermonters who are offered “unaffordable” coverage by their employers; and small businesses.

Many small businesses have been grappling with the decision of whether to continue offering health insurance to their workers via Vermont Health Connect, or dropping that amenity and instead allowing their employees to access their insurance through VNC as individuals. Qualifying individuals with low incomes can tap into subsidies to drive down premium costs.

Proponents of Vermont Health Connect have touted the new system as a way of allowing small businesses to shed responsibility for health insurance and the prevailing double-digit annual increases in premiums. This, VHC boosters have argued, could allow small business owners to improve their bottom lines while getting in a better position to offer workers raises and contributions toward their VHC premiums

Many affected businesses have until Oct. 1 to tell their employees whether they will be offering health insurance through VHC. Businesses should log on tohttp://healthconnect.vermont.gov to learn more about VHC and whether they are subject to the Oct. 1 notification deadline. The state has set up a toll-free hotline — (855) 499-9800 — to specifically help businesses with VHC.

“My sense is that more companies are keeping (health insurance responsibilities) than we imagined,” said Andy Mayer, executive director of the Addison County Chamber of Commerce and one of several local officials who have been trained by the state to navigate people and businesses through the transition to VHC. Other local VHC navigators are the Open Door Clinic, the Champlain Valley Office of Economic Opportunity and Porter Hospital.

Mayer has counseled several county businesses about VHC and its financial implications.

Typically, Mayer said, small companies that offer higher-than-average wages are continuing their health insurance benefits through VHC. That’s because they don’t want to shortchange their employees who would likely not qualify for subsidies to enroll in VHC plans as individuals.

And there are some small businesses that want to retain the health care insurance amenity as an employee recruiting tool, Mayer noted.

“It’s a significant benefit for employees,” Mayer said.

Businesses with up to 25 full-time employees that pay average annual salaries of less than $50,000 and that contribute at least 50 percent toward health insurance premiums qualify for tax credit benefits through VHC.

Mayer said he has been responding to a steady stream of VHC-related questions from local businesses during recent weeks. He has been dutifully providing answers. Ironically, the Addison County Chamber’s advice on VHC could end up costing it some members. The chamber manages a group health insurance plan for itself and its small businesses membership. Mayer acknowledges some of those businesses are dues-paying chamber members solely for the health insurance plan. Those that opt out of that plan due to VHC are therefore likely to opt out of their chamber membership.

“Financially, it could have a significant negative impact for us,” Mayer said of VHC. “But we are also developing new programs to serve future members.”

Middlebury-based Danforth Pewter has for the past year been studying its health insurance options through VHC, according to company Chief Executive Officer Bram Kleppner. And Kleppner is in a perfect position to assess the impacts of VHC; he’s also co-chairman of the Vermont Medicaid & Exchange Advisory Board, a state panel charged with informing the Department of Vermont Health Access on policy development and program administration for the state’s Medicaid-funded programs and Vermont Health Connect.

Danforth has the approximate equivalent of 50 full-time workers, some of whom tend to the company’s five retail stores. He explained the company goals at the outset were to make sure all employees maintained access to good health insurance; that it be affordable for all workers; and that costs be as inexpensive as possible for the company.

“And we decided that we should be no less fair than what we currently do,” Kleppner said.

Danforth currently pays between 60 percent and 65 percent of health insurance premiums, depending on whether the coverage is single, couple or family. Employees pay the first $500 of the deductible, then the company pays the next $2,000 for singles and $3,000 for couples and families. Employees pay the rest of their out-of-pocket costs (deductible, co-pays and co-insurance).

Company officials decided to only drop coverage if it could be done in a way so that employee costs for buying insurance as individuals through VHC were no higher than they would be under the current insurance plan.

“With all (the) calculating done, we were able to compare, and it turned out that it was roughly $18,000 cheaper for the company to provide insurance than stop providing insurance, so we will offer insurance in 2014,” Kleppner wrote in a piece summarizing his company’s decision. “Relative to what we do today, employee costs for premiums will go down slightly and the coverage will be slightly better.”

Through VHC, Danforth (and other small business) employees will be able to choose from among “bronze,” “silver,” “gold,” “platinum” and “catastrophic” (if they are younger than 30 or have limited incomes), carrying various coverage and premium levels through Blue Cross Blue Shield or MVP. The employer sets the contribution amount, and the employee chooses a plan.

Danforth agreed to pay a dollar amount equal to 60 percent to 65 percent of the premiums for the silver-level, high-deductible plan, but the employee will be free, if the employee never gets sick, to buy the bronze-level plan, which has lower premiums and higher out-of-pocket costs, according to Kleppner. At the same time, if the employee has regular high medical costs, he or she may choose to pay more of his/her own money in premiums and get a gold- or platinum-level plan, and then pay lower out-of-pocket costs as he or she goes and sees the doctor over the course of the year, Kleppner noted.

“We had to make some assumptions,” Kleppner said of the company’s analysis, which could change as VHC is implemented next year. For example, health care consumption levels are tough to predict.

Kleppner said it is unfortunate that the business community continues to have to play a role in the administration of health insurance.

“It’s not our business,” Kleppner said.

Becky Dayton is owner of the Vermont Book Shop in Middlebury. She wasn’t quite sure on Tuesday what decision she would make regarding employee health insurance.

I have not made any final decisions about 2014 and beyond,” Dayton said in an e-mail. “But it has become clear, after much number-wrangling and consulting, that the new law may help make the Vermont Book Shop a profitable business for the first time in more than a decade … without significant financial detriment to our employees.

“That said, this law and all its parts have been moving targets for over a year now,” she added. “I still don’t understand all the ramifications of shifting the responsibility to my employees, so I’ll be putting off any action until I'm confident my choice is right for both my employees and my business.”

Rep. Mike Fisher, D-Lincoln, is chairman of the House Health Care Committee. Like Mayer, he has spent a lot of time in recent weeks talking to citizens and business owners about VHC.

“I meet a lot of people who say, ‘Boy, I’m really harmed by what’s coming,’” Fisher said. “But when I pull out the (information) sheets and show what (VHC) will mean for them now and in the future, most of those people say, ‘Wow, that’s not as bad as I thought it was.’”

Fisher acknowledged some people are facing higher premiums under VHC, but most figure to save money. As an example, he displayed a chart showing current Blue Cross Blue Shield premium costs for those covered through the Vermont Health Services Group, which represents small grocers, retailers, the Vermont Medical Society and the Vermont Veterinary Medical Association, among others. Figures provided by Vermont’s Joint Fiscal Office indicate those workers figure to save $310 per month through the VHC “gold” plan; $270 through the “silver” plan; and $288 through the “bronze” plan.

“There is a lot of misinformation out there, and quite frankly a lot of bold-faced lies about what’s happening in the health insurance market,” Fisher said.

For example, Fisher said that Vermont will remain a private insurance marketplace under VHC. He said VHC should help contain the rate of increase in health care costs. But Fisher continues to believe the state will have to take a more dramatic step in order to make the health care system more affordable and accessible to its citizens.

“We need a unified financing system, one that raises the money through broad-based taxes for the people who use it,” Fisher said. “There are some very good points to (the current health care law), but some very challenging aspects, in my opinion. This doesn’t come close to where I think we need to go to make health care something Vermonters can depend on.”

Reporter John Flowers is at johnf@addisonindependent.com.

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