Vermonters for Health Care Freedom is a 501 (c) (4) organization of individuals and businesses who are deeply concerned about health care reforms being implemented by Governor Shumlin, and seek patient-centered reforms that protect the traditional doctor-patient relationship.

Health Care Reform Newsletter #38

Vermonters for Health Care Freedom continues our newsletter series on Vermont’s health care reform efforts.  We aim to provide useful information to our client businesses and newsletter recipients, to inform our readers about Vermont’s efforts toward a “single payer” health care system and the problems inherent in such a system; and to address related health care matters at the federal and state levels.

Vermont’s Failed Health Insurance Exchange

Quotes of the Week:

September 30, 2013: “We will go live with a new online marketplace for Vermonters to be able to compare health insurance plans side-by-side, to be able to access financial help if they qualify, and for them to be able to enroll in a plan that will provide coverage for themselves and their families”.

-Mark Larson, Commissioner of Vermont Health Access

September 30, 2013: “We are very concerned that ‘go live’ is never going to go live and that Vermonters are in jeopardy of not having health coverage…This is an incredibly expensive IT system that is overbuilt, that doesn’t work, and the Governor needs to tell people what’s what.”

-Darcie Johnston, President Vermonters for Health Care Freedom, calling for the Exchange implementation to be pushed back one year to get the IT issues fixed. That didn’t happen.

July 23, 2014: “It’s occupying people’s whole days. It’s invading their sleep. It’s keeping people up at night. It’s causing a tremendous amount of stress for a lot of folks.”
“We’ve had too many unexpected events, too many unintended consequences.”
“The scope of work that was bitten off exceeds the capacity to do that effectively.”
“There’s a bunch of decisions, you know, tens of thousands of decisions that were made along the way in designing Vermont Health Connect, many of which need to be revisited now that we’re in operation.”
“There is a crisis for the ‘change of circumstance’ population. For them, it really sucks right now.”

-Lawrence Miller, Vermont Chief of Health Care Reform

In This Issue:

• State Finally Gets Rid of CGI
• Vermont Health Connect: A Sorry Mess, But Predicted Well In Advance
• Where Can Vermont Go From Here?
• Typos and Speak-os and Taxes, Oh My!
Tom Pelham: Rep. Mike Fisher Enthusiastically Supports Vermont Health Connect in 2012 
“Drafting Error” May Wreck Obamacare by John McClaughry True North: Vermont Health 
Connect is Ticking Off Vermonters  

State Finally Gets Rid of CGI

In an abrupt departure from his unwavering support of CGI, Governor Shumlin announced on August 4th that he is finally dumping CGI and replacing it with OptumInsight (Optum). CGI will be paid $67 million of the $83 million contract. Performance penalties, which should have been in the tens of millions, were limited to $5.1 million by CGI. It is unclear whether CGI will pay the penalties. In typical Larson-speak, DHVA Commissioner Mark Larson said, “We believe that this agreement respects the value of that $5.1 million”. Respects the value? Is that the same as paying?

Breaking News:

