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Catamount Health

08/01/06 12:00AM By John McClaughry
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(HOST) Thanks to the recent creation of Catamount Health, you might think that the affordable health care debate in Vermont is over - and commentator John McClaughry agrees that it is - but he doesn't think it's over for long.

(MCCLAUGHRY) With his signature on the legislature's health care reform plan Gov. Jim Douglas took that issue off the table for the next three years. Then the fun will start all over again.

Until at least October 2009 Catamount Health will be a private insurance plan. Eligible enrollees will pay premiums based on their incomes. The plan will be available because the state will force its two largest health insurers, Blue Cross Blue Shield of Vermont and MVP, to offer it.

The money to pay for these two programs will come in part from the Medicaid "Global Commitment" and from increasing the cigarette tax. Small employers who don't offer health insurance or who offer policies that the legislature does not find adequate, will pay a new tax of $365 per year per uncovered employee, with four employees exempted.

There are some practical questions about all this.

The plan mandated by the legislature is very comprehensive and expensive. The liberals in the legislature believe that anything less costly - including especially the increasingly popular high deductible plans with tax free Health Savings Accounts - is not worthy of the name "insurance".

What happens, as is likely, if the revenues aren't enough to pay the bills? The law directs the emergency board to suspend new enrollment. Given the composition of the emergency board, i's far more likely that it will urgently recommend higher taxes to avoid any suspension.

Will this work? Simply put, no. By 2009 the private carriers will have found that they cannot possibly offer the costly state-mandated coverage for what the state is willing to pay. They will bow out, and the state will take over as the Catamount Health Insurance Company - the kind of outcome that led to Gov. Douglas's veto of Green Mountain Health in 2005.

And bear in mind: the legislative leadership that pushed this bill through vigorously opposed creating a real market in health insurance, consumer driven HSA-based plans, tight eligibility standards, mandate reduction, a defined state contribution in place of a defined benefit, and an enforceable cap on expenditures to match actual revenues. They eagerly levied a new tax on small business, hoping that small businesses will drop their insurance plans, pay the tax, and send their employees off to enroll in Catamount Health.

Catamount Health is certain to accomplish just what the single payer advocates have wanted all along: a steady slide into a government-controlled, taxpayer financed health care takeover. It will just take three years longer than they had hoped.

John McClaughry is president of the Ethan Allan Institute, a Vermont policy, research and education organization.

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