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Will proposed tax increase price of health coverage for Vters? - WCAX.COM Local Vermont News, Weather and Sports-

Will proposed tax increase price of health coverage for Vermonters?

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MONTPELIER, Vt. -

Wednesday morning, a snowstorm delayed the arrival of some legislators in Montpelier. But those who did make it on time wasted no time before listening to concerns from the health and business communities. At issue-- a proposed tax hike on insurance claims.

"This isn't the only assessment that's on us right now," said Susan Gretkowski of MVP Health Care.

Along with new federal fees introduced over the last few years, Vermont claims are taxed by the state at just less than 1 percent. The governor has proposed essentially doubling it. That's because he wants to use funds raised by a tax on employers that don't offer health insurance to cover the cost of running Vermont's health exchange. But spokespeople for carriers say they're already working with thin margins.

"We would be absorbing that basically through our reserves and the Green Mountain Care Board has been cutting our reserves back," Gretkowski said.

MVP representatives say the move would cost them $1 million. Blue Cross Blue Shield spokespeople peg the figure at $8 million-$9 million. Carriers would bear the cost in 2014 because rates are already set, but rate hikes would be unavoidable in 2015. Insurers say customers are likely to skimp on coverage.

"They generally respond for products that they might purchase less expensively than the ones that we bring them," said Kevin Goddard of Blue Cross Blue Shield.

Betsy Bishop of the Vermont Chamber of Commerce says their health care navigators have seen just how sensitive Vermonters are to pricing firsthand. She worries about taxing those who won't benefit from the exchange and that the measure would have the opposite rather than intended effect on reform.

"Increasing health care costs to decrease health care costs just doesn't make any kind of common sense to us," Bishop said.

The hole left by Vermont picking up the exchange tab is about $14 million. While many testified against the proposal, none had any other solution for how to raise the money, but some did suggest cost-cutting as a better option.

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