Small businesses, workers fret over new health care options
By Neal P. Goswami
VERMONT PRESS BUREAU | September 29,2013
MONTPELIER — With the state’s online health care insurance marketplace slated to launch Tuesday, many small businesses are still struggling to determine if they will continue to offer employer-sponsored insurance to employees.
Many low- and middle-income individuals, meanwhile, are discovering that the state-subsidized health care plans they have used in recent years are going away, to be replaced with plans on the exchange that may cost more in the long run.
Vermont Health Connect, the state’s version of the state-level exchanges required under the federal Affordable Care Act, will open for enrollment Tuesday. Small businesses and individuals can view insurance plans and pricing side by side on the online marketplace to determine what suits them best. The insurance plans offered on the exchange will take effect Jan. 1.
Julie McDonough, insurance program coordinator for the Vermont Chamber of Commerce, said many small businesses across the state are still trying to determine whether to offer insurance to their employees on the exchange.
Jim Fecteau, owner of Fecteau Homes in Montpelier, is among the undecided. But Fecteau said his company is nearing a decision on whether it will offer insurance to employees, and how much the company will contribute if it does.
“We’ve been doing a lot of research on it,” he said. “I would say I’m probably down to the point where we’re just talking to our accountants.”
Fecteau attended a recent Vermont Chamber of Commerce forum in Montpelier aimed at providing small business owners with information about the exchange. The forum, coupled with speaking to other small business owners, has helped him navigate his options, he said.
“We’re in the process now of putting that all together and seeing what that’s going to cost us … versus what we had before,” Fecteau said.
For some employers, determining the best outcome for workers has proven difficult. If an employer offers insurance through the exchange that is deemed affordable — defined by the state as less than 9.5 percent of salary — the employee will not be able to receive subsidies and tax credits otherwise available to them as an individual buyer.
For Fecteau, individual subsidies for employees are not a major factor.
“I theorized what household incomes would be for our employees and ran the scenarios for each one … and I didn’t see many of them with any kind of subsidy,” he said. “For us, that was not prevalent. Subsidies were not going to be a big factor.”
But businesses with a wide range of salaries are facing a dilemma: Offer plans that may be more expensive for low-income earners, or don’t offer plans and force higher-income workers to purchase plans as individuals or families on the exchange without subsidies.
“I think the biggest sort of quandary is for small businesses that have both low-wage earners and high-wage earners. The decision lies in how employees can best be served,” McDonough said. “That’s really where a lot of businesses are taking a lot of time to analyze and go through their numbers and figure that out.”
Employers face an all-or-nothing choice when it comes to contributing to employees’ health insurance. If they want to offer insurance plans to some full-time employees, then coverage must be provided for all full-time workers.
Lenny’s Shoe & Apparel in Williston has decided to continue offering health insurance for 35 full-time employees because it is “a good benefit to recruit and retain employees,” according to business manager Carol Wheeler.
Reaching that decision was a challenge, though, she said.
“It’s been a little time-consuming,” she said. “I’ve spent, I would say, many hours between webinars and seminars.”
Wheeler said she remains “anxious” about the Oct. 1 launch of the exchange, and has been warned by Blue Cross Blue Shield representatives that the website is likely to experience issues in its early days, despite assurances from state officials that the system will launch smoothly.
“We hope for the best with the enrollment part, which is obviously still the unknown because we have no idea what the platform is going to look like,” Wheeler said. “I’m a little anxious just to see the platform. Hopefully it goes smooth.”
Lenny’s would have preferred to retain its previous health care plans, according to Wheeler. The plans offered on the exchange are comparable in services but more expensive, she said.
“You’re not going to find anything that was less,” she said. “There’s definitely an increase. There’s nothing that is the same price or even a little lower.”
Wheeler added, “That’s kind of frustrating, too, because the government keeps saying we’re going to save, save, save. Our employees are going to pay more.”
The exchange, so far, has not made it easier or cheaper to provide health insurance, Wheeler said.
“We want to take care of our employees but, as we all know, insurance keeps going up and up and up,” she said. “The government keeps telling us this is going to help us, but we’ll see next year if the premiums skyrocket again.”
Many individuals are facing difficult decisions, too.
Peter Sterling, director of the Vermont Campaign for Health Care Security, said the thousands of people currently enrolled in state-subsidized health care programs — Catamount and Vermont Health Access Plan — are likely to see significantly higher health insurance expenses.
“Everyone on Catamount and VHAP who’s going onto the exchange, their premium costs may not go up that much, but their out-of-pocket costs will,” he said.
Single adults now purchasing health insurance for themselves who are not currently eligible for state-subsidized plans are seeing the greatest benefit from the exchange, according to Sterling. Even though some may not have been eligible for Catamount or VHAP, they may still qualify for subsidies and tax credits through the exchange.
“People who are in the individual market in Vermont … generally are seeing more affordable coverage in the exchange,” he said. “So they are doing OK and they will be clear winners in this exchange.”
Sterling added, “However, those transitioning from Catamount or VHAP will not. I have been hearing concerns about that.”
A current 27-year-old female VHAP enrollee, who asked that her name be withheld, said she is among thousands of Vermonters who are likely to see health care cost increases. The woman recently earned a master’s degree in public health while working part-time. She was eligible for VHAP with no monthly premium.
There is no similar plan offered on the exchange, she said.
“VHAP has been really simple and straightforward, but with the new changes I do know that I’ll definitely be paying more, either through deductible costs or my monthly premium,” she said.
Of the 42,000 or so uninsured Vermonters, many are eligible for Medicaid or the state-subsidized plans. They choose not to enroll because they cannot afford it, Sterling said.
“They’re uninsured because of cost.” he said. “If you’re going to raise those costs, obviously, it’s a concern that many of these people will choose not to enroll.”
Sterling added, “The population we’re talking about … are people by and large making under $35,000 a year. They don’t have money laying around for $4,000 (in) out-of-pocket expenses. They are living paycheck to paycheck.”
Sterling said his own health care costs will rise when the insurance plans offered on the exchange launch Jan. 1. As a Catamount enrollee, out-of-pocket expenses are capped at $1,050 per year, Sterling said. Under the plan he can afford to purchase on the exchange it will rise to $4,000.
“Me and my wife are now exposed to $8,000,” he said. “That’s crazy.”
Sterling said about 7,400 VHAP enrollees will transition to the exchange by March 31. About 10,400 Catamount enrollees will join the exchange by then.
Because of the increased costs, some people may consider paying the penalty for going uninsured — 1 percent of their salary — rather than face the ongoing monthly premiums, Sterling said.
A single adult making $25,000 per year would pay an annual penalty of $250. The monthly premiums for a “silver” level plan, by comparison, would add up to almost $1,400 a year.
That person would have to pay out of pocket for all medical expenses, however, and there would be no adjustment of the medical bill as there is for insured members. Some who have rarely gone to the doctor may gamble that they can continue to avoid illness or injury.
“There’s always going to be some people that refuse to get health insurance,” Sterling said. “It’s likely that some people who perceive themselves as healthy will choose not to enroll. But I do believe that there’s enough access in the exchange that if you want health insurance you will be able to get it.”