Vermont Legislature SmartTranscripts:

[Rep. Alyssa Black (Chair)]: Good morning. This is House Healthcare, January 28, we are starting with a walkthrough of H585.

[Rep. Daisy Berbeco (Ranking Member)]: We're not going

[Rep. Alyssa Black (Chair)]: to walk through the whole bill. This bill, we're going to sort of take in sections, and we're going to walk through right now the sections that pertain to some things together, which are correlated. So Janet, do want to come up? We don't have the bill posted on our committee page today.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yep.

[Jen Carvey, Office of Legislative Counsel]: Good morning. Jen Carvey from the Office of Legislative Council. So I am gonna put the bill up on the screen and then we're gonna jump to, I think, section three is where we're starting. So I think what we're doing right now is sections three through nine, which are kind of expanding access to different types of plans. Another thing I plan to walk through unless I get a voiceful from the notion that that is not what they were prepared to talk about this one. Okay. So I'll put that language up on the screen. And so I will take us back up to the beginning just for a moment to show that this is H five eighty five. This is an act relating to health insurance reforms. And then we're gonna go to page 10, which is where we start with limited age rating. So there are a number of different types of provisions in this bill. The grouping that we're going be looking at first this morning is relating to some expansion of plan offerings and some changes to plan rating, the premium rating. And so sections three through six kind of go together. We get to the meat of it kind of in section six and kind of in language you can't actually see that I will also put up

[Rep. Wendy Critchlow (Member)]: Alright.

[Rep. Karen Lueders (Member)]: It's okay. Just wanted to

[Jen Carvey, Office of Legislative Counsel]: make sure everybody was set before we I'm

[Rep. Wendy Critchlow (Member)]: done with language.

[Jen Carvey, Office of Legislative Counsel]: So we'll look at Sections three through six, but then we may take a little jump over to existing statute to see kind of what this means. So the general idea behind Sections three through six is to implement some limited age rating, which would allow people to be charged different premiums based on their age, but within a fairly small margin. So Sections three, four, and five are just because they come first in the statute order, are just taking out a little tiny reference to Subdivision B in 33 VSA Section 11 F-two. So that's what we're going look at in a minute is 33 VSA Section eleven(two). But under existing law, these are statutes relating to hospital service corporations, and you'll see medical service corporations and health maintenance organizations, which are different health insurance types or entities that offer health insurance in this state.

[Rep. Leslie Goldman (Member)]: I don't know these terms. I mean, I don't know the different terms of these different types of things.

[Jen Carvey, Office of Legislative Counsel]: And I didn't know if we could get some protections. Maybe not now, but Yeah, and I might let DFR, since they regulate the different insurance types, tell you. And we're going to look some more at some other governments for these corporations as well. But these are just different insurance models or? They're different insurers. So they're insurers with different kind of structures. Okay. So some of them are nonprofit and to be qualified for the nonprofit status, certain things that the insurers have to file annually with the Department of Financial Regulation have to do with certifying that they operate on a nonprofit basis for purposes of providing plans, health insurance plans to people in this state without discrimination based on, and then there's a list, age, gender, geographic area, industry, and medical history except as allowed by statute. So that's what we're gonna look at. And the b part is is more limited and directed more at DFR. So now we're just saying f two generally, except as allowed by f two generally. Section four does the same thing. It just says, if you're nonprofit, you have to certify that you're offering plans to people without discriminating except as allowed. And so we're moving that reference to subdivision b, f two b, and then same thing for nonprofit health maintenance organizations as well. So let's look at what that statute says, and then we'll see what we're directing DFR to do in the next section. So I have this queued up here.

[Rep. Wendy Critchlow (Member)]: Okay. Up on the screen.

[Rep. Alyssa Black (Chair)]: Alright. So, again, for a little orientation purposes, here we are

[Jen Carvey, Office of Legislative Counsel]: in title 33. Yes, title 33, chapter 18, sub chapter one Vermont Health Benefit Exchange. This is where we talk about the health plans for individuals and small groups. And some changes were made last year when the plans were or the markets were unmerged. So you'll see certain things took effect as of July 2026. So that's where we are now. So we'll go to that version. It's just the separating individual principal. Okay, so under existing law, a registered carrier, so a carrier who's offering plans through the Exchange, shall use a community rating method acceptable to the Commissioner of DFR for determining premiums for health benefit plans and shall determine the premiums for the carrier's plans separately from the premiums used for its Small Group Market Plans. So that's how we separate them. Except as provided in Subdivision two, the following risk classification factors are prohibited from using and rating individuals. They can't charge different premiums based on these items. Demographic rating, including age and gender rating, geographic area rating, industry rating, medical underwriting and screening, experience rating, tier rating or duration rating. But existing law allows the Commissioner of Financial Regulation by rule to adopt standards and a process to allow carriers to use one or more of these risk classifications in their community rating method as long as the premium charge does not deviate above or below the community rate filed by the carrier by more than 20% and further provided that it's never okay to allow medical underwriting and screening and the commissioner's rules must give due consideration to the need for affordability and accessibility of health insurance. What does this all mean? This means that under existing law, for the most part, plans are not allowed to use these factors in their rating. So for community rating, the way we do it now, we have basically pure community rating. So everybody pays the same amount for the same plan. In other states, doesn't necessarily work that way. In Vermont, it does work that way currently. But this would allow, the existing laws, but not necessarily the rules, allow some variation. And so what we're about to look at is directing DFR to use this authority to allow for some limited age rating. So of this whole list, just limited age ratings. Allen, question? Definition of community. Community rating is when everybody in the same pool gets charged the same amount. That's the community for the plan.

[Rep. Alyssa Black (Chair)]: So why do we need to do anything to this bill if the commissioner already has the authority to do this?

[Jen Carvey, Office of Legislative Counsel]: Well, under existing law, those three sections that we looked at the references to are really in this B part that that, so the existing existing rule says the plans have to certify that they are not doing any variation from pure community rating except that the commissioner's rules must allow a carrier to establish rewards, premium discounts, flip benefits, designs, rebates, or other sort of variations in return for someone participating in a health promotion or disease prevention program. So this is not about age rating. This is really about if you do some wellness stuff, you might get a reduced premium. So right now, that's the piece that the law points to, to say insurers certified annually to the commissioner that you're not varying rating except as allowed for this wellness benefit. And so we're taking out the reference specifically to this B so that now it includes two A and B. And C and D are also I mean, of these are not about varying premium, but just how the rules would work. So that's why this is in the bill. But to provide a bit more both context and limitation because the law allows a 20% variation. The bill is allowing less than that.

[Rep. Lori Houghton (Member)]: And 20% variation in the cost of the health insurance plan. Right, in

[Jen Carvey, Office of Legislative Counsel]: the price of the plan. Right. So if you think of kind of the community rate as being neutral of the above and below. All right, I'm pulling up the wrong thing here. Well, actually,

[Rep. Alyssa Black (Chair)]: ask about that. Above and below. So if you have a neutral, can one be 20% higher than the neutral and the other 20% lower than the neutral? Or is it that they cannot be more than 20% apart from each other?

[Jen Carvey, Office of Legislative Counsel]: Well, says provided the premium the existing statute says provided the premium charge shall not deviate above or below the community rate filed by the carrier by more than 20%. So that the reading my reading is up to 20% more, up to 20% less. That's the existing statute. So here is the language of again, of the bill. So aside from taking out that reference to Subdivision 2B, Section six directs the Department of Financial Regulation to review and amend its rules and guidance as needed to allow health insurers to use age classifications in the premiums charged for their individual and small group plans starting in the 2028 plan year, provided that the premium charged to any cohort, so any group within that community group, shall not deviate by more than 5% above or below the community rate filed by the health insurer. So five up or five down.

[Rep. Alyssa Black (Chair)]: So theoretically, I'm just throwing ages out here. Theoretically, a 27 year old, good pay, 10% less than a 64 year old.

