Cracks in Coverage:
The Precarious Position of the Uninsured
and Underinsured in Vermont
Josh Hoxie
Social Science Research Center
Saint Michael’s College
Summer 2010
Table of Contents
ABSTRACT ................................................................................................................................... 3
INTRODUCTION......................................................................................................................... 4
Why Uninsured? ....................................................................................................................... 4
Methodology .............................................................................................................................. 5
HEALTH INSURANCE: A PRIMER ........................................................................................ 6
It’s a Patchwork ........................................................................................................................ 7
What’s out there? Insurance Options in Vermont ................................................................ 7
Federal Poverty Level (FPL) Guidelines for 2009 ............................................................ 8
Who’s In? The Insured ............................................................................................................. 9
Who’s Out: The Uninsured ...................................................................................................... 9
PERVERSE INCENTIVES ....................................................................................................... 10
Who Else is Out? The Underinsured .................................................................................... 10
Getting by: The Uninsured .................................................................................................... 12
INTERVIEWS WITH THE UNINSURED: FOUR PROFILES ........................................... 12
Melanie, South Burlington ..................................................................................................... 13
Jane, Plainfield ........................................................................................................................ 13
Doris, Barre ............................................................................................................................. 14
Stephanie, White River Junction ........................................................................................... 14
BAND AIDS ON BULLET WOUNDS: WHAT’S LACKING IN PUBLIC PLANS ........... 15
Cost ........................................................................................................................................... 16
Coverage................................................................................................................................... 17
Precarious ................................................................................................................................ 17
What’s at Stake: It’s not just about insurance status.............................................................. 17
A BAD DEAL: BUYING PRIVATE INSURANCE ................................................................ 18
Cost-Benefit ............................................................................................................................. 19
FREE CLINICS AND FQHC’s ................................................................................................. 19
MOVING FORWARD: FEDERAL LEGISLATION ............................................................. 21
People Currently in the Cracks ............................................................................................. 21
STATE LEGISLATION ............................................................................................................ 22
WHAT DOES IT ALL MEAN? ................................................................................................ 23
WHAT NOW? ............................................................................................................................. 23
Appendix 1.1 ................................................................................................................................ 25
Appendix 2.2 ................................................................................................................................ 26
Notes ............................................................................................................................................. 27
2
ABSTRACT
The patchwork of public and private health insurance plans available to Vermonters
leaves a population of people uncovered and thus vulnerable to paying for care out of pocket or
foregoing necessary care. The fault lines in coverage options leave both the insured and
uninsured in a precarious position when faced with serious medical expenses. This paper looks
for where these fault lines are and what the implications are for people in Vermont who are
uninsured or underinsured. Using statewide data from Department of Banking, Insurance,
Securities and Health Care Administration (BISHCA) as well as case studies on the uninsured
and underinsured, and interviews with health care professionals in the field, a look into the lives
of people in the cracks and the contrived health decisions they must make is depicted along with
policy implications for Vermont. The paper goes on to analyze the effects on Vermonters of the
Patient Protection and Affordable Care Act passed by the federal government in March 2010 and
recent state legislation that will affect health insurance in Vermont. The conclusion is that as
long as there are insurance policies based on exclusion, there will always be a population who
are left uncovered. The only policy that could include everyone would be a system in which the
patchwork of coverage providers was unified into one coherent plan based on inclusion rather
than exclusion.
3
INTRODUCTION
In the fall of 2008, a young couple in their mid-twenties walked into the People’s Health
and Wellness Clinic in Barre, Vermont. The couple had the same form of diabetes and were both
in to get a check up. They both had jobs, but neither had health insurance. They were relying on
the free clinic for health care, paying as much as they could for the care. The couple both needed
an annual eye exam, a procedure that could prevent the onset of impaired vision and blindness
caused by their diabetes. The clinic does not have the staff to provide the procedure, nor does it
have the resources to pay for it for all of its diabetic patients. Since the procedure costs hundreds
of dollars, the couple could not afford to get the procedure. For months they saved their money
and for Christmas gave each other an eye exam as their only present.1 This couple’s story is not
unique as the more than 47,000 Vermonters who lack health insurance are forced to either go
without prescribed care or make sacrifices to get the care that those with coverage take for
granted.
Most conversations regarding health insurance are very narrow and personal. People tend
to want to know about their own health insurance and how any proposed changes affect them
personally. “Will my premiums go up? Will I still have to pay a co-pay? Will it cover my
condition?” This is very natural when you consider most people’s interaction with health care is
in a doctor’s office or when they’re paying for care or insurance. However, when contemplating
a system that will affect everyone in a population one needs to look beyond their personal
experience and look at the whole system and consider all parties involved. Health care is a topic
that affects everyone at some point in their life and health insurance will play a significant role in
everyone’s life and the lives of families. The goal of this study is to take the reader out of the
narrow discussion of “How will this affect me?” and open up the discussion to a more systemic
understanding of what it means in Vermont to not have adequate health insurance. The goal after
reading this study is to gain the perspective to see what it would look like if you fell through the
cracks of the insurance system and were on the outside looking in. Where are these cracks? And
what does it mean for the people that are in them?
This study looks at the challenges facing the health insurance “system” in the state of
Vermont with an eye out for where the fault lines are. A few questions it attempts to answer are:
Who are the uninsured Vermonters and why are they in the position they’re in? Are the
uninsured the only group that is at risk? For people without insurance-- what is life really like
and what are their options? Do they feel invincible or are they forced into this position by
circumstance? These questions are methodically studied through qualitative in depth interviews
with healthcare professionals, advocates, physicians, and uninsured people. A thorough analysis
of the most up-to-date studies conducted regarding health insurance in Vermont contributes
greatly to gaining a qualitative understanding of the current state of the state. Finally, there is a
discussion of the effects of policy changes made in the past year as well as possible policy
changes for the future.
Why Uninsured?
Nearly 45,000 people die every year from a lack of health insurance in the United States
and uninsured people are 40% more likely to die prematurely than people with insurance.2
Uninsured people are less likely to get preventative care, are more likely to be hospitalized for
conditions that could have been prevented, and are more likely to die in the hospital than those
with insurance.3 The uninsured are five times less likely to have a usual source of care outside of
4
an emergency room.4 Uninsured people often spend 2.5 times what public and private insurance
programs pay for identical care.5 In Vermont, it is estimated that more than two working-age
Vermonters died every month in 2006 due to lack of health insurance. Twice as many people
died from lack of health insurance than from homicide in 2006 in the United States.6 Nearly all
statistics point toward better health outcomes for people with insurance over people without it.
Despite these grim statistics there is a large population of people without health insurance.
With such dire correlations between lacking health insurance and poor health outcomes,
why would anyone choose to go uninsured? In Vermont, the proportion of uninsured is much
lower than national average thanks largely to a barrage of public insurance programs available to
Vermonters, but one must wonder why there still exists a sizable population of uninsured
Vermonters? Is it by choice, foregoing coverage due to a sense of invincibility? Or is it merely a
question of cost-- insurance is too expensive for these people. One must consider who the
uninsured are, what is standing between these people and health insurance. This paper goes
through the major studies done on health insurance in Vermont and looks at why the gap in
coverage continues to exist and what the difference is between being insured and uninsured. It
also looks into the efficacy of individual insurance and the various options facing an uninsured
Vermonter.
It is the hypothesis of this paper that for people not offered health insurance through their
employer or through state programs, the private market for health insurance doesn’t offer an
affordable option for people seeking insurance and the public insurance available leaves a sizable
gap. Despite the plethora of public programming put in place to address the problem there still is
a large amount of inequality in health care in Vermont. This is because the programs put in
place merely contribute to the complexity and confusion of the patchwork of health insurance
filling in gaps that exist in coverage without addressing the root causes of these gaps. The issues
addressed by this paper are the inequalities of care and cost for Vermonters. The main risk
caused by this inequality is foregoing preventative care and necessary care that would lead to
better long term health outcomes and serious financial risks rooted in medical care. The reforms
put in place to address these issues have been inadequate in their scope and execution since they
do not address the growing phenomenon of underinsurance or the causes of uninsurance, but
rather simply try to get people insurance regardless of cost or quality of coverage. These must be
addressed in order to alleviate the problems described throughout this paper.
Methodology
In order to get a full understanding of both the network of insurance providers and the
intricacy of the health insurance “system” one must investigate health insurance from both a
macroscopic and microscopic level. To get the large picture of what health insurance in Vermont
is like and how the pieces fit together, I interviewed professionals in the field of providing health
care. I spoke to constituent advocates, private insurance brokers, the Healthcare Ombudsman,
directors of community health centers and free clinics. These people had first hand knowledge of
how the “system” fit together and where the cracks were. To get a more microscopic picture I
interviewed doctors who dealt every day with health insurance companies and the bureaucracy
involved. I interviewed uninsured Vermonters who saw day in and day out what life was like
from the outside looking in and tried to learn from them why they lacked insurance. I assumed
the role of an uninsured Vermonter and went through the process of trying to qualify for a public
program or buy a private individual plan. This experience is recounted below in the section “A
Bad Deal.”
