A $200 million online health insurance marketplace created by the Shumlin administration in 2013 is a flawed program with “significant deficiencies” that is not, in its current form, capable of meeting the needs of Vermont consumers.
But imperfect as it is, Vermont Health Connect is constructed on sound technological footing. And policymakers are better off trying to improve on the state-based exchange than they are abandoning the program in favor of a federal or regional solution.
Those conclusions come from a firm hired by Vermont legislators earlier this year to provide an independent assessment of Vermont Health Connect. And the report could heavily influence debate between Democratic lawmakers, and the incoming administration of Republican Governor-elect Phil Scott, over the future of Vermont Health Connect.
“We would encourage the state of Vermont to continue making an investment to address these deficiencies and make this sustainable into the future,” said David Weiher, a member of the Boston-based firm, Strategic Solutions Group, that conducted the study. “We believe you have a roadmap, a very viable roadmap, ahead of you.”
Scott vowed during his gubernatorial campaign to do away with Vermont Health Connect, and either move to the federal exchange, or merge into some kind of regional exchange with nearby states. Since being elected, Scott has signaled a new willingness to consider sticking with the state-based marketplace. The $250,000 analysis unveiled Wednesday says that option would be the most fiscally prudent course of action.
The report delivers a harsh assessment of Vermont Health Connect. Even after three years and $200 million in mostly federal investments, the program still has significant deficiencies that, according to the report, “have created and will continue to create issues that do not meet the service level expectations of constituents, the Centers for Medicare and Medicaid Services” and private insurance carriers.
Furthermore, the report says, “it is not feasible or cost-effective to maintain the VHC system, in its current form, over the next several years due to the numerous deficiencies.”
But Don Vanslochem, also with Strategic Solutions, said during a briefing for reporters Wednesday that upgrades completed earlier this year have made a positive impact.
“And we did find as we looked at the system from August through just a couple of weeks ago that a lot of those deficiencies had been resolved, and we did find in discussions with the legislators, a large number of constituents that had been calling about long wait times on the phone and other issues had dropped down.”
Analysts say the marketplace is built on a strong technological foundation that Vermont would be unwise to abandon now. And they say that improving upon the state-based system offers a more plausible path forward than moving to the federal exchange, partnering with other states, or doing away with the exchange concept altogether and letting consumers conduct business directly with private insurance carriers.
That conclusion stems in part from the fact that Vermont Health Connect is intertwined with an “integrated eligibility system” that will also be used to administer Vermont’s $1.5 billion Medicaid program.
Weiher says 95 percent of the consumers using Vermont Health Connect are on some form of Medicaid. Even if the state does away with the exchange, he says, it would still have to come up with a way to administer benefits for those Medicaid beneficiaries. And Weiher says that means the lowest-cost option is to continue working on the system Vermont has now.
The fact that Vermont Health Connect is so intertwined with the Medicaid program is among the key reasons analysts say the state should stay the course. Federal funding for exchanges – the federal Affordable Care Act required states to develop exchanges – has dried up completely. But Vermont has $62 million in federal money that’s already been committed for technology related to its Medicaid program. And the analysts say Vermont can use that funding to simultaneously solve the technological deficiencies related to the exchange.
A 2015 report by the Shumlin administration projected additional costs of $24 million to transition to the federal exchange. Weiher says it’s a plausible estimate, given the experience of other states that Strategic Solutions Group spoke with over the course of its study.
“Other states (that moved to the federal exchange) kind of confirmed that, off the record, it was actually in excess of those numbers (in the Shumlin administration report), so it is a potentially expensive endeavor,” Weiher says. “But since it’s no longer funded by federal dollars, that really informed our recommendation to stick with the technology you have.”
In a statement Wednesday, Gov. Peter Shumlin said the report validates his administration’s work on the exchange.
“This report reaffirms what we have been saying for years: Vermont Health Connect is the path forward for Vermont,” Shumlin said.
Shumlin said that the latest open enrollment period “is proceeding extraordinarily smoothly for Vermonters,” and that the system has had a 99 percent success rate sending enrollment data to the private carriers – Blue Cross Blue Shield of Vermont, MVP, and Delta Dental – selling plans on the exchange.
“Now that this report is completed, it’s time for everybody to stop posturing and get to work continuing to build upon the system that Vermont has used to achieve the lowest uninsured rates in the nation,” Shumlin said.
Al Gobeille, who will serve as secretary of the Agency of Human Services, which oversees both Medicaid and Vermont Health Connect, calls the report “timely.” Gobeille says he spoke Wednesday with the analysts who performed the work, and that they had useful insights into the state’s situation.
Gobeille says it’s true that Vermont needs to get its Medicaid eligibility system working no matter what happens with Vermont Health Connect. But he says there may be ways to separate the portion of the system that facilitates sales of private insurance plans from the portion of the system that administers Medicaid.
“The question then is what do you do with other parts of it that allow you to use it as the qualified health plan and billing and all the pieces that get you to (the private insurance carriers),” Gobeille says.
Gobeille says he wants to explore the possibility of using off-the-shelf commercial software to administer, all or in part, the non-Medicaid elements of the program.
Gobeille says the incoming administration also needs to explore the viability of one of the bigger assumptions made in the report, which is that Vermont is, in fact, going to proceed with the “integrated eligibility” project for which the $62 million in federal Medicaid money has been allotted.
The Strategic Solutions Group report derives its conclusions in part from the fact that Vermont could use the $62 million in Medicaid money to simultaneously address functionality problems on Vermont Health Connect.
But even Democratic lawmakers have expressed some skepticism about whether Vermont has the capacity to build the system on the timeline the federal government has set out – the deadline for completion is September of 2018.
“That CMS money issue, that’s a financial timeline. And just because the money goes away on a magical date doesn’t mean that people suddenly can do all sorts of work that they couldn’t have done before,” Gobeille says.
If Vermont decides not to move forward with the project, that $62 million might dry up. And if it disappears, so does much of the funding the report counts on to resolve problems on Vermont Health Connect.
This story has been updated.
This story was updated at 8:16 a.m. on 12/22/16 to correct a typo