[Jen Carvey, Office of Legislative Counsel]: I believe so, but I will defer to DFR to They can tell you. Okay. Into the beach. Try to figure

[Rep. Alyssa Black (Chair)]: out the deviates. Like, they can't deviate 5% from each other or from up or down on the

[Jen Carvey, Office of Legislative Counsel]: I read it as above or below the sort of the the baseline is the community rate without any variations. But DFR is the one who implements this. And if we need to modify language to be clear about what's happening, we can do that. Section seven and eight are around expanding access to association health plans. Association health plans are where a group of employers get together to buy insurance or provide coverage to their collective employees. And under our and a handful of years ago, Vermont made some pretty significant changes to association health plans. There used to be a lot of association health plans before the Affordable Care Act. They were significantly restricted under the Affordable Care Act as initially implemented. Under the first Trump administration, there was some expansion of ability to use association health plans. Vermont made a decision not to allow most of that. Then there were some litigation around the US Department of Health First Rules that also put some limitations on the expanded nature available nationally. So this these two sections would reopen more Vermont to more association health plans. And what all of the details of that look like, I will let DFR tell you because, again, they regulate here. But under existing law so this uses definitions that are consistent with federal definitions under ERISA, the Employee Retirement Income Security Act of 1974, and the U. S. Department of Labor's Regulations and Guidance. This strikes language in Vermont law requiring associations to have at least 100 people in them at the time of incorporation or formation, have been organized for a purpose other than obtaining insurance, have been in active existence for at least one year, have a constitution and bylaws providing for certain parameters around the association's activities, specifying the still striking through specifying the association would not be controlled by a health insurer, and specifying the factors that can be used as evidence to determine whether an association is operated by a health insurer. And so that's one piece. And then the other piece, we have a statute specifically on association health plans. And this would modify the definition of association health plan and take out existing language around a policy being issued to an association or other similar entity. And specifically, for our purposes, striking out language saying no association health plan shall be issued, offered or renewed in this state to any person other than an association that was formed or was eligible to have been formed under ERISA and the accompanying U. S. Department of Labor regulations that were in effect basically prior to 2017. And instead just saying a group that is eligible under the previous section is eligible. So the result of this is to reopen association health plans in this state. And again, I will let DFR give you the details.

[Rep. Alyssa Black (Chair)]: So association health plans

[Rep. Wendy Critchlow (Member)]: have

[Rep. Alyssa Black (Chair)]: to under the ACA, do they have to have, like, comprehensive benefits? Think there are

[Jen Carvey, Office of Legislative Counsel]: certain benefits that are applicable to large groups that apply, but not the benchmark plan that is applicable to individual and small group.

[Rep. Alyssa Black (Chair)]: But they can't be, like, minimum essential coverage plans or can they

[Jen Carvey, Office of Legislative Counsel]: be That's a different term of art, so I wouldn't wanna because, I mean, can they can they be minimal coverage? I think there are certain required benefits, but they're not as comprehensive as what is in your individual and small group plan. And again, others may be better equipped to give you the specifics. Finally, Section nine, finally for our purposes in this chunk is expanding access to short term limited duration plans. And at the same time, the Vermont legislature was working on association health plans and limiting access there. It was also placing limits on access to short term limited duration health insurance. So under existing law, that term is defined as health insurance providing medical, hospital, or major medical expense benefits coverage under a contract, policy or contract with a health insurer that has an expiration date specified in the policy or contract that is three months or less after the original effective date of the policy or contract. This is simply using the federal definition. Still requires anyone offering a short term limited duration plan to get a certificate of authority from the commissioner. But under existing Vermont law, these plans are nonrenewable, so they cannot be renewed. And a health insurer is prohibited from issuing one to any person if the issuance would result from that person being covered by a short term limited duration health insurance coverage for more than three months in any twelve month period. And instead, this would simply say that a short term limited duration policy or contract shall not have a longer duration than twelve months in total, taking into account any renewals or extensions that somebody could be covered for the 12 of the twelve months as opposed to three of the twelve months under existing law. There are certain requirements around prominently displaying the limitations of this type of coverage in the policy or contract, that does not change. And the Commissioner still has rulemaking authority to require certain things to be included in the plan and having advertising and other information submitted to the commissioner for the commissioner's approval. And I think we get into other types of sections. So I will stop you there and let Debra put color on what all those are.

[Rep. Alyssa Black (Chair)]: Thanks, Debra.

[Jen Carvey, Office of Legislative Counsel]: Yes. I'll just be in the corner.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Morning. Hi, Samson. Department of Financial Regulation. I wanna just start by saying five eighty five is a big bill. I think there's around 10 different distinct provisions. What Jen just walked through is kind of in a category of, options or greater choices for Vermonters, And some of these are big changes, philosophically and regulatorily. And we we get here because, you know, the level of price or demographic issues has in terms of how they impact price on the exchange make it difficult for us in regulation to look at small businesses, to look at individuals who have gone uninsured and say, no. You may not look at that. You may not have that. When when we are in a better situation as a market around affordability and cost of cost of care, this this regulatory approach that the legislature, administrations, and regulators have all been aligned on made some sense. And I'm gonna say that, in some cases that we'll talk about in this bill, we need to make some, some subtle changes and, in some cases, less than subtle changes. Starting with age age rating. So I wanna make sure I cover any definitional questions anyone has from Jen's walk through.

[Rep. Leslie Goldman (Member)]: I didn't know the different types of insurance. I started reading it last night.

[Jeff [Last Name Unknown], Department of Financial Regulation]: But

[Rep. Leslie Goldman (Member)]: I don't know if I'm the only one or if there is a definition section of the different plans.

[Jeff [Last Name Unknown], Department of Financial Regulation]: So I think maybe that your question came up around association health plans.

[Jen Carvey, Office of Legislative Counsel]: Well, it was the sorry. If I can't Please. A nonprofit hospital

[Jeff [Last Name Unknown], Department of Financial Regulation]: Oh, okay. Sure. Sure. Yeah. So a nonprofit hospital and a nonprofit medical service company are is essentially Blue Cross Blue Shield of Vermont. They are licensed differently than a traditional insurance company. They are light they are enabled specifically through statute and have some some, protections and tax exemptions because of that. So a carrier commercial carrier like Cigna is licensed as a traditional insurance company. Technically, Blue Cross Blue Shield is a nonprofit hospital and medical service provider.

[Rep. Leslie Goldman (Member)]: So there was a hospital service corporation described in the bill, and now it was I got a little stuck.

[Rep. Wendy Critchlow (Member)]: Right? Yeah. One.

[Jeff [Last Name Unknown], Department of Financial Regulation]: I'm not certain, but I believe that's historic. Same same thing with Blue Cross Blue Shield.

[Rep. Leslie Goldman (Member)]: Okay. I wasn't sure what applied where. Yeah. Yeah.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Okay. So age rating. I submitted some written testimony and some exhibits. This this is a a deep and dense topic. And Joe Valenti, who I believe has joined me on screen here, our director of policy, has asked me to keep it to four minutes.

[Rep. Leslie Goldman (Member)]: Good luck with that.

