OneCare 

This week the Senate Health and Welfare Committee took testimony on S.290, the Health Care Reform Bill. A number of advocates talked about the need for increased oversight of the Accountable Care Organization (ACO- or OneCare). The bill would introduce additional reporting requirements for OneCare. It also expands the Green Mountain Care Board’s authority over rate setting between hospitals and insurers, price transparency, and contracts with designated agencies. Additionally, it caps rate increases for administrative costs for insurers and requires AHS to report back to the Legislature on the impacts of joining the ACO for state employees. This bill will most likely be the primary bill in Senate Health and Welfare to which I would expect them to add additional healthcare related initiatives.

 OPEB/Pensions

 Brad Ferland, Deputy Secretary of Administration, testified in Senate Appropriations Tuesday on the unfunded pension and OPEB liabilities. Although Treasurer Pearce has asked the Legislature to prefund the teacher’s OPEB this year with additional monies, the Administration has asked them not to do this. Ferland said that instead of placing more money in teacher’s OPEB, the money should be a part of a four-bucket strategy in order to understand the whole picture of unfunded liabilities.   

Actuarial tables have changed for a number of reasons since the original 2008 amortization schedule the Legislature agreed to. This has largely been due to changes in expectations with regard to investment returns, mortality tables have changed, retirement ages, turnover rates, etc. 

 Adam Greshin, Commissioner of Finance and Management, told the Committee that since 2007 the State has been contributing at least 100% but often more in accordance with actuarial requirements. In 2008 pensions and OPEB accounted for about $30 million and about 2.5% of the general fund budget. These payments have become about 12% of the State’s general fund budget at $199 million in FY2021.

 Ferland said the Governor’s Office has been working closely with the Treasurer’s Office to determine what can be done to address the liabilities. He said they have looked at a number of things, including renegotiating the pharmacy benefit manager contracts and looking at things like stress testing the expected investment rate of return. They did not come to the Committee with suggestions on how to fix this but told them these decisions would be left up to the Legislature.

 Sen. Kitchell (D-Caledonia) told the room this is the beginning of a very important conversation. I’ve attached a PDF of their presentation.

 Older Vermonters Act

 This week the House Human Services and Senate Health and Welfare Committees took testimony on H.661, the Older Vermonters Act. The bill aims to take steps to finalize and implement a master plan for aging, similar to what has been done in California. The committees heard from Gretchen Alkema, Ph.D.. V.P. of the SCAN Foundation, that is working with states on these initiatives. They also heard updates from the Department of Disabilities, Aging & Independent Living on establishing a plan here in Vermont. It is unclear at this point whether or not the bill will move forward in its original form, or if perhaps pieces of the bill will be incorporated into other legislation.

 

The only bill that moved this week was the Miscellaneous Retirement Bill (H.922)(highlighted in Green). It will be up for Third Reading in the House next week and upon passage will be messaged to the Senate. S.290 and H.661 are in blue because they were discussed in committees this week.

 

 

H. 661	Rep. Wood	Read First Time and referred to House Human Services	Establishes an Older Vermonters Act- support system for Vermonters over 60
	Rep. Noyes
H.649	Rep. Sullivan	Read First Time and referred to Committee on Gov. Ops 1/10/20	Requires an equal share of administrative costs between Vermont Employees Retirement System and the State Teachers Retirement
	Rep. Browning
S.290	Sen. Lyons	Read First Time and referred to Senate Committee on Health and Welfare 1/14/20	An act relating to health care reform implementation
S. 137	Sen. Lyons	Read First Time and referred to Senate Committee on Finance 2/27/19	Act relating to health insurance coverage for hearing aids
	Sen. Balint
H. 348	Rep. Patt	Read First Time and referred to Committee on Health Care 2/21/19	Act relating to health insurance coverage for hearing aids
S. 287	Sen. Pollina	Read First Time and referred to Senate Committee on Government Operations 1/14/20	An act relating to the contractual rights of members of the Vermont State Employees’ Retirement System
S. 286	Sen. Westman	Read First Time and referred to Senate Committee on Government Operations 1/14/20	An act relating to the membership of the Vermont State Employees’ Retirement System
H.677	Rep. Webb	Read First Time and referred to House Ways and Means 1/14/20	An act relating to Vermont’s income tax deduction for medical expenses
H.695	Rep. Bancroft	Read First Time and referred to House Ways and Means 1/14/20	An act relating to the income tax exemption for Social Security
S.306	Sen. Hooker	Read First Time and referred to Senate Committee on Government Operations 1/16/20	An act relating to raising an income tax surcharge in order to reduce State retirement liabilities
H. 790	Rep. Gregoire	Read First Time and referred to House Ways and Means 1/21/20	Act relating to exempting social security income from Vermont’s personal income tax
H. 791	Rep. Gregoire	Read First Time and referred to House Ways and Means 1/21/20	Act relating to exempting military retirement pay from Vermont’s personal income tax
	Rep. Hango
H. 792	Rep. Yacovone	Read First Time and referred to House Ways and Means 1/21/20	Act relating to imposing an income tax surcharge to reduce State retirement liabilities
H. 801	Rep. Donovan	Read First Time and referred to House Education 1/21/20	Act relating to statewide public school employee health benefits
H. 818	Rep. R. Hooper	Read First Time and referred to House Government Operations 1/21/20	Act relating to the contractual rights of members of the Vermont State Employees’ Retirement System
H. 839	Rep. Canfield	Read First Time and referred to House Ways and Means 1/22/20	Act relating to tax relief for retired military, working youth, and renters
H. 840	Rep. R. Hooper	Read First Time and referred to House Ways and Means 1/22/20	Act relating to exempting pension income from State taxation
H. 846	Rep. Noyes	Read First Time and referred to House Commerce & Econ. Dev. 1/22/20	Act relating to exempting military retirement pay from Vermont’s personal income tax and recruiting military veterans
H. 848	Rep. Beck	Read First Time and referred to House Government Operations 1/22/20	Act relating to a new State Employees’ Retirement System and State Teachers’ Retirement System
H.906	Rep. Sandy Haas	Read First Time and referred to House Government Operations 1/28/20	An act relating to accrual of creditable service in the Vermont State Retirement System
H. 913	Rep. Browning	Read First Time and referred to House Government Operations 1/30/20	Act relating to stress testing the Vermont State Retirement System and the State Teacher’s Retirement System
Misc. Tax Bill	Committee on Ways and Means	Still in Committee, not introduced	Miscellaneous Tax Bill- MAGI, Retirement Income Tax Discussion
H. 922	Committee on Gov. Ops.	Passed Second Reading 2/14	Act relating to miscellaneous amendments to the Vermont State Employees’ Retirement System

