HealthLeaders
Vermontfs decision to deny CO-OP a place on the exchange is likely to stand
Contributor:
Ric Gross
Topic: Exchange, CO-OP, ACA
As
details on state healthcare exchanges continue to become public, there
will likely be some surprises, but one thing is certain—nothing will match
the drama that has unfolded in Vermont. In May, Vermont became the only
state (out of 24) to reject a healthcare consumer-oriented and -operated
plan, which had hoped to offer products in the statefs health insurance
exchange. CO-OPs are regional health insurance plans established by
nonprofit groups to provide more competition in the commercial sector,
including state health insurance exchanges. Originally, the Affordable
Care Act included $3.8 billion to fund loans to CO-OPs, and $1.9 billion
of that amount was loaned to 24 nonprofits nationally to help get CO-OPs
up and running. During the fiscal cliff budget negotiations in January
2013, most of the remaining $1.9 billion was cut, meaning there is no
further funding to develop additional CO-OPs.
The Vermont Health
CO-OP received a $33.8 million federal startup loan and was putting pieces
into place to compete in the exchange with market leader Blue Cross and
Blue Shield of Vermont and MVP Health Care. The Vermont Health CO-OP
tapped Christine Oliver to serve as CEO, bringing healthcare experience on
board. Oliver served as the deputy secretary of the state Agency of Human
Services and previously held the positions of commissioner of the
Department of Mental Health and deputy commissioner for Health Care
Administration in the Department of Banking, Insurance, Securities and
Health Care Administration.
However, her experience sure didn't
help the CO-OP with state regulators. In denying the CO-OP's license,
state regulators pointed to a laundry list of concerns, including
unaffordable rates, unrealistically high enrollment projections, and the
risk of insolvency. And that is some of the nicer things. Susan L.
Donegan, commissioner of the Vermont Department of Financial Regulation,
also said the CO-OPfs management structure gdid not meet the standards of
corporate governance for proper oversight and good business judgment
necessary to conduct the business of insurance.h Ouch.
CO-OP
officials said they were blindsided by the ruling, and came out swinging.
Oliver suggested in an interview that the statefs largest and most
influential insurer, BCBS of Vermont, may have used its influence to keep
the CO-OP out, not wanting the extra competition. Donegan and BCBS
officials strongly rejected this theory, and Oliver later tried to move on
from those remarks. Oliver has continued to make her way across the
Vermont media landscape, blasting back at Doneganfs decision, often
point-by-point. Oliver and CO-OP co-founder Mitchell Fleischer even tried
to bring Democratic Gov. Peter Shumlin into the fray, though after meeting
with the duo, Shumlin announced he was, basically, staying out of it.
Some Obamacare detractors have latched onto the situation as proof
that CO-OPs are destined for failure. In this case, however, itfs more
market dynamics. Vermont hasnft licensed a new insurer in the state in
around 50 years, and it is not like more insurers have been clamoring to
get in. Itfs a small state, with a low uninsured rate, little room for
organic growth and strict insurance regulatory guidelines. And itfs not
like Vermont is a bastion of conservatism battling against Obamacare. Most
on the ground didnft think the ACA went far enough.
Some inside
the state have theorized Vermont will be better off without the addition
of a CO-OP into the healthcare mix, considering the state is attempting to
wind its way toward a single-payer healthcare system in 2017.
These
theories only add to the drama in Vermont. After all, the war of words has
positioned it as an antagonistic relationship between the CO-OP and
Donegan—who would have to overturn her ruling for the CO-OP to do
business, something CO-OP officials are pushing for. Is this even a
possibility? It appears to be a longshot at best. Donegan has said the
CO-OP must go through the state Supreme Court for her to consider
re-opening the matter. That doesnft sound like someone willing to cut the
CO-OP any slack.
Posted on: 6/7/2013 10:31:10 AM