[Rep. Alyssa Black (Chair)]: He is

[Jeff [Last Name Unknown], Department of Financial Regulation]: not a

[Rep. Alyssa Black (Chair)]: committee. But

[Jeff [Last Name Unknown], Department of Financial Regulation]: you do have an agenda, and I wanna honor that agenda. But so it's hard for me to to really get into this. But Jen went through, what community rating is, which is those factors in law that were highlighted aren't factors in determining premium. Doesn't matter where you live. Doesn't matter what your health history is. Doesn't matter what your preexisting conditions are. Doesn't matter how old you are. Everyone gets the same rate. On the exchange right now, everyone gets the exchange the same rate. When you go shopping, you don't, they don't it doesn't matter how old you are or where you live. That's community rating. We are not disrupting anything in that list of rating factors except for cracking the door open on age rating on age. And there's some several reasons for that that we brought this forward. Age rating really came in, I think, in 1992 or sorry. The ban on age rating. I believe that statute I'm not quite sure what happened before the Howard Dean reforms on health insurance, but I think it's like act one ten of 1992, I believe, really solidified, if not created, this framework of community rating. Back then, the median age in Vermont was approximately 34. I've put some numbers in my in my submission, that I got from Vermont Department of Labor. Now the median age, so 50% above, 50% below that age in Vermont is a full ten years older. And what does that mean for a community age rate? Well, when you combine that with the fact that there is an absolute linear nationwide actuarially, shown correlation between your utilization and cost of care and age. That's recognized in the ACA. The Obamacare ACA allows three to one age rating, meaning, your your oldest cohort on qualified health plan state may allow premium three times that of the youngest cohort. In Vermont, everyone pays the same. So there is a direct relationship between need for for health care services and cost to the insurance plan and age. Again, what we're proposing is can we adjust that by 5%? It's a very subtle adjustment, and I think there's some some opportunity to optimize and have some benefits to the risk pool because of that. Another fact go ahead. Yeah.

[Rep. Alyssa Black (Chair)]: I'll go to Leslie, but I I I'm I'm unclear as how it changes anything.

[Rep. Leslie Goldman (Member)]: That was sort of what are you gaining?

[Rep. Alyssa Black (Chair)]: Can you give me What are gaining?

[Rep. Leslie Goldman (Member)]: What are we gaining?

[Jeff [Last Name Unknown], Department of Financial Regulation]: So it's it's broadly understood that with this cost structure right now, the cost of health insurance in Vermont, that those and we are losing folks because of extended tax credits. So who's most likely to drop insurance, and what is the impact on the pool when they drop insurance? So the answer is, if you ask me and a lot of, professionals in this space, person most likely to no longer pay into the exchange is, again, more likely a younger, healthier person, who instead of paying $1,100 a month now pays nothing. And instead of that $1,100 a month going into the pool, into the community pool, and only drawing out a couple of doctor's visits for a cold every year, a couple $100 per year on a $12,000 per year premium, they're not even contributing. It's balancing thing, the pool. Right? You you the the idea of community rating is everyone pays in and everyone takes out at the same amount, essentially, actuarially.

[Rep. Alyssa Black (Chair)]: Because we do we have any data on, you know, people in the pool, their ages, who's not in the pool, and what their ages are?

[Jeff [Last Name Unknown], Department of Financial Regulation]: So this is the Diva Health map. This shows you

[Rep. Leslie Goldman (Member)]: It's on this. This

[Jeff [Last Name Unknown], Department of Financial Regulation]: is problem in terms of price. It's great that you know? And this is just reflective of our, you know, nationwide, maybe globally, the the baby boom and other factors. This graph didn't look so age, obviously. This is up to 64. At 65, you can go into Medicare. So the exchange is essentially up to 64. When I referenced 1992, when the median age was a full ten years younger approximately, this this chart looked very different, which meant that a 20 paying into a community rated situation or or market was and and I hate to use the term subsidy. Insurance is all about subsidy. It's what we do. You know? When I back into topper's car and have an accident and, you know, I get $10,000 to fix his car, Someone else is subsidizing it. We didn't have an accident. So subsidy, I don't mean in a negative way or pejorative ways. It's sometimes used. But because insurance that's what's insurance about. But the the business of regulating insurance is to to to try to do a fair job of attaching cost of insurance to where that cost comes from.

[Rep. Alyssa Black (Chair)]: I I just wanna I mean, I wanna further this because I don't think that answered my question. Okay.

[Rep. Wendy Critchlow (Member)]: I mean,

[Rep. Alyssa Black (Chair)]: I Yeah. I've got it right. I absolutely understand that there are more people who are on the older side and qualified in QHP than younger. However, I'm talking about the missing. The people who aren't in here. Do we have demographics

[Jeff [Last Name Unknown], Department of Financial Regulation]: the insurance? Dropping out.

[Rep. Alyssa Black (Chair)]: I mean, I'm thinking about life and obviously everybody's life is a lot different, but I'm thinking of younger people have a tendency to work for employers. People who start their own businesses who would need to be qualified to help in a QHP, they

[Rep. Karen Lueders (Member)]: tend

[Rep. Alyssa Black (Chair)]: to be a little bit older, a little more life experience. I'm wondering of the uninsured population, who do we think we're missing out of the QHP that is younger, that is not buying because of price? Because if we're going to start messing with community rating, it seems to me we should have a handle on who we think we're enticing to come back into the market if we're going to dramatically, well, maybe not dramatically, 5%, we're going to increase the cost on another. I'm just trying to figure out who's missing from the market right now that we think we can entice back in.

[Rep. Lori Houghton (Member)]: And can I just add to that? Yes. Or who might drop off the market if we do this?

[Rep. Alyssa Black (Chair)]: So I wanted to get to Leslie's question.

[Rep. Leslie Goldman (Member)]: Because it's it's all connected. It's like, if I understand right, if you said eleven thousand dollars a year for premium, is that did you say that?

[Jeff [Last Name Unknown], Department of Financial Regulation]: There are I think some of the least expensive bronze plans for an individual would be about 1,000 a month, just over

[Rep. Leslie Goldman (Member)]: the $512,000 a year, but that 5% is about $600 a year. So you're dropping the premium, if I'm understanding it right, by $600 if we institute age reading. Am I getting that right? How is that impactful in context of what Alyssa's thought?

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yeah. So I think lots of questions there. So who might I hope to so we wanna prevent younger, healthier people from opting out of insurance because that makes everyone's insurance costs go up because they are, in effect, helping keep rates down by keeping the pool relatively healthier. So agree there or or that's my answer there. In terms of who would we like to attract back, we would like to attract back the same population we wanna retain, which is folks who and it's developing situation. Right? Enhanced premium tax credits expired and are no longer available, for a certain population on the exchange, and we're just getting updates from Diva and insurers about how many folks are not reenrolling. I don't have the data. I'm not sure if Diva or the insurers would yet on any demographic information about that, but I'm sure it's available and can be forthcoming. So so that's the answer there. Actuarially, part of the response or part of what's instructive here is that if you look at the 2020 the the QHP rate filings of last summer that are policies that are in effect now, the actuaries of both MVP and Blue Cross Blue Shield had to ask for a higher rate to incorporate the impact and the estimates of losing people because of the loss of subsidies. So that shows you that the math is there to show how everyone's rates go up when people, go uninsured. And their and their models showed that those were though the folks that would choose to go uninsured because of that cost sensitivity would be detrimental to the pool. So that what we're trying to do is is stem that reverse. I would say that there's a potential, and this is what I've been working with insurer insurance company actuaries to try to explore and would explore if if this goes forward. Is there a way to optimize this? Meaning, given that given this population spread, is there a way to say for the older cohort increasing allowing an increase of 3% could actually reduce the younger cohorts by 6%? Not 3%. So, you know, I'm making up numbers here. But this is what actuaries what I've asked some actuaries to look at. So that's, you know, that that's one of the potential positive outcomes. Overall, that explains a big reason that I wanna go here in terms of age rating. Another big reason is I think it's patenting unfair, the way we price right now. We have that the other issue is that income goes up two to three times during this during this age continuum. So what we have is the equivalent of a flat tax, but even worse, and that the folks pulling the most value out of the system as a cohort statistically are also earning the most money and paying the same premium.

[Rep. Alyssa Black (Chair)]: Sorry. Isn't that what insurance is?

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yeah. Absolutely.

