Might There Be a Second Option under Vermont’s Catamount Health Plan

It’s been over two years since the state-mandated and subsidized Vermont Catamount Health Plan was introduced by MVP Health Care and Blue Cross Blue Shield of Vermont. To date some 11,200 Vermonters have enrolled in Catamount with almost 85% receiving premium subsidies. Despite the generous coverages, below-market premiums and subsidies, there are still approximately 47,500 residents who remain uninsured. This raises the question, is Catamount really affordable to the average Vermont family? Might a second major-medical state plan be offered that conforms to the Federal guidelines to qualify as a Health Savings Account (HSA) plan?

The goal of the Vermont legislature in creating Catamount was to offer an affordable public option with rich benefits to enroll as many Vermont uninsured or under-insured (covered by a $10,000 deductible plan) residents. Among the relatively rich coverages are:

• A $250 calendar year deductible for each subscriber with a maximum $500 for family coverage;
• $10 co-payments for physician office visits, naturopathic physician services, chiropractic visits and mental health sessions as well as diagnostic imaging (MRI’s and CAT scans);
• No co-pays for preventive care services or visits to treat/monitor chronic conditions;
• Reasonable prescription drug copays.

Before the 2010 session adjourns, the legislature is likely to tweak the benefits (reduce coverages, raise out-of-pocket costs) and adjust the subsidies in order to maintain the financial sustainability of the program.

The monthly premiums for the last 6 months of 2011 and the first six months of 2012 for subscribers who do not qualify for a subsidy are:

Applicants with household incomes of less than three times the Federal Poverty Level based on family size are likely to be eligible for a state subsidy so as to reduce the premium to between $60 and $205 per month.

My suggestion is to create a high-deductible Catamount Health Plan that would qualify as a Health Savings Account (HSA) plan. A prototype plan design can be viewed on the Benefit Design & Strategies link. Such a plan would provide Vermont residents with coverage for major medical treatment after meeting either a $2,000 or $2,500 calendar year deductible ($4,000 or $5,000 for two-person or family coverage). The plan would pay 100% for preventive services just as the current plan does. There are other reasons to offer an HSA medical plan, which I have summarized in an overview of the concept. This summary includes an outline of its “pros” and “cons” as well as a detailed list of eligible expenses that can be paid for out of the tax-favored HSA bank account that each primary subscriber is able to open.

I am not a health insurance actuarial, but by extrapolating a comparison of premiums from the private insurance market I estimate the non-subsidized premiums for a typical HSA plan ($2,500 single deductible and $5,000 for two-person or family deductible, 100% paid by the plan thereafter for the balance of the calendar year) to be between:

• $320 to $350 for Single coverage
• $580 to $640 for Two-Person coverage
• $820 to $850 for Family coverage

There are many details to be worked out, however, I believe if such a major medical plan were offered the state would attract many more uninsured Vermonters who are willing to assume the potential of higher out-of-pocket costs (called risk) in exchange for more affordable premiums (their reward). For subscribers in lower income brackets, the state would be able to provide better subsidized rates as well.

I welcome your thoughts and opinions on this idea. Would you opt for such a plan if it were offered? Do you work for an employer that does not currently offer health insurance to its employees or are you a solo entrepreneur?