A group of USVI residents with experience in health care announced a health insurance proposal that, if enacted into law, would replace traditional medical insurance in the territory with a "single-payer" system covering all Virgin Islanders, funded by new taxes, fees and Medicaid.
The group, VI HealthCare, unveiled its proposal Thursday at the V.I. Cardiac Center.
All residents – with or without jobs and even some temporary residents – would be covered by the plan, organizers said. The policy would cover the gaps between Medicare plans and private insurance policies.
“Everybody in, nobody out,” each speaker told the audience of about 50 people.
The three founders of VI HealthCare, who presented the proposal Thursday, are all familiar with health insurance and health care services.
• Steven Larchuk has practiced health-care law for more than 30 years and drafted health reform legislation in Pennsylvania.
• Anthony Mastroianni has a master’s degree in social work and has been a health-care-reform advocate for almost 10 years.
• Amy Rose Herrick is a chartered financial consultant, insurance agent and paid income tax preparer with 27 years experience.
All three have jobs and are not planning to work for the insurance plan. Larchuk said he won’t even serve on a board.
“We’re not interested in creating jobs for ourselves,” Mastroianni said.
Thursday they presented an overview of their proposal, which can be viewed at the group’s website, www.vihealthcare.org.
Within 30 days of the the Virgin Islands Health and Wellness Act of 2014 being enacted by the Legislature and signed by the governor, the measure would establish the USVI Health and Wellness Authority, which would manage the health care delivery system, called VI HealthCare. The authority would have five commissioners appointed by the governor and approved by the Legislature.
The health commission would employ staff to manage daily operations and determine benefits available to residents.
Also within 30 days of the proposal becoming law, a health and wellness trust would be established with three trustees, also appointed by the governor, who would manage funds collected and disbursed.The trust would produce public quarterly financial reports.
VI HealthCare is being proposed as a single-payer program – using dedicated fees and taxes reserved exclusively for health care to pay the medical costs of everyone in the territory. Health-care providers would bill the entity for all services.
Larchuk explained how the group’s plan would fund the $400 million a year program so there was enough revenue to pay all claims. He was confident the actual costs would not exceed the budget.
According to Larchuk, the first $99 million to fund the insurance plan would be supplied by the federal government – the Medicaid allocation provided in the Affordable Care Act. Because the territory did not join an insurance exchange to provide coverage, there will be an increase in federal funding.
The remaining $301 million to fund the VI HealthCare would come from three new taxes, dedicated only for health care: A five-percent health and wellness sales tax would be instituted, and individuals who are employed would pay a five-percent health income tax. Additionally, businesses would pay10 percent on their payroll instead of insurance premiums. The taxes would be capped.
Larchuk pointed out that since many people have no insurance or pay more than five percent of their wages for insurance, the individual tax would be a savings for many.
Businesses would save as well, since the proposal calls for the elimination of the gross receipts tax. Transferring the territory’s health care delivery to VI HealthCare would reduce the government’s budget by $200 million and allow the $130 million gross receipts taxes to be terminated, the proponents said.
Larchuk pointed to the dire financial status of the territory’s two hospitals. Both medical centers are underfunded, not reimbursed for the full cost of services, and incur millions of dollars in uncompensated care every year. Doctors are leaving and CIGNA “is practically screaming ‘We’re out of here,’” he said.
Additionally, $100 million in medical expense is leaving the territory every year, according to Larchuk. In the last year, officials have said the amount is more than $54 million at the Gov. Juan F. Luis Hospital alone.
“You may not think we’ve hit rock bottom, but in our research, we have concluded we’ve hit rock bottom.” Larchuk said. Action needs to be taken immediately, he added.
VI HealthCare would insure payment for health care services and hospitals also would receive $20 million a year for 15 years for debt reduction, facilities improvements and to attract highly qualified medical staff. The insurance plan’s budget already includes the $250 million for the hospitals, according to Larchuk.