[Rep. Alyssa Black (Chair)]: We all pay in Right. Hoping we never need it. Yeah. But eventually, we're all gonna need it, and everything you've paid in over the course of your lifetime, you then finally get back.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Right. And so the amount that someone who's in an older court herd now may have paid in when they were in their twenties, the amount of subsidy, if you will, pales in comparison to the amount of subsidy people in their twenties are paying now because the cost of care escalation and this demographic trend. So whatever that formula and and, yes, that's what insurance is about. Insurance regulation is about fine tuning that. Okay. We don't we don't expect everyone to pay for the reckless driving of young drivers. They pay a higher rate. But we don't, in some states, rate based on gender in auto insurance. You know, there's so so states make up their minds about what's fair to have in cross subsidy and insurance and what isn't. You know, I don't force you to have flood insurance if you're not in a flood plain. So it's not as simple as like, hey, we all pay and everything, and it's it's well, it is that simple in health insurance. I'm saying, let's break that open a little bit to the benefit of what I believe the state needs to do, which is to make things a little bit better for young families in in all in all areas of housing, insurance, taxes.

[Rep. Alyssa Black (Chair)]: Did you have a question? Okay. I had Lori from Young Leslie.

[Rep. Lori Houghton (Member)]: So I'm curious if you'll have more analysis for us on what that 5% could look like in regards to, like, let's look at the premiums and the cost of insurance today. Has DFR done an analysis to say, well, if this was in place and we had this 5% deviation, which I want to get your question answered on if it's really a 10% deviation. What it actually means dollar wise to a consumer of health care, both in the younger age and the older age. So what's the true value of this to Vermonters? There was some analysis done back in 2019 when this was brought to us. So even looking at that and updating it would be helpful because based on that analysis, we didn't make any change. I appreciate not just getting rid of it completely, which is what I think 2019 was. But I'd love to see some more analysis on the actual value Okay. Yeah.

[Jeff [Last Name Unknown], Department of Financial Regulation]: And and thank you for reminding me of the chair's question. The way it's worded, depending if we go forward with this, what I'd like to see is that no no more than 5% increase for anyone. But as I said earlier, actuarially, if there's a retention factor or bringing people back or just the age difference in the in in where the age banding is allowed to happen, I wouldn't wanna limit that to, well, we go up 4%, but we're not allowed to go down 8%. So but the way it's worded now is really deviation from what would be the community rate, which is the current system.

[Rep. Alyssa Black (Chair)]: Do you envision that each of these Are you envisioning maybe 45, 45? Or are you thinking eighteen to twenty six has one? How many age ratings do you want to have? So

[Jeff [Last Name Unknown], Department of Financial Regulation]: I think as was clear in the walkthrough, we have regulatory authority to do this up to 20%. This is a big deal. We wouldn't do it without this discussion and with without, hopefully, your your your green light to do something. So our process for amending that reg would include a lot of actuarial work that's expensive and time consuming. I think we can answer questions like yours, but so I don't have the answer to that. But what I'm envisioning is keep it somewhat simple. Not some states have, you know, age bands very tightly with age, or if they call it, and that's in the materials as well, all the way up from, you know, 18 to to 64. You know, when I initially started thinking about this, I noted from average age distribution that about half of the people on the exchange were only 35. And no. Sorry. Over 35 is two to one for that under 35. So just straight math without any additional retention or preventing additional loss. Straight math would mean that if you said over 35, you pay 4% more, means under 35, you pay 8% less. I believe it's it's that straight in terms of looking at today's prices and and doing that. I'm not saying that's the proposal. The proposal would be driven by by what works for carriers and what is least disruptive and probably would need to have at least three categories to avoid a cliff. So there you know, if a 40 was a break that you didn't have, then you go from, you know, minus six to plus three, so plus nine by having a birthday. So it it'd be smoother than that.

[Rep. Alyssa Black (Chair)]: Leslie, did you have a question?

[Rep. Leslie Goldman (Member)]: Just tagging on to what Lori was asking, do we know that this kind of, you know, a 3% 5%, sorry, changes behavior? Is it enough of an impact to change behavior?

[Rep. Wendy Critchlow (Member)]: I

[Jeff [Last Name Unknown], Department of Financial Regulation]: think part of that is answered by how actuaries actuaries modeled the loss of the enhanced premium tax credits, And the answer was yes. It changed behavior. It was a higher magnitude for sure. I think that's one of the areas that the only way to really answer that is to get the actuaries to work.

[Rep. Leslie Goldman (Member)]: So what I'm hearing you say, just to make sure I understand, so the behavior that was changed was people dropped their insurance. Correct. Does it also change behavior to people to buy in with a 5% reduction?

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yeah. I I would have to rely on actuaries to I think logically thinking, yes. You're not gonna know that Because

[Rep. Leslie Goldman (Member)]: it's only 500 or $600 if I'm understanding it right. But I'm not sure I'm understanding I just

[Rep. Alyssa Black (Chair)]: wanna make sure I understand.

[Jeff [Last Name Unknown], Department of Financial Regulation]: No. I think you're that that is the scale we're talking.

[Rep. Leslie Goldman (Member)]: Yeah, compared to a $12,000 yearly cost.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Correct.

[Rep. Leslie Goldman (Member)]: It'll now be $11.05.

[Rep. Wendy Critchlow (Member)]: Right. So

[Jeff [Last Name Unknown], Department of Financial Regulation]: that maybe this will shed some light on. Right now, we don't do that anymore. You can kill twenty percent. Correct. Through rule. Yeah. We'd have to amend our rules. Yeah. Yeah. Okay. That was under community rating. Under under the current statute, age is one of the community rating factors that the commissioner may issue a Today, as we sit here, you can do 20%. Well What you wanna do is get away from the community rating so that you can split age groups and charge no more than 5%. No. Increase or decrease more than 5%. It's the same flexibility. So the current statute says the commissioner can issue a rule that deviates from those community rating factors of which one of which is age. Yeah. But by no more than 20%. What we wanna do is not 20%. We want 5%. What I don't wanna do is is now forever limit myself to 5% by getting the legislature's endorsement of this plan. But, you know, if that's what happens, that's what happens. But it it's the same idea. Ultimately, what we're trying to achieve is input and consensus that this makes sense for Vermont, that it's not just a rule coming out of DFR blindsiding the legislature in Elkhart. Use the to do that. Right. So if there's some some to answer a lot of the important questions, we gotta go through actuarial study and the rulemaking process before we start the rulemaking process. We gotta know what we wanna do, and we we can't know exactly what we wanna do and exactly what behavior, if any, is impacted by those amounts before we so I can't tell you exactly how it would look. And that's that's why so many things are are brought to the rulemaking process as opposed to having certainty in statute all the time.

[Rep. Alyssa Black (Chair)]: I was like to keep it to four minutes, and

[Rep. Daisy Berbeco (Ranking Member)]: that's not going to happen.

[Rep. Alyssa Black (Chair)]: Daisy has

[Jeff [Last Name Unknown], Department of Financial Regulation]: a I think I'm innocent because I'm just answering questions.

[Rep. Daisy Berbeco (Ranking Member)]: Leslie brought up a really important factor in speech. And I'm wondering about behavior of incentivizing people. Would something like this be paired with having insurers incentivize people to sign up by curating benefit packages that would be more desirable to young or older people? Why not just do something like that, regulate that way, rather than having people pay a different fee? That's the first question. My second question is, what's the risk if you implement something like this and it does not work the way that you model it?

[Jeff [Last Name Unknown], Department of Financial Regulation]: I think okay. So first question, think, is a better diva question in terms of an insurer question in terms of what activities occur now and what the ACA has bandwidth for in terms of, customizing plan design to attract younger insureds. And I would say that does make sense, and I would say do both because we're at a level of, you know, an affordability challenges here that we have to do everything we can. The second question of what could go wrong, is that essentially the the question?

[Rep. Daisy Berbeco (Ranking Member)]: Or what's the risk? What's the risk of implementing something like this and if it doesn't pan out the way that you expect it to?

