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Vermont’s reliance on Uncle Sam looms large in Obamacare replacement plan

By   /   March 13, 2017  /   News  /   No Comments

Photo by Emma Lamberton

HURT: Al Gobeille, secretary of the Agency of Human Services, right, and Cory Gustafson, commissioner of the Department of Vermont Health Access, brief reporters on a potential $200 million cut in federal funding due to changes in Obamacare.


MONTPELIER, Vt. — Due to an increasing reliance on federal taxpayer dollars to fund everything from food stamps and transportation to health care, Vermont now faces a conundrum: the state could lose $200 million from Medicaid’s federal matching grant, based on what changes happen to Obamacare at the federal level.

At a time when streamlining government is gaining attention at the state and federal level, Gov. Phil Scott is sounding more like a Democrat than a Republican, at least when it comes to expecting federal help to fund a large portion of state health care.

On Friday, state health care officials met with members of the news media for an informational briefing to discuss how the congressional proposal to replace the Affordable Care Act might affect Vermonters.

“At first blush, this [federal GOP plan] appears it would have a detrimental effect on Vermont. We take this seriously,” Scott said at the meeting with reporters.

Al Gobeille, secretary of the Agency of Human Services, said the change would mean the Legislature would need to approve continued allocation of $200 million in funds from state taxpayers. Gobeille, appointed to head the agency in January, was the former chair of the Green Mountain Care Board, the regulatory body responsible for revamping Vermont’s health care system and controlling costs.

“Vermonters have been clear that the ACA has not been affordable,” Gobeille said. “ … [However], my biggest fear is that this is a tremendous opportunity for our country and Vermont to fix problems with our health care. [I’m afraid] we’ll miss the opportunity.”

Tough choices

But most U.S. House Republicans don’t view the current plan to fix Obamacare as a missed opportunity.  “There’s not everything we’d like to have in the first phase … (but) we’re not going to sit back, because Obamacare is failing. Now is the time to act,” said Rep. Kevin McCarthy, R-Calif., House majority leader, at a Washington news conference last week.

Like many fellow Republicans, McCarthy sees potential to put health care decisions back in the hands of consumers and doctors, not government bureaucrats. “Market-based solutions serve our families’ freedom to choose their best health care option at an affordable price. Common-sense tax relief and lawsuit abuse reform can help work towards the goal,” he wrote on his congressional website.

The set of GOP bills being debated in Washington, known collectively as the American Health Care Act, retain some of the popular elements of Obamacare: children under age 26 would remain under the parents’ plan and individuals with pre-existing conditions wouldn’t be turned away from care. In addition, $100 billion would be set aside over for states to use to subsidize high-risk patients. Also, the “Cadillac tax” on pricey employer insurance plans would remain intact.

GOP lawmakers have promised that states will have increased freedom to allocate Medicaid funds to projects such as wellness programs like Vermont’s Blueprint for Health.

Along with McCarthy, President Donald Trump and House Speaker Paul Ryan are strongly supporting their party’s set of bills. But in Vermont, Gobeille is focused on the impact of block grants on state Medicaid funding.

“We’re being told block grants would cut funding to Medicaid, and normally we would expect to trade flexibility for that. It’s hard to accept cuts without flexibility in the same deal,” Gobeille said.

Gobeille predicts costs will rise in the next few years as healthy people leave the program and Vermont’s population continues to age.

“Tough choices will have to be made,” said Cory Gustafson, commissioner of the Department of Vermont Health Access.

Such tough choices might include cuts to Medicaid benefits, community programs like Blueprint for Health and provider reimbursement rates. Gustafson said Vermont Medicare beneficiaries will not see a change in coverage this year.

The graying of Vermont

Vermont officials also expressed concern over tax credits included in the Obamacare replacement package. Instead of allocating federal tax credits based on income, the plan would instead reimburse by age. Some 22,000 Vermonters on independent plans could be affected by age-rating proposals.

According to Mary Kate Mohlman, director of health care reform, Vermonters currently receive between $95 million and $100 million in income-based federal subsidies. Moving to an age-determined system means Vermonters would receive $80 million and $95 million. For individuals making less than $20,000, credits drop between $1,000 and $3,000, depending on a person’s age. However, the plan also expands subsidies to benefit persons making less than $75,000, who had previously not been eligible for benefits under Obamacare.

Republican supporters say their party’s measures will result in lower costs for healthy, younger people, and encourage them to participate and thus help carry along older, low-income individuals. A lack of healthy young people paying into the Obamacare system is a main driver of spiking premiums over the past several years.

Despite Gobeille’s sense of alarm, he said state lawmakers have to wait to see how details of the replacement plan play out before deciding whether or not to pursue an all-payer model, which would be an expansion of the Medicaid agreement to Medicare and private insurers.

Republican lawmakers in Washington have promised freedoms such as allowing patients to buy insurance across state lines. Such Initiatives could help lower costs by increasing free-market competition.

Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. Contact her at [email protected] or @EmmaBeth9.


Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. She has written for the Rutland Herald and Times Argus, two of Vermont’s largest newspapers, and her work has published in The Washington Times, FoxNews.com and a number of local Vermont newspapers. She is also a member of Investigative Reporters and Editors. Emma is always looking for new stories. Readers are encouraged to contact her with tips and story ideas.