Vermont: (sigh) Kynect should keep running, but the VT exchange might want to consider closing up shop.

Over the past few months, I've ranted repeatedly about what a stupid, short-sighted, petty move it is of Kentucky Governor Matt Bevin to shut down the kynect ACA exchange, for a variety of reasons...most of which center around the fact that the kynect exchange has been operating smoothly since the moment it launched in October 2013. In other words, there's very little reason to kill kynect, and plenty of reasons to keep it operational.

This does not mean that I'm opposed to moving any state-based exchanges over to Healthcare.Gov. As I said back in June, right after the King v. Burwell decision came out:

Most of them, of course, will stay right where they are now. Few of the 37 states currently being run via HC.gov are likely to move off of it (although Arkansas is a special case, which I'll address in a bit). As for the 13 states (plus DC) running their own full tech platform, at least a few of them will probably move onto HC.gov the way Oregon and Nevada did (and Hawaii is in the process of doing). Rhode Island's woes haven't been so much technical but financial, but they just passed a budget which (I think) means they'll be OK on their own. The two states which seem most likely to me are Vermont (serious technical and financing issues) and Minnesota (semi-serious technical, serious financing).

...And you know what? As I've said before, that's perfectly fine...now that it's safe to do so.

The main reason for pushing for 51 separate websites in the first place was mainly just an attempt to win over a few conservative "states rights" votes in Congress from Republicans and some conservative Democrats. There were some practical advantages to doing it this way as well (potential innovations from trying things different ways, plus a few states like Vermont and Massachusetts wanted to offer additional financial assistance beyond the normal tax credits/cost sharing provisions, and Hawaii already has an existing state law which is actually better than some of the provisions included via the federal exchange)...but on the whole, the sheer economy of scale advantages of one federal site make the downsides seem pretty small in comparison for most states.

Ironically, it turned out to be a good thing that there were over a dozen state-run websites last year, because many of them helped mitigate the worst of the damage during the early, ugly days of HealthCare.Gov (as you may recall, only about 25,000 people enrolled via HC.gov in October 2013, vs. over 75,000 across the state-run exchanges). However, it's almost 2 years later now, and HC.gov is operating pretty damned smoothly these days (yes, I know, the billing "back end" is still being worked on, but it's magnitudes ahead of where it was on 10/1/13).

Well, Minnesota has just voted to keep MNsure, their own state-based exchange, for the foreseeable future, so never mind that.

Vermont, on the other hand, continues to have major technical problems, three years into the process...

Last October, Gov. Peter Shumlin said his administration had finally eliminated the customer-service bottleneck that had long plagued Vermont Health Connect. The change-of-circumstance backlog has since returned, however, and the setback has further eroded confidence in the future of the online insurance exchange.

...As of Tuesday, however, the backlog is back up to about 3,000 customers. And the state’s largest insurance carrier, Blue Cross Blue Shield of Vermont, says technological shortcomings at Vermont Health Connect have made it impossible for them to process changes to their customers’ policies.

...Miller says the state’s inability to process changes to customers’ policies stems from the postponed delivery of another software upgrade related to the policy renewal process.

...Miller says other unforeseen events have contributed to the backlog. The state is trying to reenroll a larger number of Medicaid recipients than it customarily has to deal with. Also, a contractor on the exchange went out of business late last year, and Miller says that has complicated work on a major software component.

...“Well I think we’re beyond being surprised at the technical difficulties anymore,” Gustafson says.

He says the latest round of technological hiccups underscore the need for the type of independent assessment of Vermont Health Connect that Blue Cross has been calling for.

The state is spending about $45 million a year to operate Vermont Health Connect. The federal government covers about 60 percent of the cost.

Ouch, ouch and triple ouch. the fact that the Vermont exchange, like Kentucky, has failed to provide a single official enrollment update this year might have been a red flag.

On top of everything else, kynect, which operates pretty much trouble-free, only costs Kentucky $28 million per year...for a state with 7 times as many people (or just $6.40 per resident of the state per year vs. Vermont's $72 apiece...or $29 apiece if you subtract the 60% covered by the Feds for the moment).

I know how much this is gonna sting the good people of Vermont, especially given their heavy (if failed) push for single payer healthcare, but it's really starting to sound like it's time for them to consider following in Oregon, Nevada and Hawaii's footsteps and move home to the mothership at this point.

On the other hand, there are a couple of complications in doing so which go beyond state pride. For one thing, Vermont requires that all individual market policies be sold through the ACA exchange, which might cause some legal headaches (although moving to HC.gov would also resolve the technical ones, especially on the SHOP/small business side, which I don't believe VT has ever been able to get to work properly anyway).

For another, I believe Vermont, like Massachusetts, offers exchange enrollees additional financial assistance that goes beyond the APTC and CSR tax credits/subsidies provided by the ACA itself. I'm not sure if those would have to be scrapped or if they could be worked into the system in the event of a HC.gov takeover.

Finally, while HC.gov has given Oregon, Nevada, New Mexico and Hawaii a free ride until now, starting next year they're apparently imposing a 3.0% fee on states which "ride piggyback". This is less than the 3.5% they're charging everyone else, but that'll also have to be taken into account when considering the move.

Anyway, it's time for Vermont to seriously discuss the possibility, at least.