5
I also consulted the most up to date studies and literature produced on the topic within the
state and nationwide dealing with the uninsured and insurance reform. The most comprehensive
study was produced by the Department of Banking, Insurance, Securities, and Health Care
Administration (BISHCA) published in January of 2010 for the Vermont Senate Health and
Welfare Committee. I consulted annual reports from the various health care providers in the
state and health advocacy organization. The interviews conducted alongside the literature
surrounding the topic created a wealth of data from which I could analyze and draw conclusions
about where the cracks in the health insurance “system” in Vermont are and what effect (if any)
public policy will have.
HEALTH INSURANCE: A PRIMER
When you look at the market for health insurance, one must consider why insurance
exists at all for health care and what separates health care from other services. The market for
health care is unlike other markets for goods or services because consumption of care is unlike
consumption of other types of goods or services. There is an asymmetry of information between
the consumers of care and the providers. This asymmetry exists because of the complexity of the
human body and the extensive training required of doctors who provide care. Patients tend to get
care that is recommended to them by their doctor. It’s rare that people get procedures done for
enjoyment as there is very little enjoyment to most people in things like waiting rooms and
colonoscopies.
The demand for health care is not distributed equally throughout society. A small portion
of society consumes a large proportion of medical care, while a large portion consumes little to
no care. The sickest one percent of non-institutionalized people use more than half of the care
consumed in the United States. The healthiest half of the population uses only three percent of
care as measured by expenditure.7 This means that some people use no care at all and are not
affected much by insurance coverage outside of public discourse and payment for insurance.
Treating illness, or receiving medical care, can be extremely costly with modern pharmaceuticals
and procedures and thus is prohibitively expensive for most people to pay out of pocket for care
when they get sick. The risk in health care is that you might get sick and have to pay for very
expensive care. To afford this, you put some money aside into a pool that covers people when
they get sick. The larger the pool, the wider the risk of getting sick is spread around and the more
money pooled together to treat illness. This is the justification for insurance.
The way that people set aside money to pay for future care varies widely in the United
States. The one constant is that everyone at some point will require medical care and in one way
or another will have to pay for it. The most common way is through buying health insurance or
getting insurance coverage through a public tax-funded program or an employer. If you are
enrolled in a private or public insurance program then you are insured and if not, you are
uninsured. Insured means that people are enrolled in a public or private program designed to in
some way pay for care if they get sick. Uninsured means that people are not enrolled in any kind
of program to pay for care and are liable to pay for any care they receive. There are some rules
set in place that require people to receive life saving care regardless of ability to pay, but the
rules vary greatly from state to state and the definition of what is “life saving” has been highly
controversial. Within these two categories, there is a wide range of sub categories due to the
wide range of insurance options that exist and the varying degrees of coverage for different
medical events.
6
It’s a Patchwork
Before going into depth about the types of insurance available and distribution of these
types among the general population in Vermont it is important to take a step back and look at the
whole made up of all the individual parts. Most people refer to the conglomeration of insurance
programs as a “system.” However, the word system implies cohesion and coordinated structure
that unites all of the insurance options available that come together to finance the delivery of
medical care. Financing care is essentially what all of the insurance programs, public and private,
have in common since they do not actually provide the care. The development of the current
insurance programs available grew organically through private companies and public programs
produced by legislation. A more apt description of the way financing health care in Vermont is
organized is “patchwork” rather than “system.” Patchwork more accurately describes the
network of insurance programs which all exist to serve a segment of the population and offer
coverage with a model of exclusivity. They finance care for people enrolled and exclude those
unenrolled. Uninsured, or unenrolled, people do not fit into the patchwork and would require
another patch to pull them into the fold or would require a shift away from the “patchwork”
model to a “system” model that would cover all people and not just those that fit into one patch
or another. For the rest of the paper, the conglomeration of insurance programs will be described
as patchwork rather than system.
What’s out there? Insurance Options in Vermont
To discuss the population of uninsured Vermonters, we must first look at all of the
insurance options available to Vermonters and look at the population that is insured. The three
major private health insurance companies are Blue Cross Blue Shield (BCBS), MVP, and Cigna.
People can either buy private insurance directly for themselves or enroll through their employer.
Employer sponsored insurance represents the majority of private health care coverage and tends
to be chosen by the employer. Individual insurance programs tend to be much more expensive
and people can enroll as a family or as an individual.
The coverage options available within private health insurance tend to vary in title and
benefits but all tend to fall into one major category with a few plans being hybrids of the major
categories. The purpose of this description is not to list all the plans available in Vermont, but to
give an understanding of the major types of plans offered.8 The categories are Health Savings
Accounts (HSA), Health Maintenance Organizations (HMO), Preferred Provider Organization
(PPO), Point of Service (POS), and High Deductible (HD). An HSA is an account people can put
money into before taxes are taken out that can be spent on health related expenses and reduce
taxable income. An HMO, a PPO, and a POS are all networks of providers that are covered by
the insurance company that allow varying degrees of choice and freedom within this network.
The insurer limits coverage to this preferred network and puts most or all of the cost of out-ofnetwork care on the individual. HD plans charge low premiums to enroll in the plan and leave
the individual liable for the cost of care up to a predetermined amount called a deductible
(generally several thousand dollars) before the insurance company begins to pay for care. For
the purpose of this study, the focus being on the cracks in coverage, we will focus mostly on
people not enrolled in these programs. However, programs that offer coverage, but still involve
high risk for patients and high out-of-pocket expenses will be discussed in detail.
Beyond these categories, there is a wide range of public programs that administer health
insurance to Vermonters not enrolled in private insurance. It is difficult to understand all of the
various state and federal programs, but the following will serve as a basic primer for the public
7
programs currently available. State health insurance programs are grouped into an overarching
organization called Green Mountain Care and include Vermont Health Access Program (VHAP),
Dr. Dynosaur, Medicaid, Catamount, as well as pharmaceutical programs VScript and VPharm.
VHAP offers coverage to low income uninsured Vermonters with an income less than 185% of
the Federal Poverty Level (FPL) either free of charge or on a sliding premium scale. Dr.
Dynosaur is a state program that provides comprehensive health insurance to children up to 18
years old with parents earning up to 300% FPL on a sliding premium scale as well as pregnant
women for the length of their pregnancy. Medicaid is a state administered program insuring
children up to age 21 and disabled adults who either can’t work or earn less than 250% FPL.
Catamount is a state program administered by Blue Cross Blue Shield (BCBS) and MVP in
which the state subsidizes insurance premiums for low income Vermonters earning up to
300%FPL. People can enroll in Catamount at any income, but must pay the full cost of the
program if their income is more than 300% FPL. To qualify for Catamount, people must be
uninsured for at least 12 months, have recently lost insurance, or have an individual plan with a
deductible of at least $7,500 for an individual or $15,000 for a family. Along side Catamount is
Employer Sponsored Insurance Assistance (ESIA) that subsidizes premiums for people with jobs
that offer health insurance coverage and are low income. Vscript and VPharm both cover
pharmaceuticals for qualifying individuals earning less than 225% FPL. The two federal health
insurance programs available to Vermonters are Medicare, which covers elderly people over 64
years old and military insurance, which covers active and retired members of the military and
their families.
As stated above, the state programs base their qualifications for enrollment on the Federal
Poverty Level. The FPL is based on income and household size and does not take into account
debt or assets. Medicaid is the only state program that takes assets into account for enrollment.
The monthly income guidelines for the FPL in Vermont are listed below.
% of FPL
Monthly Income
Federal Poverty Level (FPL) Guidelines for 2009 9
Household Size
1
2
3
4
5
6
7
8
100%
906
1,220
1,533
1,846
2,160
2,473
2,786
3,100
185%*
1,676
2,256
2,836
3,415
3,995
4,575
5,154
5,734
200%
1,812
2,439
3,065
3,692
4,319
4,945
5,572
6,199
300%**
2,718
3,658
4,598
5,538
6,478
7,418
8,358
9,298
400%
3,624
4,877
6,130
7,384
8,637
9,890
11,144
12,397
*Cutoff for VHAP
**Cutoff for Catamount subsidized premiums and Employer Sponsored Insurance Assistance
See
table below for Federal Poverty Level Guidelines for 2009
8
Who’s In? The Insured
The majority of Vermonters have health insurance that they enroll in through their
employer. Of the 57.2% (355,358) of Vermonters covered primarily through private insurance,
91.5% of these people were covered through their employer. About two thirds of people that
have access to employer sponsored insurance (ESI) chose to enroll. For people with access to
ESI who did not enroll the most common reason for not enrolling was cost-- the premiums were
too high. Only 6.2% of Vermonters paid for health insurance directly without going through an
employer. This is logical since private insurance without employer contribution or without a
group plan that can spread risk is the most expensive form of insurance available. Read “A Bad
Deal” (below) for an analysis of non-group insurance in Vermont.
Out of all adult Vermonters there were 17.6% (109,353) who had Medicaid as their
primary insurance, 15.3% (95,182) who were covered by Medicare, and 2.2% were primarily
covered by military insurance. Many people are dual enrolled in more than one insurance plan
that they qualify for. A state health insurance program called Catamount Health initiated in 2006
in collaboration with MVP and Blue Cross Blue Shield provides subsidized insurance to the
uninsured had 8,405 enrollees in 2009. This includes VHAP, Catamount, and Dr. Dynosaur
.
Who’s Out: The Uninsured
The number of uninsured Vermonters changes depending on which source you consult.