A Sorry Mess  

Based on his recent legislative committee testimony and press interviews, Health Care Reform czar Lawrence Miller has emerged as the only person in the Shumlin administration willing to tell the truth.  His candor is refreshing, but telling the truth about Vermont Health Connect doesn’t fix it.  
What it does though, is shine a bright light how much doublespeak and obfuscation the Shumlin administration has been feeding Vermonters over the past year.   Governor Shumlin and his Vermont Health Connect team, led by Mark Larson and Robin Lunge, knew that the system was not going to work - months before the October 2013 go-live date.   But they didn’t sound the alarm.  In the months following the botched rollout, they withheld information and misled both the legislature and the Vermont public.  All the while, the Governor was singing their praises, reassuring Vermonters that the failed exchange was simply “a nothing burger”.  When the legislature finally learned the truth, they were justifiably angry, and are even angrier today.  But has anyone in the Shumlin administration been held accountable?  Not yet.  
Many have called upon Shumlin to fire Mark Larson.  Even House Speaker Shap Smith, in a carefully worded statement, recently opined, “I think that it’s incumbent on the administration to look internally to see whether this is a failure not only of (contractor CGI), but of the people who are managing the project.  It certainly looks like people have not lived up to what they promised”.  Well gee.  Vermonters for Health Care Freedom has been saying that for nearly a year.  
Shumlin recently said, “You don’t just go around shooting people.  What you do is you get the team together to solve the problems…”  No, Governor you don’t shoot people.  You remove them from their posts because they obviously can’t do the job, and you replace them with people who can.  You still haven’t done that.  Your “team” is the same team that has been unable to fix the exchange for a year, and cannot even manage the consultants who are hired to do the work.  Why would you “get the team together” again to solve the problems?   
Now, tens of millions of taxpayer dollars later, no one in the Shumlin administration has any idea how to fix the Exchange.  Nor do any of the multi-million dollar consultants hired to do that job.  This week, after spending $72 million on Vermont Health Connect already, the Governor applied to the Feds for an extension beyond December 31st, so he can spend the full $171 million allotted for creation of an exchange.  Miller confirms that they intend to spend the full amount.  
Clearly, this is a panicky attempt to throw good money after bad, because if spending $72m won’t make it work, it’s not going to work.  Wasting another $100m of taxpayer money is reckless and irresponsible.  
At this point, the Governor is still defending a system that has:   Reduced health plan choices (from 18 down to 2), increased costs (exchange premiums are higher than many of the private plans they replaced), failed to meet the most basic customer service needs, placed unprecedented authority for health care decisions in the hands of 5 unelected Montpelier regulators, and left needy Vermonters unable to access coverage.
Meanwhile next door, New Hampshire’s (federal) exchange is working just fine and they have spent only 5% of what Vermont will spend ($8m).  In addition, New Hampshire has increased the number of carriers who are selling insurance though their Exchange, enhancing competition and leading to lower premiums.   
The opposite is true here in Vermont.  The original 18 health plan choices from two insurers have dwindled down to two options from each.  Blue Cross and MVP are unable to manage multiple options because they have had to take on the responsibility of directly enrolling Vermonters due to the failed Exchange.
Putting this all into perspective:
Much of the misery and inconvenience visited upon Vermonters could have been avoided.  But the Governor and the legislature decided to manipulate the exchange in order to create a government-run single payer health care system in Vermont.   From the outset, Vermont Health Connect was used, not for the purpose intended, but as a vehicle to move Vermonters into a pre-single payer system.
The first step, which went largely unnoticed by the public, was the passing of a law forcing small businesses with under 50 employees to buy only through the Exchange when it became operational.   The Governor wanted to mandate this for small businesses with under 100 employees, but the business community fought back hard, and that mandate won’t begin until 2016.
No other state has done this, and it was not required by the federal health care law.   Under the Affordable Care Act (Obamacare), the exchanges are designed as marketplaces through which one can purchase insurance on an optional basis.  Residents of every other state in the U.S. can still buy insurance outside the exchange, directly from insurers.
In Vermont, this mandate was created to force a larger segment of the Vermont population into a pre-single payer system, which theoretically would then morph into single payer.   Taking away the freedom of health plan choice has caused untold grief to thousands of small businesses, for whom private insurance was actually working and gave them freedom of choice and cost in their health plans.  
The next step was the legislature’s decisions to have Vermont create its own Exchange – even though it had never been done before, and 36 other states opted to let the Feds do the heavy lifting.  This way, Vermont would draw down tens of millions more in Federal funding to further the single payer effort.
As far back as October 2013, VHCF was among the first to call upon the Governor to request a federal waiver to delay the Exchange implementation for one year, so that the IT issues could be worked out.  Given Shumlin’s close relationship with the Obama administration, this was a strong possibility.  Obama has made many exceptions to the ACA law.   VHCF also worked closely with House Republican leadership and representatives on the House Health Care committee to try and make the Exchange voluntary, so that small businesses could purchase insurance directly from insurers as the exchange was designed to do.  Instead, the administration went full speed ahead.
Fast forward to August 2014:  Health Care Reform czar Lawrence Miller recently told a legislative oversight committee that Vermont Health  Connect’s  failures have now reached a “crisis” stage.  
Throughout the spring and summer, more than 22,000 Medicaid recipients failed to renew their coverage.   Miller says this is because of Vermont Health Connect’s sudden switch from paper enrollment forms to requiring Medicaid recipients to reenroll through the defective website.  This is another case of not thinking clearly.  It was a no-brainer to predict that this population might not have access to computers or might not be computer savvy and that enrollment would suffer.    When the administration finally noticed the discrepancy, they “fixed” it by hastily obtaining permission from the Feds to retroactively cover all who were dropped, even if they are no longer eligible.  Another Band-aid   on top of the other Band-aids.  
Another 14,000 Vermonters have tried and failed to update “change of circumstances” information through Vermont Health Connect.  Many have been denied care, or are paying too much or too little in premium because their circumstances have changed and they cannot report it through the system.  The administration’s “fix” for this was to pay $5.7m to an outside contractor, OptumInsight, to provide 125 call center employees to handle these issues manually by phone.  Even with $5.7m and 125 new workers, the original backlog has not been wiped out; in fact, it continues to grow.   
Optum is also responsible for reviewing the work of other contractors, including CGI, Exeter and Maximus.  So the state has now hired a contractor to oversee the other contractors.  Begging the questions: What can the state itself actually do?  What happens when all the contractors go home?
Meanwhile, the federal website is having no such problems.  ProPublica reported on July 24th that the federal website,,   has processed nearly 1 million “834” forms between April 19th and July 15, the majority of which were “change of circumstances”.  So residents who have a change in circumstance in states that chose the Federal website are doing just fine.
And last but certainly not least, Miller says he is concerned that the system will not be able to handle everyone who is covered through Vermont Health Connect in the annual open enrollment starting November 15th.  What kind of a mess that will be, remains to be seen.
Where Can Vermont Go From Here?


