Report from Montpelier

Representative Kate webb

Finding the sweet spot of agreement. No small task that. By the time this is in print, I assume a budget will be passed or near to it. I will do my best to explain how I see the controversy around health insurance for school employees and why it is holding up adjournment.

The Vermont Education Health Initiative is a nonprofit organization that manages health care benefits for school employees. Under the Affordable Care Act, plans could be outside of the Exchange as long as they remained unchanged. So, for the past seven years, the coverage these plans provide has not been able to make changes, putting all financial pressure on premiums.

In 2016 VEHI received state and federal approval to move to a truly self-funded system creating an opportunity to design new plans. Not only are all these plans changing, all school boards and school employee unions are currently in negotiations to address these changes. With lower premiums come higher out-of-pocket costs for employees. Nonetheless, with the cost of premiums reduced, savings could be realized while still keeping employee out-of-pocket expenses reasonable.

At the end of April, House and Senate conferees were preparing to reconcile differences in the state budget. Most believed the differences could be quickly settled and the Governor was supportive. It appeared we would adjourn a week early.

On April 26, all this changed when the Governor asserted that he would veto the budget or the education tax bill if he did not see a measure to move to a statewide healthcare agreement. He believed that this was the best way to capture the maximum predicted savings from the new VEHI health insurance plans. Representative Beck (R, St. Johnsbury) put forth an amendment that would move negotiation from local school boards to the Governor’s office. Savings garnered would stay in the Education Fund to be used for other programs as well as tax relief.

There were problems with this, not the least of which involved assumptions about the savings. Would school employees then have two employers? What happens if the Governor and all school employees don’t agree? Who are the negotiating partners? Could any savings at the state level be undone when school boards negotiated salaries and other benefits? Government moves slowly for a reason. Benefits as well as unintended consequences needed further consideration. This amendment was defeated with Speaker Johnson casting the deciding vote.

In an effort to find compromise, I put forth an amendment that would keep negotiations local, but return any negotiated healthcare savings directly to the local taxpayers rather than the Education Fund. This amendment passed and went to the Senate. The Governor was still not happy, indicating this was not enough. Senator Pro Tempore Tim Ashe, Senate, proposed an amendment that would also keep negotiations at the local level, but would send all of the savings identified by the Governor back to towns to reduce property taxes in FY 18. It also set up a commission to consider the potential pitfalls and benefits of moving to state vs. local negotiations for health coverage for school employees.

Again, the Governor said “no.” As I end this, Speaker Mitzi Johnson, ever the collaborator, is working on another path toward agreement. We should know the outcome by Thursday.

One complicating factor: while we know what the savings are in year one, we really cannot tell in year two, as the cost of insurance going forward is largely determined by the way employees use health care.

It is unclear at this point if we will find that ‘sweet spot of agreement,’ or simply pass a budget and wait for the Governor’s response.

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