It was an impressive performance on August 5^th by Professor William Hsiao, the Harvard health policy economist who has been hired to design three universal health care systems for Vermont. Dr. Hsiao was in Montpelier to give a progress report to the Vermont Health Care Reform Commission.

Using his courteous, often humorous demeanor, and his total command of the subject, Dr. Hsiao deftly fielded skeptical questions and gave every indication that the health care designs he and his team are working on will be comprehensive, evidence-based, and tailored to fit Vermont.

“We’re not doing a design in an ivory tower,” said Dr. Hsiao. “We’re designing something in the real world.” Hsiao said his researchers have been interviewing health care providers, insurance companies, and state officials, to gather background data and to fully understand Vermont’s health care problems and the possible solutions.

Throughout Hsiao’s presentation, what came clear was that in order to control costs and to make health care universal, there must be a rational system. Right now Vermont only has a patchwork of unaffordable insurance based on adverse selection, various government programs, problematic fee-for-service provider compensation, and fragmented financing, Hsiao said.

“No country can control costs unless it has a health care system operating as a whole,” declared Dr. Hsiao. He said Taiwan reduced costs by 8 percent in the first year of its universal health care program—but only because it created a single payer financing mechanism.

State Representative George Till, who is a physician, challenged that assumption. “I agree with your diagnosis, but I don’t agree that the problem must be corrected by a single payer system,” said Till. He asked Hsiao if costs couldn’t be controlled simply by paying all providers the same rate, much like Medicare does.

Dr. Hsiao replied that mandating a uniform payment rate is one aspect of a single payer system, but that in order to control costs you must also unify the payment source as much as possible. Only by taking this extra step can cost shifting be eliminated, and fraud and abuse be kept in check, he said. Hsiao’s implication was that a system that consolidates financing can build in incentives and disincentives to achieve desired results, whereas fragmented financing encourages each provider to find ways for others to pick up costs.

Another commission member, State Senator Kevin Mullen, voiced skepticism on two issues. He said when lawmakers tried to enact health care reform several years ago, IBM objected that it would not want to have employee insurance in Vermont that was different from insurance covering its employees elsewhere. Mullen also said he thought the federal ERISA law would block reform efforts in Vermont. “I worry that we will just be spinning our wheels again,” said Mullen. “I would like to see some real progress next year.”

Hsiao deflected the point about IBM, saying that a company doing business all over the world would be very used to publicly financed health care systems. On the subject of ERISA, Dr. Hsiao joked that “It’s my nightmare.” He said he knows full well that the ERISA law has many interpretations, but added that he is talking to experts at Harvard Law School about the issue.

Two commission members, Con Hogan and State Representative Topper McFaun, said they hoped Hsiao’s work would include as much economic analysis as possible. Unfortunately, said Hsiao, there is only so much his team can accomplish with the funding that has been provided and the short time frame allowed. A key member of Hsiao’s team, renowned MIT economist Jonathan Gruber, will test the three designs using a micro-economic model, Hsiao said. Gruber’s job will be to see how the designs would affect households and employers, but a full macro-economic analysis, looking at the effect of reform on the entire economy, is beyond the scope of Hsiao’s contract. Pressed on this point, Hsiao said he will certainly provide economic analysis, but it will be mostly qualitative and based on economic theory, not on precise numbers.

The three models to be designed by Hsiao’s team are (1) a state run single payer system, (2) a public option within a framework prescribed by the law passed last spring by the legislature, and (3) a consultant-designed plan. This third plan, according to Hsiao, will be designed within political and institutional constraints posed in Vermont. These constraints will be determined, in part, through “stakeholder analysis,” said Hsiao. It was unclear how the third plan might differ from the first, especially given Hsiao’s successful experience with single payer systems worldwide. One possible explanation is that the first design would be more or less a “pure single payer” and the third plan might be a single payer that is modified to fit Vermont realities.

Time will tell which design, if any, the next legislature and the new governor will decide to implement. For the time being, however, single payer supporters should be thrilled that the world’s foremost health system designer is working for Vermont. Dr. Hsiao’s breadth of knowledge, his pragmatic approach, his optimism, and his matter-of-fact endorsement of single payer dazzled his audience last Thursday in Montpelier.