[Jeff [Last Name Unknown], Department of Financial Regulation]: I think the risk is if there are big assumptions on the behavior side that it will prevent people from leaving or that it will attract people in, that we don't get any optimization out of it. To me, that's gravy. You know? That's icing on the cake. I don't think there's risk in just calibrating how we charge different cohorts of age. I can't think of any at this point. It's possible that some older insureds can absorb three, four, 5% increase. It's all of the risks around affordability sorry. Not all. But some of the risk around affordability is, of course, mitigated by what's left for subsidies, not the enhanced, but the but the base level subsidies that are available. I think what we're talking about here is that partially subsidized or now since the expiration unsubsidized payer. It's not, you know, who's 300 plus, 400 plus percentage of federal federal poverty level is now hardly or not getting a subsidy. And how sensitive to price are they are they gonna be. It is not a goal to have older people drop insurance. If that did happen, the pool would, you know, would survive, you know, in terms of although it would probably be older, healthier people. People who are gonna drop insurance are not folks that need need that insurance unless it's truly an affordability thing. And my hope is that we have a system designed. I'm not the right person to talk to because it's between catamount and the exchange, but that it's not we're not talking about a population that has huge medical needs, can't afford insurance, and can't get it in terms of this proposal. I don't believe that's what we're looking at here because of the other safety nets that are out there. I don't know if that answer your question. I don't see it as a risky proposal. I see it as politically risky. I'm here saying we need to raise the rates on some of our monitors to make it more fair and more affordable for another cohort of Vermonters that I think we all agree are having a hard time inter and I can statistically tell you from tax department data, they make less money.

[Rep. Alyssa Black (Chair)]: I'm gonna do one last question, Lori, and then I'll move on to the next.

[Rep. Lori Houghton (Member)]: So do you have the budget today to do the actuarial analysis, or would you be asking for money?

[Jeff [Last Name Unknown], Department of Financial Regulation]: We would we're not asking for money. Okay. So we have some budgets today, and we would also rely on the participation of MVP and Blue Cross, the two players on the exchange, to help us design this in an appropriate way.

[Rep. Lori Houghton (Member)]: Okay. And then did you not that I'm advocating this, but curious if you've looked at the other factors that we don't allow or other factors that other states allow Mhmm. To see if there'd be more of a of a positive impact for everyone by trying something different.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Have not. And that doesn't mean it's not worthy exploration. I think personally, I believe medical underwriting, I mean, I think the ACA disallows that as well, but guaranteed issue, doesn't matter what your health history Those are off the table for me. Absolutely. Age, geographic might be something to think about as we have different hospital systems serving different parts of the state with very different cost structures. But we did not look at that. I do wanna say, just as a as an overall, I think that was the final question. So we're looking for we we would design something 5% upward pressure max. That doesn't mean that's what we're proposing. It might end up being 2%. You know, whatever whatever we see is is a reasonable way that's not disrupted. And I also forgot to introduce that Vermont is one of only two states in the entire nation that doesn't do some type of age rating. It is not nationally a radical idea. It's Vermont and New York are the only two. Most states, I believe, use the full three to 300% deviation between highest and lowest payer based on age. This is very much, honestly, a baby step to try to restore some, what I think, some equity to who we charge what in the exchange.

[Rep. Alyssa Black (Chair)]: We remind ourselves of how many people are in this pool. Six, seventy thousand.

[Jeff [Last Name Unknown], Department of Financial Regulation]: I believe that's right. Because it would impact small group as well.

[Rep. Alyssa Black (Chair)]: Small group and individual. So about 70, we think. That's a 70,000.

[Jeff [Last Name Unknown], Department of Financial Regulation]: It's my memory. Yeah.

[Rep. Wendy Critchlow (Member)]: Alright. Next.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Next, I think.

[Rep. Alyssa Black (Chair)]: Age rating.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Unless you

[Rep. Alyssa Black (Chair)]: were unless you had more to say about age.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Oh, I have so much more to say, but it's really just answering questions. I think Mary Block should be on screen behind me to talk about some other items in the plan options category. And if it's okay, I'll stay seated right here to give color commentary. Are you there, Mary?

[Jen Carvey, Office of Legislative Counsel]: I'm here. Alright.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: For the record, Mary Block, deputy commissioner of insurance for the Department of Financial Regulation. And I think it is my my pleasure to talk a little bit about AHPs to start. So this is sections seven and eight of the bill. AHPs are association health plans. You talked a little bit about this with Jen. We know that there's a lot of small group employers out there that are facing incredible cost challenges when they're trying to provide health benefits, and they're looking for options. This is a possible option. There are group plans that can be formed through associations of employers. The one most prominent one in Vermont currently is the Vermont Association Automobile Dealers Association. So VADA has an AHP. It's not without potential concerns, because obviously we're looking to help small group employers, which means those small group employers might move out of the exchange, so that's one of the risks. Currently under federal law, AHPs are regulated through ERISA as multiple employee welfare arrangements, otherwise referred to as MIWAS, many acronyms in the federal world. They're required to meet, among other things, the standards of coverage for large group plans. The plan standards are more flexible. They don't require the federal essential health benefits. They provide more options for defining coverage that fit a plan's employees. They still need to meet meet state mandates. The way they're defined currently under Vermont law, there are it's defined a lot more restrictively, and and we hold them to the small group QHP standards including full essential health benefits and so forth. The the language change in the bill aligns our definition with the federal definitions so that any expansion of AHP types under federal law would also occur under Vermont law when that happened, and we believe the expansion is likely. Some expansion occurred under the first Trump administration. It was reversed during the Biden administration, and we believe it'll again get reversed during the second Trump administration. We would also, after this change went through, have to do a change to our AHP regulations because the regulations actually contain the current benefit restrictions. So we would have to change those from the small group QHP standard to allow them to act as large group as they're allowed to under federal law. And I think I'll stop there and see what everybody has for questions.

[Rep. Alyssa Black (Chair)]: Leslie?

[Rep. Leslie Goldman (Member)]: We in Vermont, if I understand this correctly, sort of got rid of association health plans when the exchange came in and whenever that was. And can you help me understand, and you may not know this, why that path was taken? What was the problem with them that they were rescinded? So that come bringing them back, does that bring that problem back? I just wanna understand that.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: So Yes.

[Rep. Wendy Critchlow (Member)]: It does.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: I I mean, obviously, I was I wasn't around at the time. I mean, I think one of the reasons that we did it was to support the exchange. So this does run the risk of pulling employers out of the exchange. But, you know, we're we're we're sort of you know, desperate times calls call for desperate measures, and so trying to provide more options is why we put this on the table for discussion.

[Jeff [Last Name Unknown], Department of Financial Regulation]: And it's you know, I think very clearly the reason for Vermont's historic approach on association's health plans, to be clear, is that they do generally pull better risks out of the small group market and leave higher morbidity in small group market, which raises rates for the small group market, which then means another group says, oh, those rates are high. I think I can do better in an association. So, you know, that trend is not a good trend. I would say combined with age rating, some age rating allowance, which does impact the small group market, there's a hope and maybe this goes to one of the risks that that mitigates some of that. The overarching thing here is or the overarching goal here is to recognize we're at a point of cost to small businesses as I opened with that I no longer feel comfortable telling them no when they're coming to us and saying, we wanna do this. You're not letting us do it. It's better for my small for my business. These are small businesses. Your employer is less than other.

[Rep. Alyssa Black (Chair)]: But there are consequences. Okay. So age rating.

[Rep. Wendy Critchlow (Member)]: Yeah.

[Rep. Alyssa Black (Chair)]: We're trying to stabilize the individual and small group market. We're trying to form more people into it. And then opening up for association, we're then pulling people out of it. Which pulling people out of it raises it in the individual and the small group even more. And if we have the age rating, then that 5% isn't going be 5% very long. It's going to be much, much greater because you're pulling out a healthier population, moving them to association plans. And it seems to me that what we are really doing here is we are creating volatility and it seems as though the last thing we need to be doing right now is introducing volatility into our already struggling market. I mean, two things seem to be fighting against each other.

