Vermont officials say health exchange on track but establish bail-out plan just in case

Economic Indicators Associated Press

Gov. Peter Shumlin on Friday announced contingency plans for a federal government takeover of the state's troubled health insurance exchange and an alternative hybrid federal-state system.

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Vermont Health Connect still isn't meeting its goals, and if it doesn't meet two key ones in the coming months, Vermont could scale back its handling of the project in favor of the federal government, Shumlin said. Those goals include:

— Allowing consumers by the end of May to use the exchange website to record changes in circumstance, such as a new job, marriage, divorce or the birth of a child. Vermont Health Connect staffers currently have to take such change requests manually, usually over the phone.

— Being ready for a smooth open enrollment period beginning Nov. 1 for the 2016 coverage year.

The announcement comes nearly 18 months after the glitch-ridden rollout of Vermont Health Connect set up as the state-run exchange under the federal Affordable Care Act.

Shumlin said he's been getting one basic question: "What happens, Governor, if all of your expectations that it works don't get delivered? What's your plan?"

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He said he would ask lawmakers to pass a bill laying out the contingency plans "so everybody can tell their constituents what we would do in the event of disappointment from our contractors."

After technical failures and security breaches in the early months of a system launched Oct. 1, 2013, the state switched contractors last summer. Both Shumlin and Lawrence Miller, director of Vermont's health reform program, said the current vendor, Optum, has been meeting contracted milestones since then, often early and under budget. They said they are confident the pattern will continue.

But they also acknowledged widespread skepticism and said they have determined the state should have a backup plan or plans.

They said the state could go one of two routes if it determines that Vermont Health Connect has failed: It could seek to fold Vermont into the federal exchange, or it could seek to set up a hybrid federally supported state exchange.

Republican lawmakers, particularly in the Vermont House, have been calling for months for the state to give up its exchange and fold it into the federal one, healthcare.gov. Both Shumlin and Miller said Friday it continues to be their strong preference not to do that.

One reason is that it would put in jeopardy state subsidies for consumers buying health insurance through the exchange that are coupled with federal tax credits available nationwide. Miller said if the state wants to continue with its subsidies, it will have to set up a new, separate program to do so.

While the state struggles to implement Vermont Health Connect, the federal program could be thrown into disarray by a U.S. Supreme Court decision due out by June. The court has been asked to declare federal subsidies through such an exchange illegal. Vermont received more than $50 million in federal subsidies for people buying insurance through Vermont Health Connect last year.