The most recent study by BISHCA estimates that 47,460 Vermonters were uninsured in 2009,
which is negligibly higher than in 2008 when 47,286 were uninsured. The percentage of
uninsured for 2008 and 2009 remained unchanged at 7.6%.10 The United States Census Bureau
produces a Current Population Survey (CPS) which involves an annual national survey of health
insurance status, which can be broken down by state. The most recent CPS is for 2008 and
estimates that 57,000 Vermonters were uninsured in that year. The Kaiser Family Foundation, a
non-partisan research organization has estimated the current number of uninsured Vermonters
using census projections to be 62,800. There is a variation within studies in classifying people as
insured or uninsured. Some simply require that a person not be enrolled in an insurance plan,
while others consider a person uninsured if they have been uninsured at any point in the past
year. BISCHA found that nearly half of the uninsured in Vermont had lacked coverage for over
a year and more half of these people had lacked coverage for over five years. The most common
duration of being uninsured was 1-3 months at 20.6% or 9,800 people. For people who had been
recently become uninsured, the majority had previously been enrolled in employer sponsored
private coverage.11
The average uninsured Vermonter works full time (seven out of ten), works for a small
business or is self employed (two out of three), and does not get insurance coverage offered
through their employer (three out of four). Almost all uninsured Vermonters are between the
ages of 18 and 64 with less than three percent being under 18 and less than one percent being
over 64. Those aged 18-24 had the highest percentage of uninsured with the proportion
dwindling the older one gets. Uninsured Vermonters are more likely to forego recommended
care than their insured counterparts and the most common foregone care is dental. Beyond
recommended care, uninsured Vermonters also seek less care of any kind, have more difficulty
paying medical bills and are more often contacted by collection agencies about owing for unpaid
medical bills than the insured.12 The strongest indicator of being uninsured in Vermont is
income. About ten percent of people making less than 300%FPL are uninsured compared to only
about three percent of people making above 400%FPL.13
9
PERVERSE INCENTIVES
The overwhelming data showing that insured people have better health outcomes across
the board compared to uninsured people should provide a fairly large and obvious incentive to
get health insurance. If you want to protect your body and your well being-- get health insurance.
However, the market for insurance is filled with incentives that do not draw people towards
health insurance and instead coerces them to have to make difficult economic decisions that may
not be the most rational benefit for their health. These incentives will be referred to as perverse
incentives, or incentives that force people to make choices that save them money while putting
their health at risk. The incentives within a health care system or model should be geared toward
maintaining a healthy population at the lowest cost possible. Perverse incentives stand in the way
of this goal and instead force people to make choices to save themselves money. These savings
are short term and involve exposure to long term financial and health risk. Perverse incentives
are prevalent throughout the health insurance industry and are not relegated to any one group.
People with insurance face perverse incentives when choosing between the various plans offered
by private insurance companies described earlier or when they have to make harmful decisions in
order to maintain coverage. Perverse incentives have lead to a large population of underinsured
people.
Who Else is Out? The Underinsured
The term underinsured is relatively new and relatively ambiguous. It is difficult to define
and difficult to quantify. The term underinsured defines people who have health insurance, but
would be put at serious financial risk if faced with a significant medical event. The reason the
term exists is because insurance firms will only cover certain maladies to a certain predefined
monetary sum. The number of people who are underinsured is difficult to quantify because most
people do not know they are underinsured until it is too late and they are faced with a serious
medical event that costs them thousands of dollars. The majority of medical bankruptcies in
which a person had insurance throughout their illness and went bankrupt were due to people
being underinsured.14
One way of defining the underinsured is to look at the maximum out of pocket expense
for an insurance policy and compare it to income. If the out of pocket expense or deductible is
higher than a reasonable percentage of income that can be put toward medical costs (or
disposable income) then the person is underinsured. A study by Cathy Schoen et al. published in
Health Affairs in June 2008 defined underinsured as facing out-of-pocket medical expenses of
10% or more of income for people over 200% FPL or 5% or more for people under 200%FPL or
a deductible equal or more than 5% of income. The out-of-pocket threshold definition is the
most commonly used among national studies. The deductible threshold measures potential risk
instead of elapsed risk meaning that you can tell who’s underinsured before they get sick rather
than only after. Schoen’s study compared underinsurance from 2003 to 2007 and found that the
number of non-elderly adults that were adequately insured declined from 65% in 2003 to 58% in
2007. This means 42% of Americans, 75 million people, were either uninsured or underinsured
in 2007. This affects low income people (<200%FPL) much more than high income people with
72% of 18 to 64 year old people in low income households with no or inadequate insurance
compared 27% of high income.
It is clear why the quality of insurance that people buy is dwindling as the average health
insurance premiums have risen far faster than wages, rising 91% from 2000 to 2007 compared to
10
wages at only 24%.15 This leads people to buy high deductible plans, which are euphemistically
referred to as cost sharing plans. Cost sharing is effective at getting patients to reduce the amount
of care they receive, however the care reduced is not limited to erroneous care and can often lead
to poor health outcomes.16
An independent study by Kenneth Thorpe published in August 2006 for the Vermont
Commission on Health Care Reform defined underinsured as people with less generous benefits
than a predefined level set as a benchmark for a single payer system. This benchmark was set
using the average plan offered on the free market as a guide. With this definition, Thorpe placed
the number of underinsured Vermonters at 180,000 or nearly a third of the whole state
population.17
The state of Vermont attempted to target underinsured Vermonters by allowing people
with high deductible insurance plans with deductibles over $7,500 for individuals and $15,000
for families to skip the 12 month wait to enroll in Catamount Care and enroll immediately.
However, many people still remain in high deductible plans with high maximum out of pocket
expenses. The incentive for these programs is that they are inexpensive as long as you don’t
actually need medical care. High deductible plans are attractive because of their low premiums.
Primary care physician, Dr. Marvin Malek, describes the incentives behind buying high
deductible plans and why they are so prevalent. “When you have crappy coverage competing
with good coverage in an open market, crappy coverage wins. It’s cheaper because you would
only buy this policy if you think you’re healthy and you avoid going to the doctor. Sick people,
who use exponentially more care than healthy people, won’t buy this plan- they’ll want to buy a
plan with more coverage, which will either be very expensive or it won’t exist because the risk
isn’t spread around.” The idea of spreading risk was discussed above in describing the reason
that insurance is necessary within a population. High deductible insurance, according to Malek,
allows insurance companies to cherry pick healthy people out of the system and provide
coverage to them at little to no cost to the company since they aren’t liable until after the
deductible. This creates a huge profit for insurance companies and shifts the burden of covering
sick people to public programs or, if employed, to plans that can shift risk around a pool and
allow the companies to set premiums based on risk level, or likelihood of expensive maladies.
Long time family doctor and health care advocate, Deb Richter, points out that high
deductible plans provide perverse incentives for people to avoid necessary care and receive
unnecessary care. The problem, she claims, is that people have to pay thousands of dollars for
both premium and deductible before the insurance company will pay for any of their care. They
avoid getting care that will cost out of pocket, especially preventative care which yields little in
short term consequences but is essential in preventing major medical events. Richter claims her
patients refuse to get recommended care that will cost them out of pocket money until they reach
their deductible and after they reach their deductible they’ll opt for every procedure and test
available. “I have one lady with family history of colon cancer. Her deductible is $8,000. She
needs a colonoscopy, but she’s not going to get it done. The procedure costs $3,000. If they canthey avoid preventative care. This is how it mostly is for mammograms, colonoscopies, pap
smears, blood work, and routine physicals. They avoid these until they end up in an ER and then
there’s no negotiating.”18 Preventative and primary care are what suffers-- the things that are
generally cheap to provide and yield long term benefits. Expensive hospital care and highly
technical care is incentivized.
Richter saw very little distinction between the uninsured and underinsured. She claimed,
“If you have to pay a premium every month and then another $5,000 or $10,000 for a deductible,
11
you’re uninsured up to that amount. You may spend $15,000 on health care until your insurance
kicks in. Most people never catch up to their deductible because it resets each year. You’re
paying thousands of dollars and not getting anything from the insurance company.”
Getting by: The Uninsured
The issue of avoiding preventative care is not unique to the underinsured. It affects the
uninsured to an equal or greater extent because people have no safety net and must choose care
they can afford or choose to enter into debt to pay for medical care. Primary care physician, Dr.
Marvin Malek, makes the point that a lack of health insurance forces patients to avoid
preventative care because of financial barriers. Malek described a case in which a patient with
diabetes, a condition that can lead to blindness if left unchecked, refused to get an eye screening
because he was uninsured. After three years of foregoing the prescribed annual eye screening,
the patient got the eye screening and he was deemed healthy. Malek claimed, “The patient called
me cursing me and screaming about how I forced him to get this test done that was unnecessary
because it only proved that he was healthy. Everyone with his condition with insurance would’ve
gotten this test. If his conditioned worsened and it went unchecked he could’ve ended up blind.
However, it’s my fault that he had to spend a few hundred dollars out of pocket for the test.”19
A major perverse incentive that has been repeated throughout the interviewing process by
uninsured Vermonters is the connection between insurance status and employment or marital
status. This creates an incentive for workers to stay in a bad job to maintain health benefits and a
disincentive for entrepreneurs to break away and start businesses and risk losing insurance.