The plan would also add at least 5,000 jobs to the local economy, Larchuk said, jobs providing health care and ancillary services for 50,000 Virgin Islanders, a rough estimate of the number of V.I. residents who currently lack health insurance.
“More than two Hovensas, without the pollution,” Larchuk said.
Herrick listed some of the services that would be covered, including hospitalization, primary and specialist health care, prescriptions, durable medical equipment such as wheelchairs and hospital beds and emergency transport. The VI HealthCare website lists all 34 services that would be covered.
Local physicians would be reimbursed at a rate determined by the health care authority, Larchuk said.
The trust side of the Health and Wellness Authority would manage funds and report monthly on the financial status.
Sen. Clarence Payne, chairman of the Health, Hospitals, Human Services and Veterans’ Affairs Committee, attended Thursday’s presentation. He said he had met previously with the presenters and supports the plan.
Payne said he has already drafted a bill based on the proposal and sent it to the Legislature’s legal department. Once it is vetted by the legal counsel, it will be forwarded it to his committee.
He plans to meet with senators in the next two weeks to discuss the components of the bill.
“I’m so excited I could burst, but you have to be methodical,” Payne said.
While the bill is working its way through the Senate, Payne will hold town hall meetings to receive input from the public, he said.
Payne agreed that eliminating the gross receipts tax and adding a sales tax might be the tough part of selling the plan in the Senate, suggesting those steps could be one of the last components put into place. Some people equate the gross receipts tax with a sales tax, but paid by retailers instead of directly by consumers.
Sen. Diane Capehart, who also attended the presentation, said she had not read the proposed bill, but she liked what she heard. She agreed with Payne that it might be hard to sell the sales tax idea and eliminate gross receipts.
“I look at this as a longterm solution,” Capehart said, adding it is a “high priority.”
Larchuk pointed out that some states have sales taxes as high as seven percent – although in some state local options can bring sales taxes to 15 percent. If a five-percent tax can’t be collected in the territory, benefits will have to be modified to match the budget.
Delegate to Congress Donna Christensen sent a representative to the health-care-reform announcement and later issued a news release supporting the proposal. She recently met with Larchuk about the plan and legislation, according to her release.
“I welcome the proposal as we are exploring ways to get everyone health insurance coverage. My staff and I will be looking at it and also will consult with some health care experts and look at other similar programs,” she said. “I hope that the V.I. Legislature will take a serious look at it as well.”
The bill could become law by June and implemented, in part, by January 2014, according to Larchuk and Payne.
From the audience, Dr. Daniel Johnson said the proposal is “a breath of fresh air.” He studied medicine in France and said the plan was similar to the French model that worked very well.
Ella Jean Forbes also commented at the end of the presentation, saying she has a chronic illness and hopes the plan will attract the specialists she needs. Forbes said the specialists either are not here or do not have hospital privileges.
Liz Combie is self employed and said her major concern about the health care plan is about “portability,” since she has children ready to go to college. She said the plan seems affordable. Eliminating the gross receipts tax would help business owners and keep them competitive, she said.
“Our government ought to be ready to go to work, because we are in crisis,” Combie said.
In a telephone interview with the Source, Human Services Commission Christopher Finch said he has spoken with Larchuk but is not familiar enough with the plan to endorse it.
Finch administers the additional federal funds the territory is receiving through the Affordable Care Act, which VI HealthCare aims to designate for the plan. He said the territory will receive about $100 million, including an annual Medicaid allotment. However, the VI government must match, invoice by invoice, 45 percent of the costs. He added that most of the federal funding will end in 2019.
He cautioned that “Medicaid is a very highly regulated federal program.”
“This doesn’t take away from the point. You’re still covering Virgin Islanders with health care. You should appropriate the matching dollars to utilize the Medicaid dollar fully,” Finch said. “To maximize what we can do with Medicaid makes a lot of sense.”