State News

School health insurer hangs hopes on overhaul of offerings, rules

By Tiffany Danitz Pache,

The nonprofit that provides health insurance for education employees and retirees in Vermont is making some significant changes to try to stay relevant amid calls from Legislators to move school employees onto the state health insurance exchange. The federal health care law says small school districts must shift onto Vermont Health Connect in 2018.

Speaking about health care’s role in the continual rise in the cost of education, House Education Committee Chair David Sharpe said, “Over the years the cost of health care has exploded, and paying for it has been extremely difficult.”

VEHI will soon be offering four new benefit plans with lower premiums for school districts and higher out-of-pocket costs for school employees. Its board of directors believes this will save money for everyone, skirt a federal excise tax and possibly “help lower and stabilize property taxes,” according to a VEHI document.

“The board decided that if we were going to continue to exist as a trust that serves school districts,” it would need to change, VEHI board member Mark Hage recently told the House Education Committee. “The board has chosen to close [current benefit plans] and then to move in this new direction of lower premiums, higher out-of-pocket costs, health care reimbursements and medical savings accounts.”

Federal rules that go into effect Jan. 1, 2018, will force school districts with fewer than 100 employees onto the state exchange. At the same time, districts with more than 100 full-time workers will not be allowed to purchase on the exchange.

“Large employers will either have to self-insure or stay with VEHI. Smaller schools—unless they self-insure—would be compelled to go on the exchange,” said Hage.

The Vermont Education Health Initiative covers more than 42,000 education employees, retirees and their families. Nearly 70 percent of the people that VEHI health care covers are from large school districts, but those districts make up only 17 percent of VEHI’s members; 83 percent of its members are small districts.

VEHI wants to continue to serve both and sees a possible avenue for being able to do that. It is working with the Centers for Medicare and Medicaid Services (CMS) to see if regulators there can modify the small-district mandate through a rule change. If that fails, VEHI wants the Legislature to step in and pass legislation allowing it to serve districts of all sizes.

Officials at CMS and the Department of Financial Regulation are trying to sort through this for VEHI and expect to have an answer soon, according to Hage.

Sharpe said the situation is complex. “In many ways, health care is more complicated than anything else, even more than school governance, which we dealt with last year,” he said in an interview.

Because VEHI members didn’t know what would happen with Green Mountain Care and the state health care exchange, most stayed on their old plans when the Affordable Care Act went into effect. Those plans are considered grandfathered by the federal government. This status carries with it strict conditions and doesn’t allow the insured certain rights—such as protection from being dropped from coverage and denial of treatment for pre-existing conditions—that go with ACA-compliant plans.

On Jan. 1, 2018, VEHI will transition 36,000 educational employees and their families into the new system of insurance plans. Retired VEHI members will be able to stay on the grandfathered plans for now. Officials will revisit the retiree question after transitioning the majority of members to the new plans.

“It is a major undertaking. It feels daunting,” Hage said.

VEHI considered 20-odd plans and narrowed it down to four in levels ranging from silver to platinum. They carry deductibles from $500 to $6,000 and copays starting at $25.

“At the end of the day, we felt these four plans and the cost sharing arrangements was something most people could manage,” Hage told lawmakers. “We are under no illusion that these numbers—the out-of-pocket costs—[aren’t] going to scare them when they see them . . . They are substantially higher than they have been accustomed to in the past.”

Right now, VEHI is preparing workshops describing the new benefit plans because a 2018 transition means that collective bargaining teams need to be aware of the changes as soon as possible.

Hage said VEHI, which has been providing services for two decades, has been doing a lot of soul searching. He said he doesn’t think it will be able to make everyone happy. “The Affordable Care Act and the exchange are driving the conversation,” he said. “Our plan, to a large degree, has to reflect the cost sharing agreements we see on the exchange.”

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