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

Shumlin Plan To Expand Tax On Health Claims Meets Strong Opposition

A plan by the Shumlin Administration to double the current assessment tax on all health insurance claims is running into some opposition at the Statehouse.

In his State of the State address, Governor Peter Shumlin proudly announced that his proposed budget for next year doesn’t include any broad based tax increases.

But the budget plan does call for a $14 million increase in the state’s health insurance claims tax that’s paid by every insurance company in the state.

Currently, those companies are assessed 0.8 percent on the total amount of their annual claims. The companies then pass along that expense when they file their next rate request.

The Administration says it needs to double the tax because it’s facing a $14 million shortfall for its health care programs.

Robin Lunge is the director of Health Care Reform for the Administration. She says the money will be used primarily to operate the state’s health care exchange and to increase Medicaid reimbursement rates for health care providers.

"It just increases the cost of insurance premiums." - House Ways and Means Chair Janet Ancel on the Administration's plan

“So we think that when you look at the whole package this is actually a decent way to pay for the budget shortfall for these programs,” said Lunge.

Calais Rep. Janet Ancel is the chair of the House Ways and Means committee. She says the plan will increase the cost of private insurance premiums and she questions if such an approach makes sense.

“It’s a lot of money doubling it is $14 million so we’re basically saying that the insurers in this case are going to pay an additional $14 million into this system,” said Ancel.” We know that is not money that’s going to come out of anybody other than people who are buying insurance and so it just increases the cost of insurance premiums.”

Ancel says her committee wants to take a comprehensive look at these health care programs to see if it’s really necessary to raise the entire $14 million that the Administration is seeking.

“What’s the problem we’re trying to solve ?” said Ancel. “And we don’t want to just be looking at $14 million on the bottom line you know as a budget balancing thing, although if that’s what it is let’s just say that that’s what it is and have that discussion.”

Health Care Director Lunge says there’s no question that all the money is needed to help balance the Administration’s health care budget and she says if lawmakers don’t like the health claims assessment, then they should look for other ways to raise the $14 million.