Anya Rader Wallack is the chairwoman of the Green Mountain Care Board, the state board created to improve the overall health care system in Vermont with an emphasis on improving the health of the state’s residents while at the same time making health care more affordable. Herald business reporter Bruce Edwards interviewed Wallack about the ongoing changes to Vermont’s health care system and the launch later this year of Vermont Health Connect — an online exchange (healthconnect.vermont.gov) where many Vermonters will begin buying their health insurance.
Vermont Health Connect has its own advisory board, which reports to the Department of Vermont Health Access.
Question: Where do we stand in the process to get the Vermont Health Connect up and running by January 2014?
Anya Rader Wallack: The exchange is supposed to start offering people to choose plans for 2014 starting in October of this year. And that’s for open enrollment for coverage that would begin Jan. 1, 2014. Our relationship to the Exchange involves two components: One is that we have to approve the essential benefit plans that are kind of the baseline for what will be offered in terms of plan options in the exchange. We’ve gone through a series of decisions around that. The other part is we have to approve the rates because we’re in charge of health insurer rate approval ultimately. Before those plans can be offered on the exchange, we have to approve the carriers’ rate submissions and that will happen sometime around July 1.
Q: Do you have some sense whether the rates will be lower or higher than what someone is paying today for health insurance through their employer?
Wallack: It’s really hard to say what the rates will be because we don’t know until the carriers submit their proposed rates and then we can modify those within some range of reasonableness. The rates will reflect a bunch of different changes that are occurring between now and next year. One is just sort of the natural upward trend in health care costs. The other is the Affordable Care Act, which kind of drives all the plans around the exchange benefits, to some degree bumps up kind of the floor for what you are insuring. They may be paying more next year, hard to say until we actually see the plans and what the rates are. But in some cases people may be paying more because they’re actually getting kind of more complete insurance. So what people pay will depend on what level of coverage they choose, what the underlying health care costs trend is. And then there is the inevitable bump up as the result of the federal policy around things like what’s the minimum level of insurance and then the feds have added a new tax onto insurance that will be reflected in the rates. So the bottom line it’s very hard to predict but our hope will be to keep those rates as low as possible through our review process.
It’s important to note that it will be the first time that the carriers, Blue Cross and MVP in this case, are kind of in a head to head competition because you’ve got these new federal parameters for what the products have to be for what they’re offering. I would hope that the fact that there’s going to be a more effective mechanism for consumer comparison across the two plans will give them an added incentive to (have) competitive rates.
Q: There are different levels of benefit packages — Bronze, Silver, Gold and Platinum but they’re all standardized?
Wallack: There’s a total cost of care embedded in the insurance but how you distribute that cost of care in terms of the piece that’s covered by the insurance versus the piece that gets covered by people paying out of pocket can vary. And the percentage that’s covered by the insurance is called the actuarial value. For example, at a Bronze level there’s a 60 percent minimum actuarial value so the insurance policy itself has to cover at least 60 percent of the predicted cost and then the consumer out of pocket pays the remaining 40 percent and then that goes up from Bronze, Silver, Gold, Platinum.
In the Bronze plan, as you might expect, there is a significant amount of potential consumer exposure to out of pocket costs, whereas when you’re at the Platinum level, most of your cost would by paid by your insurance but your premium as a result would be higher.
Q: And these plans will be offered through an employer?
Wallack: They’ll be available to people who are either purchasing coverage without an employer or purchasing coverage through an employer group as long as the employer group has 50 or fewer employees.
Q: For someone who is unemployed, how will this work?
Wallack: They can go and sign up for coverage as well. If they’re below a certain income level … they’ll go through the same Vermont Health Connect website and find out that they’re potentially eligible for Medicaid and get referred over to the Medicaid website where they can sign up for that coverage. If they’re above Medicaid eligibility, then they can purchase the insurance on their own, and if they’re below 400 percent of poverty they qualify for a federal tax credit to supplement the cost of their coverage. And then the Legislature is considering additional subsidization on top of the federal tax credit.
Q: What are you hearing from employers? Obviously, health insurance is a major expense.
Wallack: I think the main concern on the part of employers is how much is this going to cost me and when am I going to know. I think all business people would like to be able to understand the cost they face and (know) that as far in advance as possible. Again, I want to make clear … running the Exchange is not within our scope. What the state is trying to do is, we can’t tell them the process until the insurers go through the rate review process. But the folks who are running the Exchange have tried real hard to get out and explain how the exchange will work, what the options will be. And we’re all working to try to get those rates approved as early in the year as possible. Actually, compared with previous years people should understand the range of potential costs a lot earlier than they are used to. They would find out in August what they might be paying for coverage in January. That’s actually significantly better than what they’ve been experiencing in terms of (predicting) costs in the past.