This connection creates a perverse incentive to stay in a bad relationship in order to keep health
insurance. The Vermont Workers Center published a story from an anonymous Vermonter who
personified this harsh reality. “My father was an abusive alcoholic. My father would constantly
threaten my mother that without him and his health insurance she would never be able to make it
on her own. She would never be able to afford health insurance on her own. The fear of not
having health care prevents us [from having] the freedom to make choices.”20
INTERVIEWS WITH THE UNINSURED: FOUR PROFILES
The following interviews were conducted by the researcher with uninsured Vermonters
willing to tell their stories. Participants responded to advertisements put up in doctors’ offices,
clinics, and public areas throughout Vermont. The interviews are not meant to produce a
quantitative picture of what health insurance in Vermont is like nor are they meant to statistically
represent the uninsured population generated by randomized selection. For this, the most recent
BISHCA study is more than adequate. These interviews are meant to provide a qualitative, real
life story of a crack in the patchwork in which a person or a family is left without coverage due
to the way the current system is set up. The names have been changed, but all other aspects of
the interview remains unchanged. For a copy of the release form and the questions asked please
see appendix 1.1. All interviews were done in person and recorded. No financial incentives were
provided.

For more stories from uninsured Vermonters see Voices of the Vermont Healthcare Crisis: The
Human Right to Healthcare by the Vermont Workers Center and The Health Care Crisis: Letters
from Vermont and America by United States Senator Bernie Sanders.
12
Melanie, South Burlington
A real life example of perverse incentives in linking health insurance to employment is
from Melanie (not real name) in South Burlington. Melanie, a 42 year old mother of two, left her
full-time job eight years ago to work part time and spend time with her young children choosing
to raise them herself rather than pay for child care. When she left her job, she lost her insurance
and has been uninsured ever since. “I was penalized for being a full time mom and wanting to
raise my kids instead of working and paying someone else to do it… I plan on going back to
work full time when my kids get older, but in the mean time I’m uninsured and at risk. ” This
case is representative of a major crack in the insurance patchwork that public programs have
attempted to fill. Melanie qualifies for Catamount Care but claims she can’t afford the
premiums, which are based on her household income including her partner’s salary despite the
fact that she doesn’t qualify to be on her partner’s insurance. “They only look at income and
household size. They don’t take into account student loans, car loans, mortgage, etc.” Her
children are covered under Dr. Dynosaur.
Melanie also is representative of the coverage gaps in the state program that she qualified
for. Catamount care does not cover dental or eye care for people enrolled. Because of Melanie’s
gross household income, her premiums would be $150/mo plus a maximum $800 annual out-ofpocket expense. Melanie’s primary health care needs are contact lens and dental care. For her,
this premium was out of reach and furthermore made it more difficult to pay for the care she
needed, like dental surgery. “Why would I put $2000 into the hands of an insurance company
and then still have to spend thousands more on the care I need?”
Melanie claims she has not seen a doctor for any preventative care or screening since
becoming uninsured eight years ago. She has never received a mammogram or any routine
checkups that are advised for a woman her age. She claimed, “The care they cover isn’t the care
that I need. Yes, I want screenings and physicals and all that, but more importantly I needed a
serious dental procedure and it wasn’t covered by any insurance plan. After waiting years to get
the procedure, I finally did and had to use the only safety net and nest egg I had- a $10,000
inheritance from my parents. I now have no real safety net. It wiped out my savings.” Dr.
Dynosaur covers dental and eye care as well as all other care her children could need. Melanie
was grateful that a program like this exists for children, but can’t understand why the same rules
don’t apply to adults. She wondered why there was a double standard in place based solely on
age. Melanie exclaimed her disillusionment with the limits in coverage for Catamount, “Why
isn’t your mouth considered part of your body? How can they think if you can’t chew, you can
live a healthy life? If you can’t see, can you live a healthy life?”
Jane, Plainfield
Jane is a 49 year old mother of two living in Plainfield, Vermont. She has been
unemployed since being laid off eleven months ago and has been receiving unemployment
benefits since her severance package ended two months ago. She lost her health insurance when
she lost her job at a school supervisory union and has been actively trying to enroll in a state
program. Private insurance would cost hundreds of dollars a month and this is out of reach. She
qualifies for VHAP at a subsidized monthly rate of $75 a month and claims she could afford that.
However, she claims that despite qualifying for the program she hasn’t been able to get through
the red tape to enroll. “The system is so complicated! They want dozens of forms and
paperwork- I can’t get through it all. I was rejected because my fuel assistance form and
unemployment form didn’t match. I fixed it and have tried to reapply and I can’t get through.”
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Jane is representative of a large group of people who qualify for a state program, but have failed
to enroll. Her children are on Dr. Dynosaur and she claims to have no problem with the way that
program works.
The longer Jane waits to get into the program, the worse it gets for her both financially
and physically. “I spend $200 a month on medication for a heart condition. I’ve been cutting my
prescriptions in half to save money. I only take half of the prescribed dose so I don’t have to get
my prescription filled as often. I’m trying save money any way I can, but I’m getting nickled and
dimed.” Jane questions why she is in the predicament she is in despite programs in place for
people like her. “Why can’t it be simpler? If you qualify- you should get in. I feel at risk. What if
I get a major illness or something?”
Doris, Barre
For some people, even the subsidized health insurance premiums offered by public
programs are still too far out of reach. Doris, a sixty year old woman living in Barre, Vermont,
was laid off from her job in a college admissions office sixteen months ago. She has been
uninsured for 14 months and is on unemployment. Doris lives on about $16,000 per year from
unemployment and has begun taking in renters in her home to help pay her mortgage. Doris
qualifies for Catamount Care at the lowest reduced rate of $60 a month, but claims that even this
amount is out of reach because of her high mortgage costs on her home. Doris ran into some
tough times from a lawsuit when she was a licensed therapist about seven years ago that wiped
out all her savings. She took out a home equity loan with a variable interest rate that has risen
steadily over the years. Her mortgage now takes up more than 60% of her income. “I can’t afford
a car or car insurance. I’m trying to find a job, but it’s tough without transportation. As it is all
my money either goes to bills or groceries.” The problem is that Catamount does not calculate
Doris’s disposable income or liquid assets. All that Catamount considers is income and
household size. However, because of Doris’s extremely high mortgage and low income, even the
reduced rate for Catamount is out of reach. She claims, “For me, it would be between health
insurance and groceries. I want health insurance, but I can’t not eat or not pay my bills.” She is
just getting by and the added stress of being uninsured is taking its toll.
Doris got knee replacement surgery over a year ago when she was insured through her
previous employer. She’s had to forego prescribed x-rays on her knees and hasn’t had a checkup
since becoming uninsured. For her asthma, Doris goes to the free clinic, but avoids hospitals and
doctors’ offices out of fear of a high bill she won’t be able to pay. Doris wants health insurance
and she hopes to be able to pay for it with an income she earns when she finds a job, but times
are tough. Until then she’s crossing her fingers things don’t get worse.
Stephanie, White River Junction
Not all of the uninsured are low income or unemployed. A large segment of the uninsured
population is working people who don’t get insurance through an employer or are self-employed.
Stephanie is a fifty year old woman living in White River Junction, Vermont. She owns a
construction business with her husband and earns a combined household income of about
$100,000. She has been uninsured since she and her husband cancelled their Blue Cross Blue
Shield plan six months ago. She claimed that the business could not justify the expense because
the cost of the plan was too high and the coverage was too low. “We were paying $750 a month
with a $5000 deductible. This didn’t even cover the asthma medication my husband takes
which we spend $250 a month out-of-pocket for and the combined $2400 we spent in 2009
14
for dental care.” Some quick back-of-the-envelope math shows that for premium,
deductible, and paying for dental and asthma meds, Stephanie and her husband could
spend just under $20,000 per year for health care without a dollar spent by Blue Cross
Blue Shield. This is despite being in relatively good health and insured. The insurance company
didn’t have to spend any money on care for the couple until after they maxed out their deductible
and only then on care they deemed worth covering.
As a business, choosing to cancel their insurance was a big decision. “We couldn’t
afford to pay our bills on time and our insurance. We’re not poor, but the cost felt like a
black hole where we put our money and got nothing for it. We’d rather be uninsured than
bankrupt.” Stephanie is very disillusioned with the American health insurance system after
living for years in France and utilizing the French health insurance system. She didn’t know why
the United States couldn’t adopt a similar system in which people paid for the care they used and
didn’t have to worry about losing everything because of medical bills. Her husband has been
insured in the United States for over thirty years and been relatively healthy. He estimated that
he’s spent hundreds of thousands of dollars on health insurance for himself and his family and
not come anywhere close to breaking even in terms of the amount the insurance company has
had to pay for his health care. He represents an interesting detail in the insurance model
described earlier, which is that health insurance is only beneficial while you are enrolled
and really only for the year you are enrolled. If you pay premiums for decades and never
use care and then miss a few months and lose coverage, there is no protection or reciprocity
from the insurance company. Stephanie is optimistic about being uninsured, but is watching
legislative changes closely for a change that would benefit her family and her business. “We eat
well and stay healthy. We put our faith in God.”