Dear Mr. Hester:

Thank you for the opportunity to comment. The process to select experts to design three versions of a health care system for all of Vermont has been exceptionally open and accessible and is most appreciated.

I support Dr William Hsiao and his team to do the system design work.

First of all, his team meets all of the criteria spelled out in the RFP. I am sure you have his CV so I do not need to list all of his accomplishments in designing systems throughout the world – some single payer and some multi-payer. I am sure you are also aware that Professor Hsiao has written several books on designing health care systems, the most recent due out this August. His experience in designing real-world health systems could not be clearer.

The requirements (RFP) demand that whoever is selected must have experience in designing systems that have expanded coverage and contained costs. There is an important distinction between overall costs of a system itself and program costs within a system. Vermont has had programs designed to extend coverage to groups within a system. Some of these programs have lowered, or have promised to lower, costs to payers within a system. But none has translated into lower costs for the system itself. Dr. Hsiao, however, achieved exactly this when, for example, he designed Taiwan’s health care system.

Another very good reason for supporting Dr. Hsiao over other candidates (none of which has actually designed a system, only programs) is the inclusion of Steve Kappel. Kappel lives and works in Vermont. His depth of knowledge about Vermont’s health care data needed for any design has few if any equals.

Once again, thank you for allowing Vermonters the opportunity to participate in the process.

Sincerely, Deborah Richter, MD

Dear Attorney General Sorrell:

I request reconsideration of the decision provided in the letter by Bill Griffin concerning the appointment of Jim Leddy to the commission on health care reform. Although Bill Griffin’s statement that AARP is not itself an insurer is correct, for Jim Leddy, the AARP’s Vermont President, to serve on the commission would still be a violation of several sections of the law.

First, I agree with Bill Griffin that Jim Leddy is not in the employ or part of the management of an insurer because AARP is not itself an insurer. But this satisfies only one of the two parts of provision A of the statute (full text of S.88 § 901 is attached). Bill Griffin did not address the other part of provision A, “holding any official relation to any health care insurer.” Nor did Bill Griffin address provision C of the statute. As to provision D, while Bill Griffin said that “AARP contracts with insurers,” he did not mention that the statute includes a provision D which prohibits any person serving on the commission to “make or perform any business contract with any health care provider or insurer if such service or contract relates to the business of the health care provider or insurer.” [1]

I respectfully ask that you consider whether or not Jim Leddy is in compliance with the remaining part of provision A, and with provisions C and D. I believe he is not in compliance with any of these sections. Here is why.

First, the Vermont law states in relevant section that the appointee to the commission shall not:

(A) be in the employ of or holding any official relation to any health care provider or insurer or be engaged in the management of a health care provider or insurer; . . .

(C) in any manner, be connected with the operation of a health care provider or insurer; or

(D) . . .make or perform any business contract with any health care provider or insurer if such service or contract relates to the business of the health care provider or insurer, except contracts made as an individual or family in the regular course of obtaining health care services.

The law makes explicit the common sense rules against conflict of interest.

Here are the facts:

1. Jim Leddy is President of Vermont AARP. Jim Leddy is also a member of the AARP National Policy Council where he serves on its Health and Long Term Care Committee.

2. AARP is not itself an insurer. However, as Chief Assistant Attorney General Bill Griffin pointed out in his letter, AARP’s website states that “AARP contracts with insurers.”

3. An AARP web site lists AARP involvement with its name on a long list of health care insurance products.

4. A letter from Thomas C. Nelson, Chief Operating Officer of the AARP (attached), to Congressman David G. Reichert states that AARP’s royalty income ‘averaged $339.7 million per year from 1999 to 2008,’ That means that AARP earns a lot of money from its contracts with health care insurers. Under those contracts AARP offers health care insurance to its members.

5. Entities cannot act on their own. They act through their officers and policy makers who have fiduciary responsibility for the organization. The official relation of the AARP with the insurers is through the officers of the AARP.

Does Jim Leddy’s appointment conform to the law? By taking responsibility as President of the Vermont AARP [2] and by taking responsibility on the National Policy Council Jim Leddy adopted the duty of having an official relation with health care insurers on behalf of AARP. In his capacity as President of the Vermont AARP, which has valuable contract relations with insurers, Jim Leddy also is “in any manner” connected with the sales operation of health care insurers. Through his position as President of the Vermont AARP Jim Leddy is also responsible to see to it that the business contracts the AARP holds with health care insurers are performed. Thus, Jim Leddy’s appointment does not confirm to several of the requirements of the law.