[Jeff [Last Name Unknown], Department of Financial Regulation]: They do go in opposite directions. Another way to look at it is does one mitigate the impact of another? Does does the ability to provide the the the same population that's having good, you know, low claims experience, which could be directly attributed to the age of their employer set, providing them some relief, in terms of this age rating, proposal, that's gonna lessen their their attractiveness to form an AHP. Opening up AHPs offers more alternatives. So you're not incorrect. I I don't disagree with anything you said. They do run-in opposite directions in terms of a small group market. They don't have to happen together. You know? We're not saying you have to pass both in terms of this to work. I'm saying we have to be sensitive to what we're hearing from the business community that they understand the impact, and maybe there are other ways to work. But there are other ways to work on the health of the small group risk pool age rating.

[Rep. Alyssa Black (Chair)]: You were talking about fairness with And I guess I just Insurance costs so much because our prices are high. Bottom line. I mean, that's a million other reasons, but we pay this much for insurance because our prices are high. This doesn't do anything to influence.

[Jeff [Last Name Unknown], Department of Financial Regulation]: We'll get to that part. Okay. We have three pillars here. Cost containment is gonna be this afternoon.

[Rep. Alyssa Black (Chair)]: Mean It's just shifting who's paying.

[Jeff [Last Name Unknown], Department of Financial Regulation]: But that's important because remember, across the border is New Hampshire that has full age rating, and there are many businesses that can set up shop in New Hampshire instead of on the Vermont border. And whether they're in a small group market or individuals and where they live, it does make a difference. Right? So within Vermont, you're right. We gotta we gotta tackle cost of care.

[Rep. Wendy Critchlow (Member)]: That's okay.

[Rep. Alyssa Black (Chair)]: A lot more population.

[Jeff [Last Name Unknown], Department of Financial Regulation]: They have more population. They have bigger risk pool. They probably have better competition and access. Lower prices. Yep. But in addition to that, all those things being equal or not being equal, if you're 25 years old, you wanna live in New Hampshire in terms of if if the only thing on your mind, which is never the only thing on a 25 year old's mind, in terms of, you know, we're not just shifting things around. There is an interstate impact to this that we have to recognize.

[Rep. Alyssa Black (Chair)]: I'm 25. I'm still on my parents' insurance. And, Lori,

[Mary Block, Deputy Commissioner of Insurance (DFR)]: was gonna say just one one sec. The other thing to consider is small group employers don't have to offer benefits. So if the if the option is the exchange or nothing, they may decide to stop offering benefits. If the option is the exchange and AHP or nothing, maybe they can transition to an AHP and be able to continue to offer benefits to their employees. So it's just another pathway to hopefully keep them from dropping out of the market.

[Rep. Lori Houghton (Member)]: Lori, has Any analysis been done on the AHP as in how we would expect it to

[Rep. Alyssa Black (Chair)]: change? And could could we do

[Rep. Lori Houghton (Member)]: we have any data to do that analysis?

[Jeff [Last Name Unknown], Department of Financial Regulation]: That's very behavioral, I think. Mary, do you have any thoughts on that question?

[Mary Block, Deputy Commissioner of Insurance (DFR)]: I don't know that we do because there's a lot of ways an association can form. It's a little more limited right now until the federal law changes, but it's it's it's hard to say, and it's also up to the individual employers to decide to to join the association. So I'm not sure we have the ability or the data to do any predictions there, unfortunately.

[Jeff [Last Name Unknown], Department of Financial Regulation]: So I I partial answer to that question, I'm on a board of a nonprofit that looked at a at a similar type self insured model. Volatility was one reason that we didn't pursue that. Yeah. It was it was more a risk than AHP, but I think the same decision applies that the cost savings were kind of there Mhmm. But not enough to to you know, and that's that's a decision that's made a thousand times over. Yeah. So it's really hard to predict that. But I think it is absolutely fair to say that when you loosen AHP rules, you will see healthier risks when you leave.

[Rep. Alyssa Black (Chair)]: I would think that the cost also would be influenced by who the TPA is. What is TPA? Third party administrator. So basically the contracts that, you know, a Cigna has with Vermont providers is drastically different than maybe even Blue Cross Blue Shield has of Vermont, which also increases volatility into our provider space, not getting the commercial rates when you start pulling people out of the QHP market. It's just all that stuff to think about. Lots of things to think about.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: Yes.

[Rep. Alyssa Black (Chair)]: I'm going to go Karen and then Wendy.

[Rep. Karen Lueders (Member)]: What I hear from my constituents, small businesses and the nonprofit sector, is they do want to offer health insurance. And in the nonprofit sector as you were just describing, you know, what they have to spend

[Rep. Leslie Goldman (Member)]: on health insurance now takes

[Rep. Karen Lueders (Member)]: away from their mission directly.

[Rep. Alyssa Black (Chair)]: So,

[Rep. Karen Lueders (Member)]: some of them have opted to do self insurance and some haven't, but you remember just talking about people that are 65 and under, correct? Because we have Medicare and Medicaid. So, we're already starting with a pretty small and we have state employees and they're off to the side with their own self insurance pool. And then we have teachers and they're off to side with their own self insurance pool. And we have some smaller organizations that are doing it. So we're pretty soon, you know, who's left? And then one, I don't know, incremental question I have is in the nonprofit sector when health insurance is offered, the subsidies do not go along with that, even if one might qualify generally. Do know anything about that?

[Jeff [Last Name Unknown], Department of Financial Regulation]: Can you repeat that, or unless Mary heard that correctly?

[Rep. Daisy Berbeco (Ranking Member)]: Yeah, so if you're working for

[Rep. Karen Lueders (Member)]: a nonprofit and your employer offers you insurance

[Jeff [Last Name Unknown], Department of Financial Regulation]: Right.

[Rep. Karen Lueders (Member)]: You're not eligible for fixed subsidy.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Correct.

[Rep. Karen Lueders (Member)]: So anyways, there

[Jen Carvey, Office of Legislative Counsel]: is there's just

[Rep. Karen Lueders (Member)]: a lot of pressure for them not In short, and so in this age, the separation would only be between age 26 and 65. Right? Do I have that right? I mean, when you start parsing out age delineation

[Jeff [Last Name Unknown], Department of Financial Regulation]: It could be lower than 26. Now you can be covered on your parents' plan up to 26, but Something in that year. But yeah. Is

[Rep. Wendy Critchlow (Member)]: it worth I

[Rep. Karen Lueders (Member)]: don't know.

[Rep. Wendy Critchlow (Member)]: That I'm just Yeah.

[Rep. Karen Lueders (Member)]: Trying to sort out what we all want.

[Jeff [Last Name Unknown], Department of Financial Regulation]: I think this

[Rep. Karen Lueders (Member)]: to go down and premiums would happen.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yep. I absolutely agree with the chair. The solution to all of this has to be cost of care. And and we have a separate category in May that addresses that at least from an insurance and insurance regulation point of view. That is the only real meaningful progress we can make. Everything else is just important, I think, adjustments. But another thing I wanna respond to is is you're right. Public employees, teachers, you know, have availed themselves of a self insurance model. And so that's something we all have to think about when we say certain employers may not.

[Rep. Karen Lueders (Member)]: To give sharedness and equity. Right.

[Rep. Wendy Critchlow (Member)]: Every k. Thank you. This is Wendy. This just feels like the ACA is dying by a thousand cuts to me. It just makes me sad that But that being said, VITA weighed in on this? Like this would be a full system change for VITA. I mean, subsidies are done in a computer that already, workers just inputting this kind of stuff. So now there's going to be these incremental cutoffs that's going to increase the amount of subsidies that somebody gets, and I don't like the word subsidies, but it just seems like a lot of money and time and effort is gonna go into actually doing this. Now what's the cost analysis of that?

