As we approach the implementation of Vermont Health Connect, a milestone in the realization of the Affordable Care Act in Vermont, opponents of the health insurance exchange have been voicing their objections to the transition in our health care system. According to news sources last week, Mark Larson, commissioner of the Department of Vermont Health Access, received a letter from the republican-led House Committee on Oversight and Government Reform, indicating that the Committee was investigating Vermont’s “small business mandate.” According to the letter, “the State of Vermont imposed a requirement that forces all individuals and small businesses to purchase coverage through its Exchange,” which results in “reduced consumer choice and higher costs for many businesses and individuals.” The letter further asserts that Vermont’s “requirement conflicts with the text” of the Affordable Care Act.
The letter appears to misstate a Vermont law and presumes that greater choice would be available without the law. The letter also misreads the Affordable Care Act as restricting a state law from regulating health insurance offerings.
While the letter states that Vermont’s law “forces all individuals and small businesses to purchase coverage through its Exchange,” the Vermont law does not compel any person or business to purchase insurance. Under 33 V.S.A. § 1811(b) and (c), no insurance carrier may sell a health insurance plan to an individual or small business except through the exchange, and no carrier may sell health insurance unless it is registered with the state. States are expressly permitted to regulate the business of insurance, and this has been settled law since the 1940s when Congress enacted the McCarran-Ferguson Act.
It is inaccurate to suggest that the Vermont law “forces” all individuals and small businesses to purchase insurance through the exchange. In fact, many individuals in Vermont—those working for larger businesses, for example—will continue to have insurance plans that are not on the exchange. And because small businesses may elect not to provide insurance at all, it cannot be said that they are “forced” to purchase through the exchange.
The letter from the House Oversight Committee further assumes incorrectly that Vermont is limiting consumers’ choices of health care plans in a manner that will lead to increased costs. Vermont’s Title 8 has already restricted the choice of health insurance plans to those offered by “registered carriers” for decades. There are only a small number of carriers who operate within Vermont, both because many carriers choose not to do business in our small state, and because the state protects consumers by requiring insurers to meet certain standards.
The major carriers that currently offer plans in Vermont, Blue Cross Blue Shield of Vermont and MVP, will remain available, and they will offer a spectrum of plans through the exchange. And despite what the letter presumes about increased costs, there is evidence to suggest that costs will actually decrease for many individuals and businesses under Vermont Health Connect. In fact, on July 8, Vermont lowered the proposed premium rates for insurance sold on the Exchange. Already proposed to be at or below current premiums, the Green Mountain Care Board recommended further reductions so a silver-level plan for an individual is to cost $388 or $410 per month, without considering available state or federal subsidies.
This raises the question: why would businesses want to purchase a more expensive plan from the same carrier outside of the exchange?
The House Oversight Committee’s letter also misreads the Affordable Care Act when it claims that the exchange violates the ACA. The letter cites a section of the ACA that states that the ACA does not limit individuals and businesses from choosing plans outside of the exchanges, nor does it prohibit an insurer from offering plans outside of the exchanges. This section of the ACA is not an “express preemption” clause that is intended to restrict state laws. Indeed, the House Oversight Committee letter fails to cite the following provision of the ACA, which reads: “Nothing in this title shall be construed to terminate, abridge, or limit the operation of any requirement under State law with respect to any policy or plan that is offered outside of an Exchange to offer benefits.” (42 USC § 18032(d)(2)). In other words, the ACA does not preempt the state’s authority to regulate health insurance generally. It remains within the State’s purview to decide that health insurers may not offer insurance to small businesses outside the Exchange.
Moreover, the three republicans who signed the letter to Mark Larson seem to be intent on depicting Vermont as having overstepped its mandate under the ACA to set up a health insurance exchange. However, the ACA specifies that a state may elect to merge its individual and small group exchanges (see 42 USC § 18032(c)(3)), which is exactly what Vermont’s implementation does by merging the individual and small business exchanges. Vermont Health Connect is consistent with the ACA.
Although it is an important part of our legal heritage to question the basis for our laws, this inquiry comes at the eleventh hour as the Exchange will open less than 100 days from now. It is a shame that the Department of Vermont Health Access must now expend valuable resources to provide documents and submit to questioning by committee leadership whose questions seem to be driven by partisanship and incorrect interpretations of the plain language of Vermont and federal law.
The information provided in this blog is generic and based on the general definitions and provisions of the Affordable Care Act and Vermont law. This blog post and the information it contains should not be interpreted as legal advice for any specific situation. Individuals with specific questions about their business are encouraged to consult an attorney.
photo by Alexander C. Wimmer