While Jim Leddy is a highly qualified individual and in no way do I disrespect him, he cannot be expected to fulfill both his specific fiduciary duty to the AARP to make, perform, and maintain its lucrative contract income from health insurers and the duty to the Vermont public as a whole he would have as member of the commission. Nor does the Vermont statue now in place qualify him to be on the commission while serving as Vermont AARP President. Allowing an individual to escape from being designated as having an official relation to a health care insurer if that individual is Vermont AARP President and is involved in establishing its policy while the AARP has massive contract relations with several health care insurers is illogical, contradicts the law as written, contradicts the intent of the law, and sets an example of blatant disregard of Vermont law.

The AARP is up to its neck in official relation to health care insurers, and officers of the AARP are responsible for participating, supervising, directing, changing, making and performing that relation with health care insurers in behalf of the AARP. The Vermont AARP President’s job is also one that “in any way” has a connection with the operation of the health care insurer, including: (1) facilitating, directing, and promoting sales of the health care insurer’s insurance; and (2) directly or indirectly ensuring that the AARP receives and continues to receive very substantial payments from health care insurers. Officers of the AARP are the ones who make or perform business contracts with health care insurers. Bill Griffin himself recognized the contracts AARP has with health care insurers in his recent letter. As Vermont AARP President Jim Leddy is responsible for the Vermont portion of making and performing these business contracts.

For each of these reasons the Vermont statute would be violated if a person who is President of the Vermont AARP is simultaneously serving on the Vermont commission on health care reform.

I would therefore respectfully request that you determine that Jim Leddy can serve as President of the Vermont AARP or he can serve on the commission on health care reform but he cannot legally serve on the commission if he continues to serve as AARP President. Thank you very much for your attention to this important matter.

[1] Provision A includes the word “or” four times, and the four provisions of the statute are separated by the word “or.” This means that violation of even one part of provision A or of either provision C or D is enough to be a violation. Therefore, all provisions and parts of provisions need to be considered by the Attorney General. Merely satisfying one provision–or in this case, part of one provision–is not enough. Each and every provision and each and every part of each provision must be satisfied for the appointment of Jim Leddy to be in compliance with the law.

[2] The fact that Jim Leddy takes no money while serving as volunteer President of the Vermont AARP and while serving on the AARP National Policy Council could mean he is even more committed to the programs of the AARP, including the royalty income derived from its contract relation with private health insurers. The fact that he takes no money suggests potential for a greater conflict of interest than if he merely did it for the money.

Sincerely,

James Marc Leas

Dear Ms. Swanson,

Please forward this email to Chief Assistant Attorney General William Griffin as I have several questions regarding his interpretation of S.88 concerning the appointment of Jim Leddy to the commission on health care reform.

As AARP acts as an insurance broker for United Health, Aetna etc. with its members regarding so called Medi Gap policies (supplemental)and others and receives hundreds of millions in shared premiums or as AARP calls them “Royalties” for the solicitation of such policies, I cannot see how AARP and Jim Leddy cannot be considered to have a “Relationship” to an insurer. (Sub paragraph A p.9)

Also sub paragraph C. p. 10 states that a member of the commission may not “in any manner, be connected with the operation of a health care provider or insurer.” How can an organization such as AARP that solicits business for health insurance providers from its members not be considered to have a connection? Is this not also stated in sub.paragraph D p.10 concerning a “business contract” i.e. royalties, with a health care insurer.

Though not stated in S.88, I think the the term insurer would also apply to an insurance broker and/or agent that supplies business for an insurer for a fee(commission,royalty,or finders fee or whatever term one wants to use) which AARP acts as. After all, there is an obvious symbiotic relationship between the insurer and the supplier(broker) of such business. AARP may not call itself an insurance broker but essentially acts as one.

In any case AARP is an organization with such close ties to the health insurance industry I feel that the appointment is at the very least a violation of the spirit of S.88, if not the exact letter of the law. (Whoever crafted the language of the bill should have specifically mentioned insurance broker,agent or those acting as such, along with insurer rather than leave it up to interpretation!)

