House Lowers Governor's Proposed Medicaid Premium Increase

The House decreased the Governor’s increase of Medicaid and VHAP premiums by half in the budget bill (H.891) that recently passed the House. The Governor’s Medicaid budget for FY 2009 called for a 100% increase in premiums for Dr. Dynasuar families and VHAP (Vermont Health Access Plan) recipients. VHAP is Vermont’s health insurance program for low-income adults.

In his budget address on January 22, Governor Douglas stated that he is asking participants to “contribute a modest amount toward saving (Medicaid) through targeted changes in premiums and co-pays.” He added, “These added contributions are a trade-off; we want to keep the program available to every Vermonter who needs assistance, so we must ask everyone to do his or her part to keep it affordable.”

The Governor’s contention that premium increases for the Dr. Dynasaur and VHAP programs will work to keep the program available to every Vermonter who needs assistance is, in our opinion, incorrect. In fact, we believe that his proposal will have the opposite effect, pushing more Vermonters out of the programs. The legislature first established premiums in the Dr. Dynasaur program in 1997. In 2003 premiums were raised and the premium billing system was changed. Premiums increased by more than 40% and billing required that premiums be paid monthly, in advance. Premiums were raised again in 2005.

Between 2003 and 2006 total enrollments declined by 9.2 percent for children covered by Dr. Dynasaur (except for children enrolled in traditional Medicaid). This occurred at the same time that the child poverty rate grew and as rates of children’s participation in the Food Stamp and federal School Meals Programs rose.

Studies have shown that those enrolled in public health insurance use health care services at the same rate as the rest of the population. Premiums do not reduce unnecessary use of service. Though children account for 48 per cent of Medicaid enrollees, they represent only 19 percent of expenditures on services.

Economically stressed families will lose coverage, may be temporarily, due to nonpayment of premiums. Churning, as this is called, can wreak havoc on a child getting adequate preventive or regular medical care; health problems that occur during this period also add to economic burdens of already-struggling families. In addition, costs for high needs children may be balanced on the back of providers.

The House’s effort to soften the blow by halving the increase is appreciated, but not enough. If our goal is coverage of all children, any increase in premiums for Dr. Dynasuar is a setback. The relatively small revenue gained will surely be offset by the cost of loss of health insurance to the family, the providers and most importantly, the child.

Thanks to Hunt Blair from Bi-State Primary Care for the following summary:

In its current form, the big bill will raise Medicaid premiums, but by lesser amounts than proposed. Current VHAP premiums range from $7 to $49/month. The Governor’s recommend moved them back to the rates prior to Catamount, (Vermont’s new health insurance program for the uninsured) a range from $11 to $75/month. Similarly, Dr. Dynasaur is currently $15 to $40/month, depending on FPL; the administration proposed raising the range from $30 to $80/month. The House has set them as listed below, and also raised the Catamount premiums, to help pay for holding down the VHAP and Dr. D. increases.

Dr. Dynasaur:
0-185% – No premium • 185-225% – $22.50/month
225-300% – $30/month (Dr. D. is secondary insurance) • 225-300% – $60/month

VHAP:
0-50% – No premium • 50-75% – $9/month • 75-100% – $32/month • 100-150% – $41.50/month
150-185% – $62/month

Catamount: 
up to 200% – $65/month • 201-225% – $100/month
226-250% – $125/month • 251-275% – $145/month
276-300% – $165/month