[Jeff [Last Name Unknown], Department of Financial Regulation]: To be honest, we haven't done a cost analysis with on and I I hope I'm not confusing the word subsidy. When when we talk about subsidy and age rating, it's kind of the inherent overpayment a younger cohort is making because of the claims experience of an older cohort versus this doesn't change federal subsidies. In terms of ACA death by a thousand cuts, we had an individual mandate that made community rating make a lot more

[Rep. Alyssa Black (Chair)]: sense. Right.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Yes. That made community rating make a lot more sense if if you can basically say you have to be insured. We had a younger population age rating or no age rating made a lot more sense. So you're right. Losing those things, which, you know, I don't think we have control of. Mhmm. Well, I guess you could pass a statewide individual mandate, but that's not our proposal, I think. I don't know. But, yeah, it's I think, my position on this is guided by the fact that if we look at the trajectory in our rearview mirror of health care costs and health care policy, it's not something we can sustain and continue. We have to do some things differently. Some of them are harder to swallow than others.

[Rep. Alyssa Black (Chair)]: Growing the pool, be more effective. Getting more people into the pool.

[Jeff [Last Name Unknown], Department of Financial Regulation]: That would make the pool more stable. If they are healthier people, yes, it would make their rates go up and the and the food adjoining rates go down relatively.

[Rep. Alyssa Black (Chair)]: I mean, it just seems like what we've seen over the over the past few years is that the UHP pool is shrinking, shrinking. Employers are leaving because it's easy for them to become self insured now, which is expanding self insured market, which is further destabilizing the QHP market. And the pool is shrinking, which is raising costs. The really sad part of it is that the QHP market is so unaffordable at this point because it is the only market where we can sustain our hospitals and our providers. And they're taking on that cost shift and that burden because we have no regulation whatsoever over the self insured or RSA market. Mean, it seems to me that what we want to be doing is we want to do everything we possibly can to grow the QHP market, and that will stabilize it, and that will create affordability. We'll batten prices, but we're not in that section, Jeff. I think I'm going to Okay. Somebody else have a question. Oh, Brian.

[Rep. Brian Cina (Member)]: I was on Zoom and I was holding them in the whole time.

[Rep. Alyssa Black (Chair)]: Are running dramatically behind also, just to let everybody

[Rep. Brian Cina (Member)]: So make it snap. All right, so I heard you mention wanting to expand choice, three different kinds of rating. You mentioned age rating, you mentioned geographic variations. Are there additional

[Jeff [Last Name Unknown], Department of Financial Regulation]: That's not in our proposal, that was in responsibility.

[Rep. Brian Cina (Member)]: You mentioned it as another possibility. Yes. Yeah. 1%. Are there possibilities for rating based on income? I know we currently subsidize costs, but why is it that a person who makes $50,000 or maybe not 50,000, 60,000 pays the same as someone who makes $600,000 yet they can make 10 times more income? Why aren't they paying 10 times more of a premium if they can afford it?

[Jeff [Last Name Unknown], Department of Financial Regulation]: Because we don't have that structure in place. I would say that part of the value proposition of an of moderate age rating is that there's a direct correlation between age and income, so it better aligns income and thus affordability with health insurance premiums. But but that's but income based health insurance premiums aside from subsidies is is not something we have or that we're proposing.

[Rep. Brian Cina (Member)]: Is it allowed? Loud? The CACI? I don't think

[Jeff [Last Name Unknown], Department of Financial Regulation]: I do not think it is forbidden for a state to come up. I mean, I think well, I think if you're it's probably actually possibly problematic actually to charge a non actuarially supported rate that's meant for income redistribution, I I would guess. But, of course, a state could come up with different ways to subsidize or charge higher income earners, and it's discussed all the time in ways and means. Can you bring us

[Rep. Brian Cina (Member)]: at some point, us some data to show the correlation between age and income in Vermont? Because you asserted that generally people who are older are making more than people who are younger.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Can you bring us some evidence and demographic data to show? Okay. I'll put that into the record. I have an analysis from the tax department on both individual and joint filers, average income by age. Thanks. And then

[Rep. Brian Cina (Member)]: the other question, I'll merge them into one. No pun intended, but I'll merge my questions. So if we're trying to increase options for people and choice, like I'm hearing age rating increases choice because it reduces premiums on the exchange for younger people providing an incentive for them to choose that versus being uninsured. And then the other choice that you're promoting is association health plans being allowed. Are options on the table perhaps a public option? Could adding a public option to the mix on the exchange give people more choice and how might that impact rates of insurance? Also is another possible option merging with another state, is that allowed under the Affordable Care Act? Could we potentially work with New Hampshire, for example, or New York State, Massachusetts, or could they all combine to create a bigger market?

[Jeff [Last Name Unknown], Department of Financial Regulation]: We've talked about the multi state option. Our cost structure is so high in delivery of care in Vermont. It seems dead on arrival in terms of asking them to work with us in terms of the cost of care in Vermont. In terms of a public option, I'm not sure what that would look like or what it would take or, I mean, I I would say that the QHP and the regulation around that and the fact that, unfortunately, it has become somewhat of an insurer of last resort or an option of last resort starts to look like a public option. But public option also has five different definitions if you talk to five different people. Yeah.

[Rep. Brian Cina (Member)]: I think I was referring specifically to allowing people to buy into the state Medicaid program, like letting people purchase Medicaid as an option so that we're giving people a third choice on the exchange.

[Jeff [Last Name Unknown], Department of Financial Regulation]: That might be a question for Diva or AHS. Yeah,

[Rep. Alyssa Black (Chair)]: he's not answering. Ask Diva the hard. I think I've

[Jeff [Last Name Unknown], Department of Financial Regulation]: shared with this committee, I am not a health care policy expert. Really am not. I'm more of a financial person.

[Rep. Alyssa Black (Chair)]: Did I have any other questions Just to start to Mary and Kaia, you're done with your

[Jeff [Last Name Unknown], Department of Financial Regulation]: There's one more, isn't there, Mary? Is there short term limited duration? Did we cover that?

[Rep. Alyssa Black (Chair)]: Oh, we haven't covered that.

[Rep. Leslie Goldman (Member)]: So we have short term limited duration.

[Rep. Lori Houghton (Member)]: May I ask

[Rep. Alyssa Black (Chair)]: what I Yes.

[Rep. Leslie Goldman (Member)]: It'll be quick. If I understand this right, there's this tension between age rating and the association plan for is there any analysis that's been done on the impact of one versus the other? So if we were thinking about that tension, where we want it to lean?

[Jeff [Last Name Unknown], Department of Financial Regulation]: I think one important no. Because, again, it's very behavioral and a little easier to predict and potential to predict on the individual market or on the individual decisions for the exchange. But for businesses making that decision, it's, I think, a lot harder to predict. An important fact that I think Mary did mention, though, is that the ability to open up more businesses to form association health plans at this point is more throttled by federal rule than anything we're proposing here. So federal rule would have to change to allow, I forget the term, but not nonaffiliated or what have nonconforming, something like that groups to form an AHP. That is something we can't change. So let's change it. So the impact of what's in here for AHP reforms is is varies by what the feds do.

[Rep. Leslie Goldman (Member)]: So it's dependent on federal rule. That's what and is there any Some of it. Not all of it. Is that likelihood of happening?

[Rep. Alyssa Black (Chair)]: Anyway, never mind. And it has to be an existing association.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Other part Mary, you wanna cover the kinda two components of the AHP proposal, the federal reliant and the non federal reliant?

