Healthcare Is a Human Right Campaign Testimony Calls for Limiting and Ultimately Prohibiting Private Insurance Market

The Vermont Workers’ Center’s Healthcare Is a Human Right Campaign testified before the Vermont House Health Committee yesterday, supporting the elimination of an insurance market outside the Exchange, as proposed by H.559, and demanding an amendment to the bill to clarify that after implementation of Green Mountain Care, private health insurance companies will be prohibited from selling health plans in Vermont for services also covered by Green Mountain Care.

Read or download the testimony below, along with a list of proposed amendments.

Good afternoon.  I am Peg Franzen, President of the Vermont Workers’ Center. I first want to thank you for this opportunity to testify about the implementation of Vermont’s pioneering health reform law. This is a very important process, and I’d like to thank you for moving this process along in a serious, considered and participatory way. I’d also like to share with you the ideas and suggestions our members have about some of the provisions in this particular bill, H.559.

We are very proud that by passing Act 48 last session, our legislature put Vermont on the path toward a universal, publicly financed healthcare system.   The embodiment of human rights principles such as universality, equity and participation in that act confirms to Vermonters that this legislature will treat their healthcare, in fact, as a human right and a public good.

We trust that the legislature seeks to ensure that this path toward universal healthcare will not be longer, rockier and more winding than absolutely necessary. We are aware that a crucial stretch of this path consists of planning for a state exchange, a marketplace that is not intended to provide health care for all. While the federal health reform requires this planning process, we expect the Administration to apply for a waiver as soon as it becomes available, so that we can transition to a universal health care system without the detour of yet another market endeavor. Whether or not Vermont is able to obtain an early waiver, Act 48 is very clear when it comes to the transitional role of the exchange:

“The intent of the general assembly is to establish the Vermont health benefit exchange in a manner such that it may become the foundation for Green Mountain Care.”[Act 48 of 2011, Section 2 (a)(2)(A)]

We urge Committee members to keep this intention in mind as you review the implementation plan set out in H. 559. Although the exchange in itself does not meet human rights standards, it is possible for you to ensure that it becomes a viable stepping stone for a smooth and early transition to the universal system we all await.  You can do this by making certain that none of the provisions of H. 559 erect barriers, however hidden or small, that would impede progress toward a true human rights based health system.

It is also within your power and responsibility to ensure that the people of Vermont will not suffer any further reductions in their access to healthcare as the federal reform requirements take effect. Unfortunately, these requirements fall short of Vermont’s high standards for healthcare access. We are concerned that there is a real danger that the exchange will lead to the loss of healthcare benefits for some Vermonters who currently enjoy Vermont’s greater protections. We urge you to ensure that this does not happen. Every Vermonter must see a continuous improvement in access to care, until we complete the transition to universal healthcare.

This is why the Vermont Workers’ Center has proposed specific amendments to Sections 34 and 35 of this bill, including that a decision be taken now to implement a state-run basic health plan for people transitioning out of our public programs, which have fulfilled such a crucial role in maintaining access for low-income Vermonters. As these sections of the bill are not the subject of today’s hearing, I will limit my comments in this regard to recalling the importance of ensuring that all aspects of the transition process improve Vermonters’ access to care. We propose that an explicit requirement is added to this bill for the transition plan to guarantee that no individual shall have less coverage, reduced access to care or higher costs than in Catamount, VHAB or any other public program in which he or she is currently enrolled.

The Vermont Workers’ Center supports the provisions in this bill that seek to achieve a large risk pool within the exchange and eliminate the sale of private health insurance outside the exchange. The individual and small group market pushed by private insurance companies has always sought to maximize corporate revenue at the expense of policyholders with no other options. These companies place financial gains ahead of the needs of Vermonters. This practice of largely unregulated profiteering stands in stark contrast to the recognition of health care as a public good, mandated by Act 48, and must stop with the establishment of a more regulated marketplace, the so-called exchange. We commend the bill drafters for prohibiting an outside market, which brings us a small step along the path of treating health care as a public good.

We support the bill’s commitment to making the risk pool of the exchange as large as possible. While we know from many expert sources, including Prof. Hsiao, that the exchange itself will be unable to create universal access or achieve real cost-savings, those same financing experts also point out that even fewer people would obtain coverage and that costs would be higher for everyone if only a small number of businesses participated in the exchange, and if a market was allowed to operate outside the exchange.

So if Vermont is serious about moving towards a system that guarantees universal access to care and provides healthcare as a public good, we must make the exchange as strong as possible to serve as a viable platform for this endeavor.

This also requires that a strong platform for universal healthcare remains in place even when the exchange will be surpassed by Green Mountain Care, our universal, publicly financed system. Green Mountain Care, just like the Exchange, cannot function effectively if an outside market of private insurance companies undermines its operations. In order to ensure that healthcare is treated as a public good, Green Mountain Care must eventually become the primary source of healthcare for all Vermonters. However, as it currently stands, H.559 eliminates a market outside the exchange, yet is silent on whether such a market could resume once the exchange will be superseded by Green Mountain Care. Does the legislature really intend for individuals to contract with private insurance companies for the same services provided by the universal, public healthcare plan? Selling private insurance products in competition with Green Mountain Care would undermine the universal system through fragmenting the pool of insured people and promoting adverse selection. This would make coverage more costly for everyone, also by adding unnecessary administrative expenses. Moreover, it would lead to the creation of tiers, privileging those who are healthier and wealthier. In short, all access and cost benefits of Green Mountain Care, as intended by this legislature with the passage of Act 48, would be undermined.

It is for this reason that we today suggest an amendment to H.559, Section 3, which would add to 33 V.S.A. § 1811: “(l) Nothing in provisions (b) through (k) of this section shall be construed as limiting the ability to carry out the intent of Act 48, Section 2 (a)(2)(A), which affirms that the Vermont health benefit exchange is to be established in a manner such that it may become the foundation of Green Mountain Care. After implementation of Green Mountain Care and upon termination of the Vermont health benefit exchange, whether through a federal waiver or other action, private health insurance companies shall be prohibited from selling health benefit plans in Vermont that cover services also covered by Green Mountain Care, to the extent permitted by federal law.”

This amendment is consistent with the purpose of treating healthcare as a public good, clearly stated in Act 48. It would serve to strengthen Green Mountain Care’s sustainability and effectiveness. Instead of operating merely as a public option, which has been deemed unsustainable by Prof. Hsiao, our amendment ensures that Green Mountain Care will be able to guarantee universal and equitable access as a public good for all Vermonters.

We urge you to limit the role of private insurance companies, in order to expand the benefits to all Vermonters. We trust that your primary goal is to establish a publicly financed system that guarantees access to healthcare for all Vermonters by providing healthcare as a public good. Therefore, please ensure that access to care is not restricted, reduced or otherwise limited by the private interests of the insurance industry or by any decisions taken during the transition process.