The Governor is scrambling to put Band-aids on the ever-increasing holes in a very leaky ship. The Band-aids are costing millions of dollars per Band-aid. On July 29th, he told Seven Days newspaper that he had issued a “directive” to “ensure that the IT challenges that we’ve been facing at Vermont Health Connect don’t stand in the way of Vermonters getting health insurance”. Shumlin’s solution? To do it all on paper instead. He has already asked his team to come up with a contingency plan if the technical problems are not fixed by November 13th. More Band-aids; more millions.

Legislators Are Not Amused: The truth is that Shumlin and his administration have run out of excuses. Lawmakers are finally fed up. It took them longer than it took most Vermonters, but they finally got it.

Lt. Gov. Phil Scott says he is ready for Plan B (VHCF called for a Plan B months ago). Scott says Vermont should consider following New Hampshire’s lead and adopting the federal exchange, or team up with New Hampshire and Maine for a regional exchange. Reps. Komline (R-Dorset) and Scheurmann (R-Stowe) have called on the Governor to allow individuals and sole proprietors to bypass the website and buy coverage directly from insurers. Shumlin implemented that “fix” last year for small businesses when they were unable to enroll through the Exchange.

One might think that under the circumstances, the Governor would be considering alternatives on behalf of the Vermonters he was elected to lead and protect. Several states have abandoned their failed private exchanges and joined the federal exchange. Every state except Vermont allows residents to shop outside the exchange. But Shumlin is doggedly determined to continue down his narrow and precipitous path, lest he lose his meal ticket to single payer.

He was recently quoted as saying, “So what we’ve got to do is solve the problem. What’s that mean? It means getting the exchange to do what we expect it to do”. No Governor, it means something else. It means undoing the mess that has been made, by enabling all Vermonters to circumvent the exchange, and purchase directly through insurers.

At least one legislator is now warning Vermonters who are not yet affected by the problems of the exchange. Rep. Patti Komline (R-Dorset) is quoted as saying that the technical problems with the exchange should alarm all Vermonters regarding a single payer system: “And to think we’re going to build a system where we can handle the entire population of the state – if you’re not affected by the problems of the exchange now you should be very concerned. Because they’re coming for you on this in a couple of years”.

State representatives Mary Morrissey (R-Bennington) and Doug Gage (R-Rutland City) are the only two Republicans on the House Health Care Committee, chaired by single payer advocate Rep. Mike Fisher (D-Lincoln). Both Mary and Doug have spent countless hours in committee pointing out the obvious flaws and pitfalls of Vermont Health Connect and single payer, to an otherwise pro-single payer committee. Both have done yeomen’s’ work under difficult circumstances, being often dismissed out of hand, and overruled on many occasions. Now the chickens are coming home to roost, and folks are learning that Mary and Doug were not so far off after all.

