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The home for VPR's coverage of health and health industry issues affecting the state of Vermont.

Some Towns Face Health Care Premium "Rate Shock"

Several dozen Vermont communities are experiencing “rate shock” as they prepare to buy health insurance for their employees on the state’s new health care exchange.

The towns don’t think they have any good options to the problem they’re facing.

Bobbi Brimblecombe is the Town Manager in Marshfield.  Currently, for its 5 full time employees, Marshfield has coverage offered by the Vermont League of Cities and Towns.  The plan has a $2,000 deductible for individuals and a $4,000 deductible for couples and families.  There is no out of pocket exposure beyond the deductible.

Since Marshfield has fewer than 50 employees, it needs to buy its coverage through the exchange. Brimblecombe says the town can offer a plan with a very low deductible and a comparable out of pocket cap, or a policy with a similar deductible that has a very large out of pocket limit.  Brimblecombe says there’s nothing similar in cost and benefits to what the town currently has.

We did not realize that there is nothing out there as good as what we have now - Marshfield Town Clerk Bobbi Brimblecombe

“We have to make a decision whether we want to give the employees a plan where they potentially could have to spend three times as much out of pocket,” said Brimblecombe. “Or we have to choose a plan that’s going to cost the town 30 percent more than what we’re paying now.”

And Brimblecombe says she’s disappointed with her options on the exchange.

“We just assumed when we first started talking about it that we would just choose the plan that’s most closely aligned with what we have now,” said Brimblecombe. “We didn’t realize that there’s nothing out there as good as what we have now because the plan that we have now was not considered one of the high end plans.”

David Sickel is in charge of health care services at the Vermont League of Cities and Towns. He notes that various towns have chosen to have different types of health care plans.

Because of this variation, he says about a third of the towns will benefit from buying a policy on the exchange and a third will see little difference.

But he says the remaining third are in the same position as Marshfield and he says this situation poses “a pretty severe budget challenge.”

“Many of our cities and towns are in high deductible plans but the out of pocket costs are capped at relatively low amounts,” said Sickel. “And the plans in the exchange have much higher out of pocket maximum costs which means that somebody has to assume that risk for those higher maximum costs and that’s where it impacts the budget.”

Robin Lunge is the director of Health Care Reform for the Shumlin Administration. She says it’s clear that some towns will benefit by going through the exchange and that some won’t.

“Whenever you have significant change like this in the types of coverage available there will be some folks who can’t find the same coverage at the same price,” said Lunge. “And there will be some folks who are positively surprised that they can find better coverage at lower costs so we really have seen a variety of responses.”

Marshfield Town Clerk Brimblecombe says the town could also decide to drop its health care coverage and allow its employees to purchase their own insurance on the exchange where some employees will qualify for federal subsidies.  But she says this option works only for those employees who have household incomes that meet the federal eligibility requirements.