 

Senate Government Operations

On Tuesday the Senate Government Operations Committee heard bill introductions on S. 286, S. 143, and S. 287. S. 286 and S.143 constitute two retirement eligibility alternatives for various state law enforcement employees. While the Committee did not endorse one option over the other, the Treasurer’s Office suggested they would like to weigh in on whichever alternative is ultimately chosen. S. 287 codifies a contractual relationship between members of the Vermont Retirement System and the state in an effort to protect members by not allowing their benefits to change. 

Military Pension State Income Tax Exemption

On Tuesday H.839, a bill which would exempt retired military from the state income tax, was discussed in the House Ways & Means Committee. One veteran testified in favor of the bill.  Committee sources say that the bill will most likely stay on the wall this session.

Pharmaceutical Pricing

This week both the House and Senate Health and Welfare Committees took testimony on a number of pharmaceutical bills. Both Committees believe that the price transparency legislation they have passed in recent years does not do enough to curb the trends on rising pharmacy costs. The House Healthcare Committee heard from Brian Murphy, Director of Pharmacy at Blue Cross Blue Shield of Vermont (BCBSVT) and from Nancy Hogue, Director of Pharmacy at the Department of Vermont Health Access (DVHA), Vermont’s Medicaid program. Brian and Nancy both pointed to the price increase of specialty drugs, or biologics, as the primary cause of the continued increase in pharmacy costs. It is not just the cost of the drugs through the pharmacy benefit, but it is also the medical cost to hospitals for administering these drugs which are generally injected in an inpatient or outpatient setting. 

Vermont did pass a bill a number of years ago to increase the use of biosimilars here within the state. Biosimilars are basically the generic versions of these specialty drugs. However, the FDA has not yet approved any of these as “interchangeable” with brand specialty drugs. This means that doctors are not required to offer the cheaper biosimilar instead as they do for many pill-form generic drugs. 

The Legislature will be looking to curb pharmaceutical trends in a number of ways this year. This will include examining the role of Pharmacy Benefit Managers (PBM’s) in determining the final cost of the drugs when they are purchased through the pharmacies. It will also look at expanding the role of the Green Mountain Care Board (GMCB) to include pharmaceutical price oversight. Finally, the Legislature will look to other states for ideas like California, that is seeking to create a state-owned generic manufacturing plant and their own purchasing pool to buy drugs directly from manufacturers.  

Divestment of State Pension Funds 

On Thursday the Senate Finance Committee heard testimony from Treasurer Beth Pearce on ongoing efforts towards divesting the State’s Pension Fund away from fossil fuels. According to Pearce, the rough cost of doing divestment is around $9 million annually due to losses and diversifications risks, among other considerations. While the State doesn’t make individual selections, the consultant group managing the funds have been instructed to make greener choices. Several Senators pushed back in favor of divesting from fossil fuels outright, citing efforts to divest from tobacco under Governor Davis. In response, Treasurer Pearce argued that mixing politics and doing legislative changes sets up a slippery slope that the State should not go down and that the proper approach entails concerted engagement. In Pearce’s words, if this approach isn’t effective, then people in Congress wouldn’t be trying to curb state’s ability to engage and that investment is not the answer for the State portfolio. 

~Table of bills tracked is provided in current week's reporting~