In the summer of 2012, the Vermont Health COOP was launched with great fanfare. But it failed to win state approval in a timely manner and this meant that the COOP wouldn’t be ready to sell policies on the state’s new health care exchange beginning in January.
The Centers for Medicare and Medicaid Services, or CMS, notified the COOP that it was cutting off all funding for the group because CMS concluded that the business model for the COOP now faced “insurmountable obstacles.”
CMS loaned the COOP $4.5 million for start up costs. COOP CEO Christine Oliver says there’s no way her group can reimburse the federal agency for the entire amount.
“I think our obligation is to do what we can do to resolve all of our debts here that we have incurred to date and certainly if there was money left over we would submit back to CMS,” said Oliver. “I don’t expect that to be the case.”
In its letter to cut off funding, CMS said the COOP’s lifespan could be very short if Vermont implements a single payer system in 2017. As a result, Oliver says her group faced obstacles not present in other states.
“The impact that single payer might play on that is what led from my reading of CMS’s letter to their decision that the timetable seemed different that it would be for say other COOPs,” said Oliver.
Darcie Johnston is the executive director of Vermonters for Health Care Freedom, a group that opposes the Affordable Care Act. She thinks the federal government is strongly supporting Vermont’s move to a single payer system.
“We’ve done it by utilizing and leveraging millions and millions and millions of federal dollars in over building the exchange,” said Johnston. “And putting the system in place that is much more needed for a single payer system than it is for an on line marketplace.”
However, Governor Peter Shumlin is downplaying the role that single payer had on the CMS decision to defund the COOP.
“CMS’s decision is based upon some of the same concerns that we had which was the original application had rates that higher than the other insurers,” said Shumlin. “And there was question about the solvency as well as the structure that’s really what’s it’s based upon.”
And Shumlin says the Vermont Health COOP could have played a key role if Vermont adopts a single payer approach.
“Now had CMS made the argument about single payer I would have said that’s ridiculous we’re going to contract with one of our providers to provide insurance for all Vermonters in a single pool,” said Shumlin. “And there’s no reason why it couldn’t be a cooperative.”
COOP officials expect it to close by the end of the month.
