"Cat" Amounts 

Comprehensive health care for all Vermonters has long been the Holy Grail of reform-minded policy-makers - and at or near the top of the public's list of most-desired government programs. Most Americans who went to the polls last November said they did so to express their dissatisfaction with the war in Iraq. But when pollsters probed voters about what else should be a high priority for their elected officials, their overwhelming response was a call for fixing the nation's costly, out-of-control health-care system.

The 2006 Health Care Affordability Act, which was signed into law in June, is no silver bullet for the problem. But it's being hailed by some as an important first step toward achieving the goal of high-quality, affordable health insurance for all Vermonters. Among other things, the law created Catamount Health, a private-sector insurance package that will be offered to the estimated 10 percent of Vermonters who don't have health insurance and don't qualify for other plans, such as Medicaid, Vermont Health Access Plan or Dr. Dynasaur.

When Catamount opens its enrollment on October 1, it will help tens of thousands of low-to-moderate-income Vermonters - that is, those earning less than $30,000 per year, or $60,000 per year for a family of four. The state-managed program will cover the cost of their primary care, such as routine doctor visits, immunizations and annual check-ups; chronic care for such conditions as asthma, diabetes, heart disease, mental illness and substance abuse; and hospital stays.

Though the official rollout of Catamount Health is more than nine months away, many Vermont businesses will feel its financial pinch much sooner. Starting April 1, every employer in the state must start tracking which of its employees have health coverage and which do not. About one-third of the cost of Catamount Health will be paid by employers that don't contribute toward their employees' health costs. Those businesses will pay an "employer assessment" based on the number of employees they have who aren't covered. As a result, businesses from mom-and-pop grocery stores to the state's largest hotels, manufacturers and ski resorts are now scrambling to figure out what this new legislation will cost them.

In a nutshell, here's how the state will determine what they owe. If a business subsidizes a health-insurance plan for all its employees, that business will owe the state nothing. If a business does not provide health insurance to any of its employees, that business will pay $91.25 per quarter - or $365 per year - for each uninsured employee, even if those employees have health insurance through other sources. In the first two years of the program, the first eight employees of each business will be exempt from this assessment, but that number will decline in future years.

Vermont businesses that provide health insurance to some of their employees but not others - such as low-level, part-time and/or seasonal workers - will pay an assessment on their full-time workers (or their part-time equivalents) who aren't offered health insurance. If an employee is offered health insurance but declines it because he or she has coverage from another source - say, a spouse's insurance policy - that employee is not counted toward the employer assessment. But if an employee declines coverage and has no other health insurance, that employee is counted toward the assessment, regardless of whether he or she ever enrolls in, or even qualifies for, Catamount Health.

Duane Marsh is president of the Vermont Chamber of Commerce. He says he's fielded "dozens and dozens of calls," mostly from small-business owners who are concerned about what they'll owe. It's worth noting that about 80 percent of Vermont's working uninsured are employed by businesses with fewer than 25 employees.

"What we're finding is that a lot of companies, because of the exemption, will not have any exposure," Marsh says. "However, there are a lot of larger companies that will have significant exposure," he adds, particularly those with many young and part-time employees.

"Clearly, some businesses are going to be hit much harder than others," explains Jeanne Keller, a health-care policy expert with the Burlington-based consulting firm Keller & Fuller, Inc. "I think it's going to be tied to the average age of your employees. If the average age is under 30, chances are, you're going to have a lot of uninsured people."

Keller refers to those workers as "the young invincibles" - that is, the twenty- or thirtysomething employees who are, by and large, healthy and don't think health insurance is important enough to give up part of their paycheck for. According to Keller, about half the uninsured people in Vermont are under the age of 32. And, because Vermont did not mandate that everyone carry some type of health insurance - as other states, such as Massachusetts, have done - Keller suspects that Catamount Health will enroll the oldest and sickest Vermonters first. Such a practice runs contrary to the standard insurer's concept of pooling high- and low-risk members.

A major concern for many employers is the still-unanswered question of seasonal workers. As it is currently written, the Health Care Affordability Act requires them to be counted toward the employer assessments. For Vermont businesses that rely heavily on seasonal employment - such as ski resorts, restaurants, hotels, bed-and-breakfasts and other tourism-related industries - what the legislature decides in the next month or two could be the difference between a "make" or a "break" year.

"I'll tell you, if they get us on those seasonal employees, it's really going to hurt," says Mike Shea, owner of the 400-passenger Spirit of Ethan Allen III, the largest cruise ship operating on Lake Champlain. Each summer, he employs about 45 to 50 foreign workers and 15 to 20 college-age students. All of them are temporary employees, and none qualify for the company-sponsored health plan. Shea points out that most of the college kids he employs are already covered through their parents' insurance policies; his foreign workers typically are required to get health insurance through their international employment agencies.

"We made a conscious business decision not to raise our prices this year because we felt the American consumer needed a break," Shea adds. "But if all of a sudden I'm paying a tax on 75 seasonal employees, well, you do the numbers."

Vermont's ski resorts and the ancillary businesses that rely on them will face a similar dilemma. Parker Riehle is president of the Vermont Ski Areas Association. According to his calculations, the state's ski industry employs about 10,000 Vermonters per year, 75 to 80 percent of whom are brought on during the peak winter months. Based on a survey of his members, Riehle says the new legislation could cost the ski industry as much as $750,000 per year. "In a year like this," he says, "where many ski areas are lucky to hang on to their employees when they can, that's a real hardship for the industry."

Riehle asserts that many seasonal workers in the ski industry already have health coverage through other sources -for instance, ski patrol personnel may work full-time jobs elsewhere during the week. Some of the younger seasonal workers, he notes, decline health coverage when it's offered because they'd rather pocket the cash.

Shea at the Spirit of Ethan Allen raises yet another concern. He points out that the new law could become a disincentive for hiring people who don't have insurance, since Catamount Health essentially creates a $365 annual tax for employers per uninsured worker.

Susan Besio is director of health-care reform implementation for the Vermont Agency of Administration. While she admits that Shea's scenario is a possibility, Besio thinks it's more likely that many businesses will see the new law as an opportunity to help their uninsured and part-time employees gain access to a reasonably priced, good-quality health-care plan.

This week, a health-care working group presented the legislature with three options for dealing with the question of seasonal workers. One is to leave the law unchanged; another is to exempt all seasonal workers from the employer assessment; a third is to exclude only those seasonal workers whom the state deems "short-term" employees and who already have health coverage. Of these options, Besio says the working group has recommended the third. In the coming month, the legislature will hear testimony and make its determination.

Although the Vermont Chamber of Commerce was opposed to the Catamount Health plan, Marsh says his organization is helping its members adapt to this new economic reality. "It's passed and is now the law of the land of the state of Vermont," he says. "Now our whole objective is to make it work."