BAND AIDS ON BULLET WOUNDS: WHAT’S LACKING IN PUBLIC PLANS
There will always be a debate surrounding the justification for and efficacy of public
programs put in place by governments to help their citizens. The debate surrounding healthcare
has been exceptionally brutal over the past couple years as reform has been considered both on a
state and federal level. There is a wide spectrum of opinions surrounding how health insurance
should be organized within society. It ranges from the free market approach-- all public
programs are an encroachment on and a hindrance to private enterprise-- to the single payer
approach-- all private insurance companies are unnecessary and inefficient and should be
replaced by a single tax funded insurer. Of course there are a huge number of opinions within
these two placeholders. Regardless of where one falls within this spectrum, public programs
exist within Vermont and seem to be here to stay. Their mission is to reduce the number of
uninsured Vermonters and including state and federal programs they insure 35.2% of
Vermonters or about 220,000 people.21
If we accept that public insurance plans are here to stay and their goals is to efficiently
enroll as many uninsured people as possible, then we can analyze the way in which the programs
are set up and look at the weaknesses and strengths of the patchwork. A daunting figure to keep
in mind throughout is that in 2009, more than 23,200 people or 53% of uninsured adults aged 1864 met eligibility requirements, but were not enrolled in Green Mountain Care, which includes
Medicaid, VHAP, and Catamount Health and Dr. Dynosaur. Among children, 76.9% or 2,718 of
uninsured children aged 0 to 17 met eligibility requirements for Medicaid or Dr. Dynosaur, but
were not enrolled. That means that if all the people who qualified were to enroll, the number of
uninsured Vermonters would instantly be cut by more than half without any legislative changes.
15
However, to understand why these people are not enrolled one needs to take a look at what is
holding people back.
Cost
When the BISCHA study asked residents about the main reason they were uninsured,
“61.1% indicated cost was the only reason they lacked coverage.”22 Other reasons included
28.1% who could no longer afford premiums for employer sponsored insurance, 23.4% who’d
lost a job and 14.8% whose employer stopped offering health insurance. When I conducted
interviews among uninsured Vermonters, cost was the overwhelming reason I received for being
uninsured. The best indicator for insurance status was income. For families earning less than
200% of the FPL, 13% are uninsured and for families earning over 400% of the FPL, 3.2% are
uninsured. Despite the existence of public programs for low income families, low income
households are much less likely to have health insurance.
One issue relating the high cost of insurance and the large population of people who
qualify and are not enrolled is the way in which Green Mountain Care determines premiums.
Premiums are to be set on a sliding scale based on income and household size. There is no asset
test for state programs. What isn’t calculated is disposable income, or the amount people have to
spend once things like taxes, mortgage, loans, etc are paid. This means that people get put into
brackets for premiums that are subsidized but that they still can’t afford. An apt metaphor is
giving a ten foot rope to people in a thirty foot hole.
According to Peter Sterling, Executive Director for the Vermont Campaign for Health
Care Security, an organization dedicated to enrolling Vermonters in Green Mountain Care and
raising advocacy on health care issues throughout Vermont, the biggest barrier for people is cost.
Sterling asserts that “Catamount is still a way better deal than anything offered by private
insurers. You simply can’t get a plan with this low of a premium and deductible. But it’s still
rising too fast and it’s too far out of reach for people. Premiums need to be cut in half.” The cost
is simply out of reach for a lot of people who qualify for the program, want to be on it, but can’t
afford it. The goal is to make it affordable and it’s coming up short.
The full cost of Catamount Health is $442/mo, which is what anyone earning over 300%
FPL would pay, but when the program was initially proposed in 2006 the full cost was estimated
at about $340/mo. This creates a large budget problem for the state since the state is subsidizing
the low income enrollees up to the full cost of the program. In other words, if a low income
family of two earns a gross monthly household income of $2,439 (200%FPL) then they would
pay $120 each month for both to be enrolled in Catamount. The state would then have to pay
$764 to the private insurance company to subsidize this low rate up to the full cost of the
program which would be $884 for both together. The state is getting a bad deal by putting a
private insurer in charge of the program since they have to pay for the full cost of the insurance
plan regardless of whether the individual uses the care. If the total cost is less than the number of
people multiplied by $442/mo then the private insurance company keeps the surplus as profit. If
the total cost is more than the amount charged, then the private insurance company can petition
BISHCA to increase the full cost from $442 to a higher sum. The state loses either way and the
private insurance can’t lose. The insurance company is getting customers who by definition can’t
afford their product and can control the market by leveraging their non-public programs against
their public programs. This puts the private insurance company in a predatory position to
increase cost as much as possible as much as they can get for each program administered. The
individuals enrolled get the benefit of health insurance coverage that they wouldn’t otherwise
16
have, but the cost of administrating this coverage is higher than it would be without the insurance
company’s monopoly position.
Coverage
As the interviewed uninsured Vermonters and BISCHA data pointed out, cost is a huge
problem with state programs, but coverage is also a major point of contention. The lack of dental
coverage is the biggest complaint of enrollees in Catamount and dental work is also the most
common prescribed medical procedure to be foregone because of cost.23 Peter Sterling argues
that the marketing surrounding Green Mountain Care could use improvement. “The literature
makes it sound like you’re an exception if you qualify.” According to Sterling, it should say that
if you fall inside the guidelines-- we want you to sign up. The goal is to get people signed up.
It’s apparent that getting through the paperwork can be difficult as Stephanie from Plainfield
explained. When signing her children up for Dr. Dynosaur, Melanie from South Burlington had
similar sentiments. “I get letters saying I haven’t paid and the coverage will lapse even though I
paid on time. I call up and they apologize. It’s happened more than couple times. It’s not a huge
deal for me- just a little stressful- but imagine if my English wasn’t great or I didn’t know better
and my child was sick?”
Precarious
If we take the starting point that the goal of the health care system should be to maintain a
happy and healthy population, then the trends surrounding insurance coverage should be seen as
troubling. The upward trend in cost sharing inflicts financial stress on lower and middle class
families. Merely having health insurance does not seem to be adequate protection from stress
caused by expensive bills and uncertain coverage. In 2009, 15.3% of people with state insurance
were concerned about losing coverage in next 12 months.24 Among the general population of
insured Vermonters, 12% (68,904) were concerned that they might lose insurance coverage in
the next 12 months.25 Spending on health care has risen steadily over the years. Annual out of
pocket expenses were over $1,000 for 66.4% of residents in 2009, up from 61.3% in 2008. A
quarter of Vermonters had trouble paying medical bills and one in six reported getting calls from
collection agencies. One in ten people avoided dental care in 2009 because they could not afford
it.
What’s at Stake: It’s not just about insurance status
The mere existence of inadequate insurance can cause serious stress for people who have
insurance but are unsure of the services covered by their specific plan. Knowing that insurance
companies can decide between what they will cover and how much of the cost will be put on the
individual makes it important for people to fully understand their coverage. However this is
difficult as many insurance contracts can include several pages of fine print. As people may
change insurance plans and change jobs at fairly rapid rate, the likeliness that people study their
changing coverage is small. It is even more unlikely when you consider that at the time of
signing onto an insurance plan, a person is most likely generally healthy and may not foresee the
need to confirm coverage of a possible future malady until they are already sick.
A true story exemplifying this stress can serve as an example for the reality that many
people face. Dan is a young recent college graduate living on very low wages earned through his
job in the AmeriCorps. Dan has health insurance through his job, but as a physically fit healthy
young guy, he never thought he’d have to use it besides getting a physical and thus didn’t read
his insurance plan very closely. One night while riding his bicycle home, Dan fell on black ice
17
and broke two bones in his leg. He was taken to the hospital with his foot facing the wrong
direction. Immediately, Dan’s health insurance became crucial and he feared the worst about his
coverage. In the emergency room he tried to convince nurses and doctors to only do the least
amount of care necessary so that he would not be put into massive debt paying for the care
required to treat his badly broken leg. Dan’s story is representative of the numerous people with
no coverage, bad coverage, or questionable coverage who are faced with unnecessary terror
when faced with a major accident or illness. Fortunately Dan’s story ended well with his
insurance paying for the majority of care leaving him with just a co-pay and deductible
payment.26 Many others are not as lucky.
For the people falling through the cracks in the health insurance patchwork, the problem
is not relegated to simply becoming and staying insured. The negative financial outcomes
associated with the current health insurance system can be dire and their prevalence is growing
rapidly. Researchers at Harvard University, Harvard Medical School, and Ohio University
published a study in the American Journal of Medicine in 2009 on medical bankruptcy in the
United States using data from 2007. They found that 62.1% of all bankruptcies were caused my
illness or medical bills. The number of medical bankruptcies increased 22.9% from 2001 to
2007. It’s important to note that financial problems from medical bills are not just for the poor or
uninsured. Three quarters of people who filed medical bankruptcies had insurance at the onset of
their illness and 60% had continuous coverage. The average person who filed medical
bankruptcies was middle class, owned a home, and was college educated. In 2007, an American
family filed bankruptcy due to illness every 90 seconds. These statistics are from before the
economic downturn in the United States and the number of bankruptcies has increased
dramatically. More than five thousand families filed bankruptcy every business day in May of
2009.27
A BAD DEAL: BUYING PRIVATE INSURANCE
If you were to remove public insurance options and solely consider the private market for
insurance, you would be very limited in your options for choosing a plan. Most people get
insurance through their employer and thus have very little say in which insurance company they
enroll in. However, 72.4% of uninsured adults were employed in 2009 and in that group, 71.2%
worked more than 35 hours per week. Only 31.5% of employed uninsured Vermonters were
offered some type of health insurance.28 The majority of Vermonters who are uninsured don’t
get insurance through their employer and for those who do get it offered and don’t enroll, the
most common reason for not enrolling is high cost.29 This means that people must either enroll
in an individual plan or public plan. Setting aside public plans discussed above, let’s consider the
market for individual insurance plans.
