Federal and ERISA plans in Vermont’s GMC

This post is part of a series on Vermont’s single payment system law.

Vermont’s single payment system law (Green Mountain Care or GMC) will certainly include all state and municipal employees, everyone in the VT exchange, and individual and small group markets directly regulated by the state.

The law also intends to cover state workers’ compensation injuries – a historic move towards full integration.

For federal entitlement plans – Medicare and Medicaid – Vermont will ask the Obama Administration for waivers so that all of these federal funds are paid directly to Green Mountain Care, with all federal rules waived, including Part D formularies.  If these waivers are granted, all Medicare and Medicaid reimbursement rules would be suspended in Vermont and all providers paid solely under GMC.

Other federal plans  – TRICARE, VA and FEHBP – are left for another day, as are employees of foreign governments.

The last category includes private ERISA plans, which are shielded from state law to various degrees (fully self-insured plans enjoy the greatest freedom).  Vermont can’t force these plans to conform to GMC (as the Supreme Court has made abundantly clear in almost two dozen ERISA opinions), but these employers could voluntarily choose to participate.  Vermont is considering a “pay whether or not you play” tax on all employers to fund GMC, which would certainly encourage ERISA plans to either join GMC or leave the state altogether.  (One prominent employer in Burlington with a self-insured ERISA plan has put a “for lease” sign up at the local office).  The Governor’s job over the next few months is to persuade these employers to voluntarily participate in GMC, with this tax being the stick.  The carrot is the promise of a cheaper health care system that actually works.

My interview with Ezra Klein is here.

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