Thank you for your attention to this matter and I appreciate you and Mary-Kay Swanson’s forwarding your opinion concerning Dr. Richter’s complaint.

Respectfully,

Jerry Kilcourse, Montpelier,VT

James Leddy’s nomination to the new Health Care Reform Commission raises ethical concerns of such magnitude as to make his appointment objectionable, if not illegal. Mr. Leddy, the Commission, and the people of Vermont should not permit it to proceed in its present form.

James Leddy has performed valuable public service for the people of Vermont, first as director of the Howard Center for Human Services and then as a senator from Chittenden County. I have heard him speak on the topic of health care on several occasions; he has been thoughtful, eloquent and passionate.

Mr. Leddy would make an excellent member of the Committee, but for one thing: he brings to the position a very significant and unavoidable conflict of interest.

Mr. Leddy is currently the president of the Vermont chapter of AARP. That organization serves as a health insurance broker, marketing insurance products for United Healthcare under the AARP name and bringing in considerable revenue by doing so. Thus AARP is not a disinterested party when it comes to creating health care policy; and when it does become involved, it puts its own interests ahead of those of the people at large.

AARP actively worked in support of the very flawed 2003 legislation that established pharmaceutical benefits for Medicare recipients (Medicare Part D), which spawned such monstrosities as the doughnut hole and forbade cost reduction negotiations with pharmaceutical companies. That legislation also mandated an unnecessary and costly middleman role for health insurance companies–including United Healthcare and its partner, AARP.

My father always told me, “Never ask an umbrella salesman what the weather is going to be.” When it comes to forecasting a health care delivery model for Vermont, Mr. Leddy is an umbrella salesman. Given his present job, he would face an unavoidable conflict of interest were he to assume a seat on the Health Care Reform Commission: it is not difficult to imagine that what is best for AARP is not always what is best for the people of Vermont, and Mr. Leddy would have obligations to both. By definition, he cannot be a disinterested party; even if he says he can set aside his conflict of interest, he would bring his conflicted loyalty with him. Taking a seat on the Commission would be the wrong thing to do, and it may well violate the law that established the Commission.

This situation can be satisfactorily resolved in one of several ways. First, Mr. Leddy could resign from his job at AARP and then take a seat on the Commission. Second, he could appreciate the inherent and irrefutable conflict and decline the appointment to the Commission. Third, Shap Smith could recognize his error in appointing Mr. Leddy and rescind the nomination. Fourth, the Commission could refuse to seat Mr. Leddy. And fifth, if no other remedy is brought to bear, Mr. Leddy’s appointment could be fought in court.

We need to hope that Mr. Leddy and the Health Care Reform Committee will do the right thing for the people of Vermont.

This week two new members were appointed to the Health Care Commission. This is the first action called for in S.88. This new commission meets in June to select the consultant/s to design three health care systems for Vermont. It is imperative we have an unbiased Commission if the public is to have trust in this selection process and for the end result to be unbiased.

Senate Pro Temp, Peter Shumlin, appointed Con Hogan, whom we support and think will be a great asset to the commission.

House Speaker, Shap Smith, appointed Jim Leddy who currently serves as President of Vermont AARP. While we applaud Mr. Leddy’s service to our state,  we oppose this appointment. It violates the conditions the law. S.88 clearly states the members cannot have “any official relation to any health care provider or insurer.” AARP is a health insurance broker and derives most of it’s income from that activity. (For more information on the relationship between AARP and the insurance industry please visit our Homepage.) Speaker Smith’s response in the Burlington FreePress,”Anybody who knows Jim Leddy knows he marches to his own drummer, I have no concerns he will be beholden to anyone” shows a disrespect for the law as written.

Vermont Health Care for All has filed a formal complaint with Attorney General Sorrell stating, “Speaker Shap Smith’s appointment of Mr. Jim Leddy as a member of the Health Care  Commission that is overseeing the implementation of S88-Act 128, as it is an infraction of this state statute. This appointment clearly defies the intent of the bill which was to avoid undue influence by the insurance industry and other special interests on the process of designing three health care systems for Vermont.”

Over the weekend almost 100 messages requesting the appointment of Mr. Leddy be rescinded were sent to members of the Health Care Commission. Click here to send your own message.

In order for health care reform to be successful this must be rectified so the public can trust in the process and know the intent of the bill is being fulfilled.