As described earlier, buying individual insurance is generally more costly and less
common than getting insurance through an employer. This is because employer based insurance
programs have a large pool in which risk can be spread around. Individual plans place the whole
burden of coverage on a family or single person. The difficulty within individual plans is that
you can spend thousands and thousands of dollars on care before the insurance company has to
spend anything. This is because the most common plan bought by non-group policy holders is a
high deductible plan, which means that there is a low up front cost, but high out-of-pocket
expense if you get sick.
If the high overall cost of the plan wasn’t bad enough for individuals, nationally
individual plans are facing the highest premium increases of any other group according to a
18
study published in June 2010 by the Kaiser Family Foundation. The average deductible is four
times higher than employer sponsored coverage. Those who purchase their own coverage have
much higher concerns about their coverage with higher frequency of a lack in confidence in their
ability to pay medical bills. This fear may be well founded as those with individual coverage are
more likely to have a problem paying a bill.
Cost-Benefit
So if buying your own insurance is so expensive, why do people do it? The short answer
is that buying your own insurance is still better, although marginally, than being uninsured.
Remember earlier that the opposite question was posed- if the health outcomes associated with
being uninsured is so bad, why is there a population of uninsured Vermonters? The bad health
outcomes associated with being uninsured as explained earlier are pretty grim and include things
like being more likely to die sooner and suffer more from illnesses that could’ve been avoided by
preventative care. If one places their health above all other priorities, then getting health
insurance is worthwhile at any cost. However, one still needs to be able to afford basic
necessities like food, clothing, shelter, etc.
If you were to consider the cost a person would face for some common maladies in
contrast to what people pay in insurance premiums, it takes very little for medical costs to
skyrocket past premiums and deductibles. The price people pay for care can vary a great deal
and nationally, ‘self-pay people’, including the uninsured, are often charged 2.5 times more than
private and public insurance programs.30 For a relatively healthy person just getting routine
exams, blood work, and immunizations one can expect about $500 a year cost annually
according to primary care physician, Deb Richter. However, once a person gets sick in any
significant way, costs begin to skyrocket past the limits of deductibles and premiums. The
problem with this is that deductibles reset annually and, as stated earlier, we know that people
will eventually get sick we just don’t know when, who, and with what.
So even if someone wanted to do a back of the envelope cost analysis with the thought“I take care of my body, I’m healthy. I exercise; I can save thousands of dollars by dropping
health insurance--” they would be right as long as they never needed care. However, even the
most basic of procedures can put a person well into debt. Michael Moore in his movie, Sicko,
showed how an amputated finger can cost $12,000 to fix.31 An appendectomy can cost over
$40,000. A broken leg can cost double. Any major medical event involving hospital overnight
stay or long term care can add zeroes onto this figure.32
Buying individual insurance is a bad deal in that it offers little coverage for a high cost in
comparison to employer sponsored plan or a state run plan. However, when compared to the
potential loss of a major or even minor medical event, buying individual insurance is a necessary
expense. Peter Sterling asserts, “People aren’t gaming it. They would rather be insured and if
they can afford it, they buy it. For some people it’s out of reach.” Marvin Malek agrees, “There
may be a population of people for whom buying insurance wouldn’t be a big expense and still
they choose not to- maybe a tenth of a percent. If they exist, I’ve never met one.” The American
Journal of Medicine study on medical bankruptcy only found 0.3% of the uninsured went
without coverage voluntarily, because they thought they didn’t need it.33
FREE CLINICS AND FQHC’s
In continuing with the theme of what the world looks like from the view of the people
who fall through the cracks of the insurance patchwork, it is important to consider where
19
Vermonters can go to get care. As stated earlier, uninsured people on average receive less care
overall and receive less preventative care than people with insurance. People without insurance
are less likely to have a regular source of care of a primary care physician. Underinsured people
tend to avoid getting care until their deductible is reached. When an uninsured or inadequately
insured person does need to get care, where do they go?
There are four basic options a person has when in need of care including a primary care
physician (or family doctor), an emergency room, a free clinic, or a Community Health Center
also known as Federally Qualified Community Health Center (FQHC). Since the uninsured do
not have a third party (like an insurance company) to pay the bill or to dictate where they can go
for care, people must first choose their health care provider and then pay out of pocket for care.
Each provider type offers a different type of care and provides a distinct societal need and vary
in organizational structure, services offered, and reimbursement type.
The most well known care provider for the uninsured is the emergency room (ER).
Emergency rooms are limited to major hospitals, but have the benefit of being required to
provide care.34 Emergency rooms exist to provide acute, urgent, tertiary care to the general
population, however for uninsured people who may not have a primary care physician;
emergency rooms are attractive sources of care for all maladies urgent and nonurgent. Using
emergency rooms for nonurgent care is extremely costly in comparison to a primary care
doctor’s visit or a community health center; however for the patient emergency room care may
be less expensive since they may not pay for the care they receive. For nonurgent care,
community health centers are much more effective and efficient and can provide long term care
as opposed to merely episodic care offered in emergency rooms.
Community health centers began during the Johnson administration in 1965 and predate
both Medicare and Medicaid. Their purpose is to provide high quality primary care to people in
underserved areas regardless of their ability to pay. This means that they will provide care to
anyone who walks in regardless of insurance status, income, or any other criteria. The number
of community health centers has expanded to over 20,000 in the United States, 8 of which are in
Vermont. Community health centers can operate more efficiently through paying the least
amount for pharmaceuticals possible thanks to government regulation and by utilizing federal
grants set up to enable them to offer a sliding scale pay system based on income and household
size.
Community health centers are essential to reduce unnecessary care and in providing
quality comprehensive care. They match patients with primary care doctors that they keep to
provide long term care rather than episodic care. Patients receive preventative care and can
avoid hospital visits for nonurgent care. The cost of treating a patient for a year at a community
health center is less than the cost of one ER visit.35 One third of emergency visits could’ve been
served by community health centers totaling over $18 billion in wasted spending. The people
that tend to get unnecessary emergency room care tend to be low income and/or uninsured and
could be served by community health centers.
The other sources of care for uninsured and underserved people are private doctors and
clinics for the uninsured (free clinic). Private Doctors do not operate within a set framework for
processing and seeing patients. Each one is different and they can charge people out of pocket
and choose which patients they’ll see at their own discretion. For people who can’t afford to pay
a private doctor and either choose not to or are unable to go to a community health center, there
are free clinics. There are ten free medical clinics and two dental clinics in Vermont that make
up the Vermont Coalition of Clinics for the Uninsured (VCCU). Clinics for the uninsured are
20
drastically different in their organization than community health centers. Free clinics coordinate
care for uninsured people with doctors willing to work on a volunteer, pro bono basis. Patients
served are low income (earning less than 300% FPL), uninsured or inadequately insured, and
claim to be unable to afford other sources of care. Free clinics are funded by monetary and
pharmaceutical donations, public and private grants, and donated physician time.36 Care is
provided free of charge although patients are encouraged to donate what they can for care they
receive.37 Patients are screened for eligibility in public insurance plans and assisted by a case
manager to help organize their care, get referrals for specialty care, and enroll in Green Mountain
Care. In 2008 the VCCU served 6,188 patients, three quarters of which claimed they would have
delayed care if not for the VCCU services because they could not afford care.38
MOVING FORWARD: FEDERAL LEGISLATION
This paper is written in the wake of one of the largest reforms in health care in American
history. The Patient Protection and Affordable Care Act (P.L. 111-148) was signed into law by
President Barack Obama on March 23, 2010. The law was passed after several months of heated
debate and is several hundred pages long in its final form. The goal of this section is not to
describe all of the details of the legislation in its entirety, but rather to give a very basic summary
of the law and to take a look at the effect it will have on those currently falling through the
cracks in Vermont. The actual interpretation and effect of the law may vary greatly over the
course of its four year implementation period and will be largely affected by reform at the state
level.
The hundreds of pages making up the Patient Protection and Affordable Care Act
(PPAC) contain a multitude of policy changes that will take effect over the next four years. The
primary change made by the legislation is the creation of a health insurance mandate that will
require American citizens to have health insurance or pay a fee that will rise annually.
Employers will also be assigned a fee for not offering health insurance to their employees. To
pay for this, employers and individuals will be given tax credits and premium subsidies.
Exceptions, fee amounts, and credit amounts will be assessed based on income and household
size for individuals and number of employees for businesses. On top of this there will be
expansions in Medicaid and an exchange created in which people can buy insurance from private
firms. There will also be regulations put on private insurance firms regarding access to care.
