Lawrence Miller prepares to report to the House Appropriations Committee.
The Shumlin administration's health reform chief delivered to lawmakers today long-awaited details of updated costs for developing and operating the problem-plagued state health insurance exchange.
The bottom line, according to Lawrence Miller: The state expects to spend $198.7 million to develop its exchange — Vermont Health Connect. Those funds are federal. The exchange handles both individuals and families buying commercial insurance, and Vermonters who are eligible for Medicaid.
Miller also reported that the ongoing operating costs are $51.8 million annually, with the state covering just more than half, and the federal government the rest. Big numbers, Miller acknowledged, but he noted that much of the expense was updating the state's antiquated Medicaid enrollment system.
Speaking after the briefing, House Appropriations vice chair Peter Fagan (R-Rutland) said he has yet to figure out what might trigger him to say "enough."
"Should they come back and ask for an additional red cent, we could be there," Fagan said. "Given state government's current financial troubles, they must unequivocally operate within their budget."
Development costs through 2014 totaled $126.6 million, including $43.3 million paid to CGI Technologies — the company the state fired last summer because of its failure to deliver workable systems on deadline.
Miller told the budget-writing committee that the remaining development expenses would total $72 million — which is also how much federal funding the state has left for development. "We expect to complete the work within that budget."
Fagan asked if the $72 million would cover the cost of developing the system to allow businesses to buy insurance through Vermont Health Connect. That capability was supposed to exist when the exchange launched in October 2013, but it didn't work and was abandoned. Businesses purchase plans directly from Blue Cross Blue Shield of Vermont or MVP Health Care. Miller said he couldn't say how much the business function would cost or whether it would be covered by the remaining federal funding.
State officials had hoped the exchange could process change-of-circumstances requests by April without those requests being handled manually. Now the state has a specific work plan and contract with Optum, its new development contractor, to deliver a tested change-of-circumstance capability by the end of May.
When pressed by reporters about the moving date, Miller said he likes to set aggressive targets, but he never promised the system would work by April. Now that the state has a contract with Optum for the development, he said, he is "confident" about the end of May.
Still he added, "Is that a guarantee? No."
The lack of an automated change-of-circumstance function has led to backlogs. Last summer, it swelled to more than 14,000, forcing the state to hire extra people; it's now at more than 11,000. Of the $51.8 million in operating costs, only $8.1 million pays for expenses associated with individuals and families buying commercial insurance. The remaining $43.7 million pays for the Medicaid side of the system. Medicaid covers 100,000 Vermonters.
Rep. Robert Helm (R-Fair Haven) questioned whether the state could afford the ongoing expenses.
Miller acknowledged that it has been particularly painful to see so much money spent on a system that has yet to work correctly. Still, he predicted that future costs could decline once more processes become automated.
Rep. Kitty Toll (D-Danville) turned to the new commissioner of the Department of Vermont Health Access, who had joined Miller for the presentation, and asked, "Can you give us some confidence?" Steven Costantino, who replaced commissioner Mark Larson this month, previously oversaw Medicaid and other health services in Rhode Island.
"Even in Rhode Island, with a successful exchange, they are talking about sustainability," Costantino said. He plans to put in place a management structure that is "much more task-oriented" to ensure efficient operations.
Rep. Diane Lanpher (D-Vergennes) asked Costantino if there is an opportunity for Vermont to reduce future costs — once the system is functional — by helping states that might want to switch from using the federal exchange.
"We have to make sure we are successful," Costantino replied.
Miller jumped in with a more definitive rejection. "I don't think we have the capacity for that. We have enough trouble taking care of our own."