As the legislature approaches adjournment, and as S.88 nears its final disposition in the Senate, the Vermont for Single Payer campaign would like to clarify its stance. First and foremost, we support the health system studies that are embedded in S.88. For this reason, we would be very happy if the bill passes, with or without other provisions in it that we feel are diversions from the ultimate goal of single payer health care. Alternatively, we would also be happy if S.88, or some part of it, is added to the budget bill and passes with the studies intact. Therefore, at this time, we do not take a position on the political mechanism by which S. 88 becomes law. We leave that to the legislative leaders. Whatever the mechanism, we are optimistic that by this time next year we will have a single payer design to build our movement upon.

The side issue-about disclosure requirements for free drug samples-did indeed threaten to derail S.88, but not because single payer supporters, such as members of our organization, took the position we did. Instead, it was legislators in the House who, in defending the House committee version, refused to listen to doctors and to patient advocates, many of whom said the reporting requirement would adversely affect low income people and the uninsured. Some of these legislators, normally supporters of health care reform, even said they would vote against S.88 if the reporting requirements were removed. Had we ignored this issue, we would have betrayed our most steadfast belief, which is that all people, regardless of income, should have the health care they need. It goes without saying that our preference is for health care, including prescription drugs, to be delivered under a single payer system. Until that happens, however, we will not turn away from defending the immediate needs of the disenfranchised.

And so here we are, perhaps moments away from passage of the health care bill of 2010. It’s a good time to put in perspective everything that has happened so far. We must remember that S.88, as originally introduced, was a strong single payer bill that would have begun implementing universal publicly financed health care within a year or two of passage. The Senate Health Care Committee then changed this original implementation bill into a bill calling for a study of three system designs, one of them single payer. Despite this significant weakening of the legislation, the Vermont for Single Payer campaign continued to support it, and we rejoiced when the Senate passed the measure by an overwhelming 28-2 vote.

We then watched with dismay as the House committee diluted the bill with over 80 pages of arcane, unstudied, and often regressive health care provisions that were unrelated to designing a universal health care system. We worried that the House had put the studies, and the entire bill, at risk by adding these controversial provisions. Then, when the drug sample debate took center stage, we spoke out. As explained above, to have remained silent would have been unconscionable. But at all times we remained hopeful that some form of the bill would pass, giving Vermont the opportunity to have an eminently qualified consultant design a detailed single payer system for our state.

As an organization and as individuals we have worked tirelessly for many years toward the goal of universal and affordable health care for all Vermonters. Ultimately, we believe Vermont will lead the country in true health care reform and will continue to do everything possible to ensure a single payer health care system is implemented in our state. But let us remember that S.88 is only one very small step toward that goal. We do not hold any illusions that single payer, once studied, will be easy to legislate. We know that much work remains to be done and we will need the cooperation and support of Vermonters from all walks of life. Let’s keep our eyes on the prize-universal, single payer health care-and recommit ourselves to the work that needs to happen to reach that goal.

Yesterday S.88 passed out of the Senate with an amendment that would continue to allow doctors to receive drug samples from pharmaceutical companies without reporting them to the Vermont Attorney General. (Senate Kills Drug Sample Tracking) Many are calling this a win for the pharmaceutical industry but as a doctor I have a different view. These samples are sometimes the only way I can provide needed medication to some patients, specifically those who can’t afford their medication and have little or no insurance. When Vermont has universal health care and everyone has affordable access to the drugs they need I might support these reporting measures but at this time the samples are an asset to my practice and patients. Below is a letter the doctors in my small practice wrote to the Attorney General in November, 2009 regarding this issue. You should also know I do not use any new drugs until they have been on the market for at least three years.

Dear Attorney General Sorrell:

We are practicing clinicians -5 physicians and 2 nurse practitioners- at the Cambridge Family Health Center. We provide primary care to patients of all ages in Lamoille County. Our patients come from all walks of life and all income levels. Some are affluent and have very good insurance but many are poor and are uninsured. It is the latter group that will be severely affected by impeding the flow of samples to our office.

