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Vermont aims for universal health care

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Vermont aims for universal health care

MONTPELIER, Vt.—The intent of Vermont's sweeping new health care reform law is spelled out in a single sentence in the measure.

“The state of Vermont must ensure universal access to and coverage for high-quality, medically necessary services for all Vermonters,” the law says.

While the intent of the measure that Gov. Peter Shumlin signed into law last month is clear, the details of how to achieve the stated goal of universal coverage are not.

The law lacks details on issues such as how the program will be financed, benefits to be offered, premium subsidies to be provided and the role of employers. Those decisions will be made by members of a health care board to be named in the future, and some of those decisions then must be ratified by state legislators.

“It is like creating a new business without a business plan,” said Darcie Johnston, the founder and executive director of Vermonters for Health Care Freedom, a Montpelier-based nonprofit organization that opposes a government-run health care system.

What the law says is “we will implement a single-payer system in 2017 and we will tell you what it means later,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

“There are no details. Basically, they have just passed planning legislation,” said Betsy Bishop, president of the Vermont Chamber of Commerce in Montpelier.

But Gov. Shumlin said those details will be coming.

“People have legitimate questions about how a single-payer (system) will be financed and operated, and we will answer those questions before the legislature takes the next step. We'll be getting input from all Vermonters moving forward, which is essential to the success of this effort,” he said in a bill-signing statement.

The lack of financing details—also to be decided later—has special implications for employers. Nothing in the law would bar employers from continuing to offer coverage. But if the state decides to impose a payroll tax on employers, which is one of the ideas under discussion, employers that continue to offer cover still could be liable for the payroll tax, assuming that is the funding mechanism Vermont lawmakers adopt.

Effectively, employers “would end up paying twice,” said William Driscoll, vp of the Associated Industries of Vermont in Montpelier, a business lobbying group.

That potential liability concerns state business groups.

“We have talked to our members and they don't have confidence that (reform law) savings will be achieved. If (lawmakers) take the payroll tax route, employers would have to pay and have no control” over that cost, Mr. Driscoll said.

In its lack of detail, the Vermont law is strikingly different than the health care reform measure that Massachusetts lawmakers approved in 2006, which in certain ways became a model for the federal health care reform bill approved last year.

The Massachusetts law, for example, made clear that employers could continue offering coverage and not be liable for any special assessments. Those that don't offer coverage have to pay an annual assessment of $295 for each full-time employee.

In addition, the Massachusetts law established a special program for the lower-income uninsured—those with annual incomes of up to 300% of the federal poverty level—in which the state partly or completely subsidizes premiums charged by health care plans providing coverage through a pool.

Soon after Massachusetts passed its bill, the state received a Medicaid waiver assuring that it would receive hundreds of millions of dollars in federal funding. The state used the money to expand Medicaid and subsidize premiums for low-income uninsured state residents not eligible for Medicaid.

In its quest for universal coverage, Vermont is taking a very different implementation path than Massachusetts. The Massachusetts law was detailed, with blanks quickly filled in by regulators. The result was much of the law went into effect within a few months after enactment.

By contrast, the Vermont law creates a five-member board that will make decisions on vital issues such as premium subsidies, benefits that must be covered, the role of employers and private insurers, and, above all, financing.

“The financing is still a big unknown,” said Beatrice Grause, president and CEO of the Vermont Assn. of Hospitals and Health Care Systems in Montpelier.

“They are going to have to figure out how to pay for it,” said J.D. Piro, a principal with Aon Hewitt Inc. in Norwalk, Conn.

However Vermont decides to achieve its goal of universal coverage, it also will need permission from the federal government before moving ahead. The federal health care reform law has a mechanism in which states can seek waivers to institute reform measures that differ from the federal law.

But such waivers are not available until 2017. Legislation, S. 248, was introduced this year by Sen. Ron Wyden, D-Ore., to move up to 2014 the availability of the waivers.

While President Barack Obama endorsed the bill, it has attracted little support in the Senate, with just eight senators—seven Democrats and one Republican—signing on as co-sponsors.