House Speaker Shap Smith now says, “My view is that the one thing we could have done was to make the exchange voluntary, and allow both the individual market and businesses to buy directly from the carriers. And I think that’s an issue we may have to revisit if the exchange is not running effectively”. Ok Mr. Speaker, but you were House Speaker when it was necessary to shepherd the bill through the House that forced small businesses to buy insurance only through the exchange. That was the time to think this through and not just blindly follow the Governor’s misguided lead. But you didn’t.

Smith continues, “We are not in a place where any of the legislators can go in and fix the coding and management problems. So as far as the execution of the plan goes, I don’t think we (the legislature) can be found to be at fault”. Really? We think you can. Your statement is more than a bit disingenuous. It was never your job to fix the coding, but it was your job to lead the House, ask the tough questions, and raise the red flag about the failed exchange, and you did not.

The legislature was astonishingly silent and passive all throughout the 2014 legislative session when everything was going wrong with the exchange. That was the time to take the Governor to task and not to accept vague and obfuscating responses from Larson and Lunge. Although many Republicans did speak up, it was glaringly apparent that the Democratic legislative majority who favor single payer were willing to let Vermonters suffer through the exchange, in order to avoid losing the single payer meal ticket from the Feds. Simply stated, the legislature did not do its job or its due diligence to protect Vermonters.

House Health Committee Chair Mike Fisher (D-Lincoln) has been mainly responsible for pushing through health care legislation. In 2012 he was quoted as saying, “The health benefit exchange is going to be a place where people can move into access insurance in an easier way, with more flexibility about what gets covered, by moving everybody in the small group market into the exchange, we’re starting to build a structure that’s all in, where we’re all going to be in the same system…..”.

Rep. Fisher, there is no “flexibility about what gets covered” when 18 insurance plans have shrunk down to 2 because of the failed exchange. Moving everybody in the small group market certainly hasn’t done them any favors. And as for our all being “in the same system”, it was abundantly clear at the outset that it couldn’t happen.

The problem here is that Rep. Fisher has been so starry eyed and enamored of single payer for so long that he has failed in his responsibility to produce thoughtful and careful legislation that considers the downsides as well as the upsides. Fisher now says, “My role that I applied during the session was to shine a bright light on it, because generally shining a bright light on difficulties helps clean them up”.

VHCF has sat through countless meetings of Fisher’s committee, and begs to differ with his interpretation of his own actions. In fact, the two Republican committee members, Rep. Mary Morrissey and Rep. Doug Gage repeatedly called for caution and were rarely heard. When they were, they were often cut off or verbally chastised by Fisher. Rep. Fisher took testimony primarily from single payer proponents, and when it looked like he might have a problem, he called in his single payer buddies from the Worker’s Center and the NEA.

Not only did Fisher not shine a bright light on all aspects of single payer and problems with the exchange, he actually turned off his flashlight when there was something he didn’t want to see.

VHCF would say that Rep. Fisher’s responsibility was to lead his committee in a fair and unbiased manner, which he did not do.

Now Rep. Fisher says that the state’s health insurance system is worse off than it was before the exchange. Fisher and Smith both say they are considering legislative action if the exchange isn’t working by January 2015. Too little, too late. Why was no legislative action taken when it wasn’t working by January 2014? The horse has been out of the barn for quite awhile now.

Typos and Speak-os and Taxes, Oh My!

It may seem like a long time since February 2011, when Harvard Economics professor William Hsaio and MIT Economics professor Jonathan Gruber came to Montpelier to testify before the House Health Care Committee, then chaired by Mark Larson (the same Mark Larson who now heads up Vermont Health Connect).

On the heels of the release of the Hsaio/Gruber report, Governor Shumlin presented the legislature with his own 80-page single payer bill. The plan was based on Hsaio and Gruber’s preliminary assertions that single payer would save Vermont $580 million in the first year of operation. When legislators questioned the reliability of the savings estimate, Gruber, co-author of the report, suggested that Hsaio was almost too conservative in his savings assumptions. According to Gruber, the first year savings could be even higher.