As a rule, we do not give samples to patients with insurance unless there is a problem with their scripts and then we may give them a weeks worth of medication to get them through. In general, we use these samples only for patients who will not get medication for their condition unless we give them sample medications. We realize that some studies indicate that most samples around the country are distributed to offices in affluent neighborhoods and therefore used mostly by patients who could afford to buy their own medications. That is not the case with our practice as we are rural and as described above, we serve patients from all income levels.

We also take issue with having providers sign for samples which will be monitored by the Attorney General’s. office. This requirement implies that there is some sort of conflict of interest. We would of course want to avoid the appearance of impropriety and would probably decline to sign for these samples which would of course lead to decreasing our supply of sample medications.

It might be worth your reviewing the recent study published by a Harvard research team showing 45,000 deaths /year attributed to lack of insurance. Many of these people died because they could not get the medications they needed.

The other myth being promoted is that patients could receive cheaper generic equivalents. While it is true that many conditions can now be treated by inexpensive generics, it is not true for major classes of drugs that at this time have no generic equivalents.

We also must tell you we find it offensive at the implication that our prescribing patterns are influenced by the samples we receive. I think if you look further into this issue you would find that our prescribing is much more influenced by what the third
party payers allow us to prescribe.

Sincerely,
Deborah Richter, MD
Jennifer Laurent, FNP
Paul Bertocci, MD
Patricia Towle, APRN, ANP
Laura Norris , MD
Donald Miller, MD

S.88 passed the House and the latest version of  is headed back to the Senate and most likely to conference committee. Even though some interested groups have celebrated the passage by the House of this bill we have strong reservations. We are doing our best to bring them to attention of the leadership. Our two main concerns are the choice of the consultant and the date for expansion of Blueprint.

The intent of the Senate bill was to choose a consultant capable of designing three complete health care systems and providing the comparative economic consequences of financing each. The House amended the bill to read someone with “experience in health care systems.” The difference is hard to discern but it is huge. There are no complete population-based health care systems open to everyone in the U.S., so this language opens the door to any consultant with a little familiarity with incremental programs. We are asking the Conference Committee to revise the language of the bill to reflect the seriousness of the search for a real health care systems expert with actual experience in system design.

The second area of concern is expansion of Blueprint that has experimental programs running but has yet to show any evidence of containing costs. They are the kind of limited programs that can only flourish within a complete health care system – exactly the kind of systems the Senate wants Vermont to look at for cost containment and expenditure analysis before moving ahead. We do not believe there should be any expansion of the Blueprint’s current experimental programs until the evidence is in. To expand them before the results are in derails the whole point of the three comparative design studies.

There’s a lot of talk in the legislature about evidenced-based medicine. It’s time for the same legislature to act on evidenced-based health care reform.

We need to stand strong and let our elected officials know we are watching them and expect them to hire a qualified consultant and subject any new programs to evidence-based cost analysis.

This week S.88 passed out of the House Appropriations committee and now it heads to the House floor for a vote. As we have previously reported, this bill has been amended to include additional programs, and we are concerned that they will paralyze the process and distract us from the critical work of designing a fiscally responsible system to finance health care for all Vermonters. As we said in our last message, we do not support S.88 in its current form and we are asking you to contact your Representatives and encourage them to amend this bill to the version that passed the Senate.

Imagine you are going to buy a car; the first thing you need to do is figure out how you will finance it. S.88 as it passed the Senate would provide us with the data needed to make this important decision. The House Health Committee added implementation of a bunch of delivery modules to the bill; this is the car in our analogy. It is like picking the accessory package for the car before you figure out how to pay for it. Just like you can’t purchase a car until you know how you will finance it, the new delivery methods added by the House Health Committee cannot be implemented until we figure out a system for financing health care in Vermont.

The House Health Committee’s experimental programs may sound good but they have no way to pay for them. How to pay for our health care comes first. That’s what the Senate’s version of S.88 is all about. It is about our costs and health care. The over-loaded House version is about changing the delivery of our health care by adding layers of costly bureaucracy. The House Health Committee’s claims that this will save money are disingenuous. No evidence of cost-saving exists.

We must separate material added by the House from the Senate version of S.88 because their goals and purposes are completely different. The Senate version deals with how to pay for health care for all Vermonters, while containing costs. The House additions focus on changes to the way we deliver primary care without addressing the way we pay for primary care first. Please help us advance true health care reform in Vermont by sharing your opposition to S.88 in its current form with your Representative today.