• Co-op could provide health care option
    July 21,2013

    Heath care in Vermont is in transition. Vermont Health Connect, our state’s own health care exchange, will begin on Jan. 1 in conjunction with the federal Affordable Care Act, and the hope is that Vermont’s single-payer system will begin in 2017.

    While the Vermont Legislature and the Shumlin administration have devised a rough road map of how to get there from here, there is a great deal of uncertainty as to whether we’ll be able to hold the course and how we will pay for it. Interrelated problems need to be thoroughly understood before the final goal can be reached. Looking ahead, Vermont needs to keep its options open and not close off new avenues that might help us make the grade. One such idea is the establishment of Vermont Health Co-op, a new insurance company that would provide coverage to Vermonters under a cooperative arrangement.

    It is against this background that Financial Regulation Commissioner Susan Donegan’s rejection in May of the Vermont Health Co-op application for an operating license should be viewed. It is true that there were a number of flaws in the co-op’s application, but these flaws should not be insurmountable. More to the point, the concept of introducing an additional health care insurer, particularly a co-op run by and for Vermonters, has real merit.

    Currently there are only two health insurance companies that sell policies in Vermont — Blue Cross Blue Shield of Vermont, which has approximately 85 percent of the market, and MVP Health Care (out of New York), which has the other 15 percent. Unless things change, these are the only providers that will sell policies on the exchange. Further, MVP recently backed out of insuring lower-income Vermonters under the Catamount program, citing excessive costs. There is no guarantee that MVP will remain a Vermont insurer for long. If the state is left with only one provider, Blue Cross will have no competition on rates and service.

    Even though each health insurance provider is to offer products on the exchange with similar services and benefits, there will be differences among them as to price and how administration and customer service is handled. That is exactly the way an exchange is supposed to function, with competition and customer satisfaction driving the bus. Presumably, this competition will lead to improved results while keeping rates down. Vermont’s experience with the formation of the health care exchange is already producing strong benefits for Vermonters. The establishment of the exchange has required all insurers and group associations to disclose their rates, and a number of group association policies have been exposed as having unjustifiably high rates for relatively poor coverage.

    It is by no means a foregone conclusion that we will have a publicly funded health care system by 2017. The Legislature may not be able to agree on a tax package to fund it. The federal government may not grant Vermont permission to proceed, which would mean a loss of essential federal subsidies.

    Yet Donegan’s rejection of the Vermont Health Co-op seems based on the assumption that by 2017 we will have a Medicare-type structure where everyone is covered under the same statewide policy, and in which both payment and administration are handled under a single bureaucracy. She attributed her decision largely to concerns about the co-op’s solvency, which arise in no small part because she assumes that the co-op will have a life expectancy of no more than three years. Her rejection of the Vermont Health Co-op seems to ignore the probability that the state might need to bid out administrative services when it switches over to a single-payer system to handle payments and related tasks. Can we be sure that Blue Cross would be the best party to play this role, or instead, might we benefit from competition among several companies to serve the administrative functions of a single-payer system?

    It would be good for Vermont if the Vermont Health Co-op and Donegan could work out an agreement that would allow the co-op to begin operation and perhaps eventually to flourish. Vermont has had good experience with cooperatives. There are examples all around us of co-ops that provide high-quality products and services at better-than-competitive rates. And, during this uncertain time of health care upheaval, having new organizations at work and a potential part of the solution is an inherently good idea. It would be a shame if the co-op has to fold up shop before it really begins.

    Jim Masland is a Democratic House member from Thetford Center.

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