The legislature proceeded to pass Act 48 with flying colors.

The $580 million savings, let alone more, has never materialized. The Governor has never explained why Act 48 was based on a faulty economic premise. The $300,000 Hsaio/Gruber report, without which Act 48 might never have become law, has long since been buried, apparently along with the administration’s single payer financing reports.

Fast forward to 2014: Governor Shumlin just rehired MIT economist Jonathan Gruber to do another ($400,000) economic study. This time the assignment is to figure out how to raise $2.4 billion in taxes to support single payer in 2017 – that pesky financing plan. Gruber’s job is to determine how different tax structures will affect different subsets of the citizenry, and to advise the administration as to whether single payer is indeed affordable for Vermonters. Gruber’s report is expected to solidify Shumlin’s single payer funding pitch to the legislature this coming January.

There are at least two major reasons why the Shumlin administration should not have hired economist Gruber for this job. (1) First and foremost, Gruber has a conflict of interest in that he, along with William Hsaio, gave birth to Vermont’s single payer plan with their 2011 proposal. So Gruber is not exactly neutral in determining if raising taxes on certain Vermonters will be detrimental to Vermont’s economy and health care system.

If his financing analysis proves that single payer will be bad for the future of Vermont, will he really be willing to kill his “baby”? Can Vermonters really trust his work this time, when the $580 million in purported savings never materialized? It would have been far better for Vermonters for Shumlin to have hired a person or persons without such conflicts of interest.

(2) Expert advice may seem like a worthy use of taxpayer dollars; however Shumlin’s choice of Gruber is unlikely to foster confidence, as the MIT economist is currently caught up in a scandal of his own making. Gruber helped devise Obamacare, and is on tape and video multiple times in 2012 stating that those states that do not set up their own exchanges are not eligible for federal subsidies. A DC Court of Appeals recently agreed with Gruber’s interpretation of the law. The fallout of this decision would be devastating for Obamacare, as consumers in the 36 states served by the federal exchange would become ineligible to receive tax-credits (subsidies) to offset the high premiums.

However, once Gruber’s statements became politically problematic, he reversed his position, and argued that no one had ever intended to make the case that he himself had made. Saying that he honestly didn’t know why he made that statement, Gruber now says that he misspoke and his comment was just a “speak-o”, you know, like a “typo”. A January 2012 video – uncovered and posted online July 24th by the Competitive Enterprise Institute – features Gruber telling an audience at a Noblis meeting that if states don’t set up their own exchanges no subsidies will be available, and implied that this was to pressure states into setting up their own exchanges.

This has become a hot legal political health care issue this week, after the DC Court of Appeals ruled that subsidies shouldn’t run through federal exchanges and another appeals court said they could, less than three hours later. The issue has now gone to the Supreme Court.

Although Vermont would not be directly impacted by an adverse subsidy decision, the whole of Obamacare could come crashing down and along with it, Governor Shumlin’s single payer dreams. And even if not, the fox is in the henhouse now that Jonathan Gruber is vetting the single payer financing plan. (See more on this by clicking on ‘Drafting Error’ May Wreck Obamacare” above).   

"So much of the focus of H 202 and S 57 is centered on controlling the cost of health care, which is a multi-faceted entity. This legislation in its current form will directly affect the manner in which health care providers are reimbursed for their services, rather than address the root issues of the so-called “health care” crisis. Health care is costly due to many factors, including patients who are reluctant to be proactive about their health or who make poor health and lifestyle choices. Before the legislature moves forward with governmental regulation of an entire industry, they should be reminded that they are altering an industry that is responsible for 20% of the state’s economy. In addition, this bill is nothing more than an empty shell as it does not outline benefits, access, or how it will be funded. Take it back to the drawing board before you do permanent damage to the industry and the state."

Andrew Conte of Milton, Vermont
Occupational Health Coordinator

  • Employers pay 40% of the healthcare costs – and were never consulted.
  • An appointed board will determine benefits, coverage, funding, deductibles, co-pays, premiums, technology, provider payments, etc.
  • Under this law, you will not be allowed to purchase insurance outside of the Vermont Health Benefit Exchange.