People Currently in the Cracks
For people either without insurance or without adequate insurance in Vermont, the law
will have a large effect but perhaps not immediately. For low income people, Medicaid will be
expanded to cover anyone up to 133% FPL, but not until 2014. This means that federally funded
Medicaid may take the place of state funded VHAP. This is beneficial for people in this category
as Medicaid has more extensive benefits than VHAP, including dental. It’s unclear how the state
program will change with this change. Also beginning in 2014, insurance companies will no
longer be able to exclude or not cover patients’ ‘pre-existing conditions.’ The state of Vermont
already has legislation in place banning insurance companies from setting premium rates based
on health status or gender39. This change will benefit people who get insurance in Vermont, but
have to wait to get care for a pre-existing condition. Beginning immediately, young Vermonters
will be able to maintain dependent coverage up to the age of 26. This means that young people
can stay on their parents’ insurance for longer.
21
Throughout the course of the next four years the implementation of the mandate, subsidy
and tax credit for health insurance will take effect. Low income people in households between
133%-400%FPL will receive premium credits towards buying health insurance in an open
exchange and small businesses with less than 50 employees will be exempted from penalties
charged to employers not offering insurance benefits. These fees for businesses over 50
employees will begin in 2014. People who do not qualify for an expanded state or federal
program or for a tax or premium credit will be forced to pay the full price of enrolling in a health
insurance plan. Anyone who does not have insurance by 2014 will be charged a flat fee starting
at $95 in 2014 or 1% taxable income and rising to $695 in 2016 or 2.5% taxable income. The fee
will continue to rise with inflation. Exceptions will be granted for people for whom insurance
would cost more than 8% income, people earning below the tax filing threshold, or who are
uninsured for less than three months. Other exceptions include American Indians, religious
objections, undocumented immigrants, and incarcerated individuals. For anyone who doesn’t fall
within these exceptions, being uninsured will be a costly endeavor and thus an enticement to get
insurance.
One key expansion from the PPAC is the expanded funding for Community Health
Centers throughout the country. Funding will increase $11 billion for FQHC’s, which will
nearly double the number of people receiving primary care from community health centers by
2020 and open 7,500 new facilities nationwide. This expansion will cut $180 billion in health
care spending over the next ten years.40 In Vermont, doctors and health care advocates will need
to apply and receive this money in the form of grants to expand facilities and capacity for
Vermonters to see a difference. The biggest room for expansion in underserved areas is dental.
STATE LEGISLATION
At the time of this research, the Vermont state legislature is in summer recess and will
not resume until after elections in the fall. Governor Jim Douglas has announced his retirement
and his successor will play a vital role in the future of health reform in the state. There has been
a storied past of policy changes and legislative history that has led to the current health insurance
situation in Vermont. It is not the purpose of this section to go into great detail about how the
current system came to be or about all the possible legislative changes starting this fall and
beyond. However, there are some recent developments within the state government that will
have an effect on uninsured and underinsured Vermonters in the near future.
The Vermont state legislature has a long history of enacting health care reforms. In 1989
Medicaid was expanded to cover uninsured children and in 1995 was expanded again to cover
low-income, uninsured adults. In May of 2006, Governor Jim Douglas signed the Health Care
Affordability Acts (HCAA) into law which went into effect at the beginning of 2007. The plan
was enacted to expand access and reduce cost. It created the Catamount Health Insurance
Program and the Employer Sponsored Health Insurance Premium Assistance Program (ESIA).At
the time these laws were introduced the number of uninsured was at about 10%.41 That
proportion has been reduced to 7.6% in 2009.42
Before the state legislature left for the summer they passed health care reform bills S.88
which became law on May 12, 2010.43 The bill, now called Act 128, calls for a commission to
be hired that will create and develop health insurance reform options in a report due by the end
January 2011. The legislature can then choose one of the options to adopt into law in the spring
of 2011 or it can choose to do nothing. It is mandated that one of these options must be a Single
Payer system that would phase out private insurers and create a publicly run insurance plan that
22
all Vermonters can enroll in. Federal legislation limits what states may do on their own as far as
health insurance reform although exceptions are possible. U.S. Senator Bernie Sanders (I- VT)
has committed to gaining an exception if Vermonters pass a reform that is not strictly complicit
with federal law.44
WHAT DOES IT ALL MEAN?
A lot of statistics have been thrown around describing health care in Vermont and in the
United States to provide a picture of what currently exists regarding health insurance and access
to care. The topic of health care is as large as it is complex and this paper has only taken a small
aspect of the topic and tried to provide timely and cogent description and analysis. As the health
insurance currently exists, there are inequalities for Vermonters because of the way health
insurance is organized. The root of this problem is that the organizations and programs in place
are exclusive to serve only the people that fit into their specific guidelines or can afford their
specific product. Enrollment in insurance programs is largely dependent on income and
employment status. The dichotomy as described up to this point has been between those with
adequately insured and those without. The uninsured and underinsured make up those without
adequate insurance and left at risk. Insurance is episodic in that one is only covered while
enrolled in a program and when not enrolled, there is no reciprocity for previous enrollment.
Bankruptcy and financial ruin is the serious risk facing someone without adequate insurance in
Vermont as there is a strong medical ethic in Vermont to provide care to everyone. The cost of
this care can be crippling but less devastating than not receiving care. Perverse incentives
encourage people to make decisions that do not benefit their health or well being but incentivize
avoiding care and avoiding insurance.
To use a health care metaphor, reforms proposed up to this point have dealt with the
symptoms of the inequalities in health insurance, but have not addressed the causes of the
problems. The connection between employment, income, and insurance as well as the episodic
nature of insurance are the root causes that lead to inequality in health insurance. Each reform
has taken these aspects as a given and attempted to apply a patch to the system without dealing
with the reason a patch is needed. They are done with the idea that the fundamentals are strong
and if only a few more people were insured or if only insurance costs stopped rising so
drastically we would be okay and could deal with other things. The problem with this mentality
is there is a permanent population of people who will inevitably fall outside of adequate
protection unless the root causes are addressed. So what can be done?
WHAT NOW?
The St. Albans Messenger published an editorial on April 15, 2010 titled “Why Tinker
with Something Ranked #1?”written by the Executive Editor, Emerson Lynn.45 The article cited
the United Health Foundation and the Commonwealth Fund who both rank states by healthcare
status and both ranked Vermont number one in 2009.46 The two organizations both ranked
Vermont highest based on a variety of criteria including health outcomes, access, coverage, etc.47
The editorial went on to argue that Vermont legislators should focus on other issues since it is
already well ahead of the curve on health care.
The strides made by Vermont that have put it at the top of national rankings are truly
impressive and deserve to be lauded. However, the real issues have yet to be addressed by reform
and until they are, the system remains flawed and will continue to be flawed. More than half of
the uninsured people in Vermont currently qualify for a public insurance program and are not
23
enrolled. For people who are enrolled, the cost of maintaining coverage continues to rise for both
public and private programs at a rapid rate and the number of underinsured people remains
unchecked. Simply getting everyone enrolled in an insurance plan is not adequate protection and
decreasing the number of uninsured people is only part of the battle.
With health care reform in the spotlight for so long and so many back-and-forth battles
taking place, it is not surprising that people wish to move onto other issues. However the reforms
regarding health insurance on both state and federal levels continue to apply patches to try and
fill in gaps. The central problem that these reforms do not address is that of equality. When
people have varying levels of coverage ranging from everything to nothing, there is inherent
inequality that places higher value on the health and well being of some over others. Recall from
earlier that the justification for health insurance is that in health care it is known that a certain
number of people will get sick and it will be expensive to provide care for them, but it is
unknown who these people will be. For the people who remain in the cracks of the patchwork,
this unknown can be terrifying. Getting a horrific illness or injury is one of the worst things that
can happen to a person and the additional risk of losing one’s livelihood just to get care is
morally wrong.
Removing insurance from employment and removing inadequate insurance options need
to be the root of any proposed reform in order to really address roots of the problems described.
The delivery of medical care needs to be guaranteed for all Vermonters without the threat of
bankruptcy or financial ruin. The ban of high deductible insurance plans is an easy step in this
direction as high deductible plans offer little coverage and a high level of financial risk.
Removing high deductibles in exchange for premiums that people can’t afford is not advisable
either and thus the regulations surrounding types of insurance allowed to be offered must require
that if a person is designated as ‘insured’ then the insurance must be adequate thus removing the
existence of underinsured population. The transitory nature of the uninsured moving in between
jobs or in between public programs needs to be addressed by divorcing insurance from
employment and creating a public program on the model of inclusion rather than exclusion. This
means a single public program rather than a bunch of programs. This is both feasibly and fiscally
possible as shown by numerous studies done on Vermont healthcare.48
The health insurance patchwork that makes up the state of Vermont has evolved over
decades as have the crevices in which some people now sit who are without coverage or
inadequately covered. It will take years to reduce the inequality that has created these cracks, but
the first step towards doing so is a change in perspective. This means looking at systemic
changes that will increase equality instead of shortsighted patches to fill in the gaps. The
movement within Vermont seems to be in this direction. To reduce inequality, this is the only
step forward.
24
Appendix 1.1
INTERVIEW QUESTIONS
To be asked by the interviewer verbally
NUMBER(in lieu of name):
LOCATION:
DATE:
INFORMED CONSENT OBSTAINED:
1. Demographic questions
What is your Gender?
What is your age?
What is your race?
Are you married?
Do you have children, if so how many?