[Mary Block, Deputy Commissioner of Insurance (DFR)]: Yeah. So by just by changing we would be changing our statute statute to to align with the federal definition of AHP. Right now, the federal definition of AHP is throttled back because the Biden administration pulled back from what the first Trump administration did. It's likely that the second Trump administration will probably go back the other way again and open it back up and allow more flexibility for the types of associations that could be eligible. The second piece that we have to do regardless is to change our regulations, because the benefit structure is in our regulations, and right now, unlike the federal law, we limit or require that AHPs offer the same benefits as the individual and small group markets, so we have that requirement. On the federal level, they align with the large group market because if you think about it, right, it's an association that is creating a large group in order for them to allow them to have that flexibility and those options that are available for a large group. So we would have to do both. We would have to change so that if the federal law loosens up the the kinds of associations that could form and take advantage of this, and then we'd have to also change the regulations to change the benefit structure so that it aligns with large group.

[Rep. Lori Houghton (Member)]: So can I just clarify?

[Rep. Wendy Critchlow (Member)]: I'm sorry.

[Rep. Lori Houghton (Member)]: So if we change this, let's say we move forward with this, nothing actually changes unless the Feds change their policy? I guess I'm confused. I just got confused by that or rule. Whatever.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: If we make changes to this and then change the regulation, it would impact existing AHPs. They would have that large group market flexibility, but there would be very little movement as far as the types of new AHPs that could be formed because the federal law hadn't expanded. Okay.

[Rep. Wendy Critchlow (Member)]: Thank you.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Lear as mud.

[Rep. Lori Houghton (Member)]: Yeah. I'll do this. Limited

[Jeff [Last Name Unknown], Department of Financial Regulation]: Very hard. Short term limited duration. Duration plans. Mary, I'm gonna attempt to do this quickly. We've shut the door here in Vermont on that. Short term limited duration plans are not comprehensive major medical. As regulators, we do want want people to think that they are a substitute for health insurance. They are not, in terms of range of benefits. They do not follow the same rules as a comprehensive major medical plan. That can be surprising to consumers. So the regulatory approach up until this proposal has been no, essentially. Doesn't say no, but we've put so into any restrictions on that that we don't have any filers in Vermont.

[Rep. Alyssa Black (Chair)]: Example of what one of these are because I don't think we've ever

[Rep. Wendy Critchlow (Member)]: Well, these are we As I was saying, these

[Mary Block, Deputy Commissioner of Insurance (DFR)]: are there's these are short term, meaning, they're usually three month policies that are, if everybody is using them appropriately, used as stop gap policies. So if somebody's in between jobs, for example, and they need coverage because they've got this gap, You could buy us three months short term limited duration plan in case

[Rep. Alyssa Black (Chair)]: you have

[Mary Block, Deputy Commissioner of Insurance (DFR)]: a catastrophic issue that happens during that gap. They can be abused. They can be packaged with other policies to make it look like you're getting comprehensive coverage, which is why we've always been very uncomfortable with them. But they are used in other states to fill that gap and to help people who just need something. We restricted them so much, and the reason that nobody wants to write them is we require them to have QHP benefits in them. So nobody's gonna write a three month QHP policy.

[Rep. Wendy Critchlow (Member)]: And

[Mary Block, Deputy Commissioner of Insurance (DFR)]: so this change would take the benefit restrictions off and would allow you to stack renewals. So you we would we would do three month you could do three month policies with essentially four renewals so that you could go for a full twelve months with these stop gap policies. In the first this is another federal law thing. Right? Right now, the federal law wouldn't allow for that, so we would be changing this in anticipation of a change. The first Trump administration, there was a a change that opened this up. The Biden administration pulled it back again, and, the Trump administration has already said that they're interested in changing this again and that they have issued a letter of nonenforcement of the current policy, basically. So

[Jeff [Last Name Unknown], Department of Financial Regulation]: And the the the purpose here is to understand or to and and keep in mind that any new carrier that would come in would have their policies reviewed by DFR and their rates reviewed by DFR, and we can deny those. We can they're not conforming. So we have a protection what appears on the market even with these changes. But this really comes from a concern that we have, as we discussed at the openings, thousands of new uninsured for Bonners, the direct correlation to the expiration of the tax credits. So I find ourselves in a question or in a position to say, do we really want to not offer some options? It's not the best option. It's not a Cadillac. It's not even a Chevy. It's a bicycle. We let people buy bicycles? Right now, we don't let people buy bicycles.

[Rep. Alyssa Black (Chair)]: Oh.

[Jeff [Last Name Unknown], Department of Financial Regulation]: Just don't move.

[Rep. Alyssa Black (Chair)]: Yeah. If they're gonna drive on the highway, then you don't want them to have bicycles.

[Jeff [Last Name Unknown], Department of Financial Regulation]: It's a fair way to take that analogy.

[Rep. Alyssa Black (Chair)]: Motorcycles though. See you, Hal. I just have a clarifying question. So this would allow like a three month policy and then a renewal for up to a year, could the person then drop it for three months and then start all over again? Is a limit to I mean, this is like living in Europe.

[Jen Carvey, Office of Legislative Counsel]: Yeah. We

[Mary Block, Deputy Commissioner of Insurance (DFR)]: could put a limit on it. I'm not sure there's a limit currently the way it's written. I know in the original Trump expansion, there was a it was twelve months in a thirty six month period in the original version.

[Rep. Wendy Critchlow (Member)]: Okay. Val? That means that Oh. Know

[Rep. Alyssa Black (Chair)]: this. The only folks I

[Rep. Daisy Berbeco (Ranking Member)]: can think about this being incredibly helpful for worth the risk of abuse really is folks in the military. When they're not deployed, they don't have health insurance. I've had a couple of constituents come to me about this. Or maybe it's folks in the reserves or something. They're not on active duty. Yes, if they're not on active duty. Interesting. Yeah, so when we're thinking about creating short term limitations, we should carve out an exception for those folks.

[Rep. Alyssa Black (Chair)]: I thought you purchased TRICARE during your inactive status. I'm sorry. I'm not we should have somebody who actually knows

[Rep. Wendy Critchlow (Member)]: what we're talking about. Yeah.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: I this is this is another area that will be bound by federal law. So right now, we'd be making a change that wouldn't change because federal law right now is three months, but no more than four months, which is a little strange, because you couldn't even do a full renewal. But if the Trump administration opened it up, then we'd again be able to to move beyond that.

[Jeff [Last Name Unknown], Department of Financial Regulation]: In addition, Mary, to removing our requirement that they have to have essential health benefits.

[Mary Block, Deputy Commissioner of Insurance (DFR)]: Yes. Yeah. So we would need to make regulatory changes also. And as a part of those regulatory changes, we can obviously build in protections and things like that to make sure, hopefully, that people don't get confused.

[Rep. Leslie Goldman (Member)]: Maybe a comment just

[Rep. Wendy Critchlow (Member)]: I think you're trying

[Rep. Lori Houghton (Member)]: to move my eyes

[Rep. Daisy Berbeco (Ranking Member)]: up here.

[Rep. Alyssa Black (Chair)]: No. No. No.

[Rep. Wendy Critchlow (Member)]: I'm I'm wondering if

[Rep. Alyssa Black (Chair)]: we can discuss a scheduling thing here real quickly because we are clearly engrossed in this. Yeah. We we have you pretty much all day today, And I was wondering if we could take a break now, we could get to our next witnesses on these three sections, and then maybe start what we were tending to start at 10:45, but will not be, and then move the efficient service delivery into the afternoon. And then we can get rescheduled on insurance government governance and executive compensation. Although we actually have time this afternoon, I think. Is that okay? Can we take a break right now? Okay. Yes.

[Rep. Brian Cina (Member)]: May we?

[Rep. Alyssa Black (Chair)]: Yes. Shall we? So we're we're amazing our square rule a little bit, but same people

[Jeff [Last Name Unknown], Department of Financial Regulation]: Different topics.

[Rep. Alyssa Black (Chair)]: Different topics. Okay. So let's take a break.