What is your gross family income? (rounded off to closest 10,000)
2. Are you currently employed? If not, for how long have you been unemployed?
3. Do you have health insurance? If no, for how long have you been uninsured?
4. Have you ever had health insurance?
5. How long have you lived in Vermont?
6. Have you ever had to use the emergency room as primary care?
7. Are you aware of the public and private health insurance options available to you?
8. Can you afford health insurance?
9. What’s keeping you from having health insurance?
10. Are you satisfied with your insurance situation?
11. What changes would you like to see made to the health care system?
12. What changes to the health care system would help you the most?
25
Appendix 2.2
CONSENT FORM FOR RESPONDENTS
For questions about this study, please contact: Josh Hoxie and/or Bill Grover
Jhoxie@smcvt.edu
Wgrover@smcvt.edu
Saint Michael’s College
Saint Michael’s College
One Winooski Park, Box 2718
One Winooski Park Box 214
Colchester, VT 05439
Colchester, VT 05439
DESCRIPTION: This interview is part of a research project designed to study health insurance
in Vermont. This will be used alongside other interviews to give a qualitative picture of the
health insurance situation facing Vermont.
RISKS AND BENEFITS: There are no significant physical or mental risks to participating in
this study. Your confidentiality will be secured by removing your name from your response and
identifying you simply by your town. The benefits of your participation are that you will give
policy makers and stake holders a better picture of the access problems facing the health care
system. This will give people a better sense of how and why the health care system can be fixed.
The reasons behind people lacking health insurance need to be understood by everyone with an
interest in the workings of the health care system.
TIME INVOLVEMENT: Your participation in this research is expected to take between 30
and 60 minutes depending on how much information you choose to give in your answers. There
is no mandatory maximum or minimum time limit for this interview.
PAYMENTS: Your participation in this study is voluntary. You will not be paid for your
answers.
SUBJECT’S RIGHTS: If you decide to participate in this research, your participation is
completely voluntary. You have the right to refuse to answer any question or terminate the
interview at any time. There will be no penalty or loss of benefits to which you are otherwise
entitled. In order to respect your confidentiality, your name will not be attached to the answers
you give and your responses will be treated as anonymous identified only by your town.
If you have concerns about this study, please direct them to Elizabeth O’Dowd Chair, Institutional Review Board,
Saint Michael’s College, Box 253, One Winooski Park, Colchester VT, USA. Email: eodowd@smcvt.edu
You will sign two copies of this form, one for you to keep and for us to retain.
SIGNATURE AND DATE:_____________________________________________
GUARDIAN SIGNATURE (IF UNDER 18):________________________________
26
Notes
1
Peter Youngbear, Personal Interview July 10, 2010
Andrew Wilper et al. “Health Insurance and Mortality in US Adults” American Journal of Public Health,
10.2105/AJPH.2008.157685 December 2009, Vol. 99. No. 12 2289-2295.
3
John Holahan, Allison Cook, and Lisa Dubay “Characteristics of the Uninsured: Who is Eligible for Public
Coverage and Who Needs Help Affording Coverage?” Kaiser Commission on Medicaid and the Uninsured.
February 2007.
4
Ibid.
5
Anderson, Gerard F. “From ‘Soak The Rich’ To ‘Soak The Poor’: Recent Trends In Hospital Pricing” Health
Affairs, 26, no. 3 (2007): 780-789
6
“Dying For Coverage in Vermont.” Families USA April 2008. <http://www.familiesusa.org/assets/pdfs/dying-forcoverage/vermont.pdf>
7
Zuvekas, Samuel H., and Joel W. Cohen. 2007. "Prescription Drugs And The Changing Concentration Of Health
Care Expenditures." Health Affairs 26, no. 1: 249-257. Academic Search Premier, EBSCOhost (accessed March 28,
2011).
8
Blue Cross Blue Shield. Group Plan Overview Pamphlet and MVP Healthcare Personal Choice Plans Pamphlet.
9
2009 Federal Poverty Level (FPL) Guidelines January 1, 2009 to December 1, 2009. State of Vermont Agency of
Human Services Office of Vermont Health Access. < ovha.vermont.gov/administration/fpl-guidelines-2009.pdf>
10
Robertson et al. 2009 “Vermont Household Health Insurance Survey: Comprehensive Report.” Vermont
Department of Banking, Insurance, Securities and Health Care Administration (BISHCA). Market Decisions.
Montpelier, VT. January 2010.
11
Brian Robertson et al. “2009 Vermont Household Health Insurance Survey: Comprehensive Report” Vermont
Department of Banking, Insurance, Securities, and Health Care Administration. January 15, 2010. Page 17
12
Ibid, 22
13
Ibid, 11
14
David Himmelstein et al. “Medical Bankruptcy in the United States, 2007:Results of a National Study” the
American Journal of Medicine. 122, no 8 (2009) 741-746.
15
Cathy Schoen et al. "How Many Are Uninsured? Trends Among U.S. Adults, 2003 and 2007." Health Affairs 102
(2008): 298-309. Web. June-July 2010.
16
J. Hsu et al. “Unintended Consequences of Caps on Medicare Drug benefits,” New England Journal of Medicine.
354, no 22 (2006):22349-2359.
17
Thorpe, Kenneth E. “Costs and implications of a Single Payer Healthcare Model for the State of Vermont,”
Prepared for the Vermont Commission on Health Care Reform. August, 2006
18
Dr. Deb Richter, Personal Interview June 28 2010.
19
Dr. Marvin Malek, Personal Interview June 15 2010.
20
“Voices of Vermont Healthcare Crisis: The Human Right to Healthcare” The Vermont Workers’ Center,
Burlington, Vermont December 10, 2008.
21
Brian Robertson et al. “2009 Vermont Household Health Insurance Survey: Comprehensive Report” Vermont
Department of Banking, Insurance, Securities, and Health Care Administration. January 15, 2010.
22
Ibid
23
Ibid
24
Ibid, 66.
25
Ibid, 75.
26
Dan Hock, Personal Interview, June 19 2010
27
David Himmelstein et al. “Medical Bankruptcy in the United States, 2007:Results of a National Study” the
American Journal of Medicine. 122, no 8 (2009) 741-746.
28
Brian Robertson et al. “2009 Vermont Household Health Insurance Survey: Comprehensive Report” Vermont
Department of Banking, Insurance, Securities, and Health Care Administration. January 15, 2010. 22
29
Ibid, 46.
30
Anderson, Gerard F. “From ‘Soak The Rich’ To ‘Soak The Poor’: Recent Trends In Hospital Pricing” Health
Affairs, 26, no. 3 (2007): 780-789
31
Sicko. DVD. Directed by Michael Moore. 2007: Denver, CO. Dog Eat Dog Films, 2007.
32
Dr. Deb Richter, Personal Interview June 28 2009
2
27
Himmelstein, David U. et al. “Medical Bankruptcy Fact Sheet.” http://www.pnhp.org/sites/default /files/docs/
Bankruptcy_Fact_Sheet.pdf
34
Hogan, Cornelius and Deb Richter. At The Crossroads: The Future of Health Care in Vermont. Vermont 2005.
35
National Association of Community Health Centers 2006 Data on Community health Centers Summary
36 The Vermont Coalition Of Clinics For The Uninsured 2009 Annual Report. http://www.vccu.net/
37
Peter Youngbear, Personal Interview July 10, 2010
38
The Vermont Coalition Of Clinics For The Uninsured 2009 Annual Report. http://www.vccu.net/
39
Hogan, Cornelius and Deb Richter. At The Crossroads: The Future of Health Care in Vermont. Vermont 2005.
40
Ku, Leighton et al. “Strengthening Primary Care to Bend the Cost Curve: The Expansion of Community Health
Centers Through Health Reform.” Department of Health Policy. George Washington University. June 30 2010
41
Deprez, Ronald et al. Achieving Universal Coverage through Comprehensive Health Reform: The Vermont
Experience. State Health Access Reform Evaluation. Center for Health Policy, University of New England. Portland
ME, October 2009.
42
Brian Robertson et al. “2009 Vermont Household Health Insurance Survey: Comprehensive Report” Vermont
Department of Banking, Insurance, Securities, and Health Care Administration. January 15, 2010.
43
S. 88 An Act Relating To Health Care Financing and Universal Access to Health Care in Vermont. The Vermont
Legislative Bill Tracking System. http://www.leg.state.vt.us/database/status/summary.cfm?Bi ll=S.0088& Session=
2010
33
Klein, Ezra. “Sen. Bernie Sanders: 'Vermont stands a chance to be the first state in the nation
to pass single-payer.'” The Washington Post Online. Published November 18, 2010.
44
Lynn, Emerson. “Why Tinker With Something Ranked #1?” The Vermont Tiger. April 15, 2010.
Vermont, America’s Health Rankings. American Public Health Association http://www.americashealthr ankings.
org/ yearcom pare/2008/2009/VT.aspx
47
State Data Center. Commonwealth Fund. http://www.commonwealthfund.org/Maps-and-Data/State-Scorecard2009/DataByState/State.aspx?state=VT
48
Thorpe, Kenneth E. “Costs and implications of a Single Payer Healthcare Model for the State of Vermont,”
Prepared for the Vermont Commission on Health Care Reform. August, 2006
45
46
28