Q: How does the Exchange system allow the state to provide better health care at an affordable price?
Wallack: The Exchange doesn’t really change the world in terms of what drives health care costs. And we as a state are taking on lots of other efforts and that stuff is really within the Green Mountain Care Board’s purview in terms of changing the efficiency of the health care delivery system — changing how we pay for health care so it encourages efficiency. What the Exchange does is really reorganize the existing insurance marketplace from a consumer perspective. There’s easier comparison, easier shopping experience, hopefully some more competition because there is a better means of consumers making head to head comparisons across plans and across carriers. It brings in this new federal money to reduce the price for people who are low income.
Q: How do we get health care costs under control?
Wallack: Well, in my opinion, we really have to redesign how the health care system is organized and orient it much more clearly toward keeping people healthy. (It means) avoiding unnecessary use of particularly expensive health care, making sure that when health care costs inflate that the inflation is legitimate, and creating efficiencies around things like health information technology. When you go from one doctor to another, the second doctor actually understands what the first doctor did without a whole lot of effort. So that you can avoid duplicate testing, avoid duplicate diagnostics and radiology and things like that that really currently add an enormous amount of avoidable costs to the health care system.
Then there is a lot that can be done to encourage better coordination of care. So again, another area of tremendous waste is like people getting discharged from the hospital with multiple chronic illnesses and because there isn’t a good hand off from hospital to primary care or from hospital to nursing home people end up bouncing back and forth. And not only sort of using resources that could have been avoided but also just kind of having a crappy experience of care. And so you fix those things and you end up avoiding a whole lot of cost and improving the quality of people’s experience.
Q: What role does prescription drugs play?
Wallack: It does play a big role and frankly it’s real challenge for us at the state level because there is only so much we can do to influence the price of drugs and there’s different components to it. Some of it is driven by things that are just high cost and there’s a lot of profit built in by drug manufacturers and they have to cover a lot of expenses in terms developing new drugs. Right now one of the biggest areas of cost growth is in new oncology, the cancer drugs, and they’re tremendously expensive. In Vermont and nationally, we’ve seen a real ballooning of costs around these. On the other hand, technologically, they’re a real advancement over what used to be available. There’s tough policy issues around all of that and we’re kind of limited as a state in terms of how much we can influence prices that are really set at a national level.
Q: The GMCB recently issued budget guidance for the state’s 14 hospitals, limiting net patient revenue increases to 3 percent a year through fiscal 2016. Is that reasonable to expect the hospitals to live within that limit?
Wallack: I think it is and certainly we’ve seen other areas of our economy grow at low rates or not grow at all. Our expectation is that health care should be more in line with the growth in our capacity to pay. I think for that to be sustainable for the long run requires some sort of change. So we can’t just artificially grow at a low, low rate if we haven’t, for example, changed the incentives for providers to focus on better care coordination and reducing unnecessary volume of services and stuff like that. To me it can work but … we just can’t say three percent and then walk away. It really requires a commitment on our part to moving forward with changing how people get paid and supporting providers in how they deliver services.
Q: Could that force hospitals to reduce services or cut back staff?
Wallack: I think if we do it right, what it does it forces them, or encourages them to start thinking about whether there’s a more efficient way to provide services. Can they collaborate with other hospitals and not duplicate services in every corner of the state. Can they focus on reducing the volume of services they provide because they don’t need to cover as much fixed costs or variable costs. What kind of things can they do to keep the people who live in their community healthier and so they’re not using the hospital as much and what’s the financial model that makes that viable for them.
Q: Given the size of the state, do we need 14 hospitals?
Wallack: I think it’s hard to say. I think we probably have duplication of some services where ideally we wouldn’t. But on the other hand, there are core services, things like access to emergency rooms, being able to have a baby, and perhaps certain kinds of surgery that most Vermonters want to make sure they have close by. So, you might not be talking about closing facilities necessarily given the rural nature of our state, but you might be talking about deploying the facilities in different ways. We’ve already been seeing some of this happen (at) Grace Cottage, which is kind of an extreme example because they’re so small, but they no longer essentially are an in-patient hospital. They’re much more like a clinic with a couple of beds for people who need palliative care. The array of services they provide is different today than is was 20 years ago. More facilities may go in that direction. Fletcher Allen and Central Vermont Hospital have been working together to make sure their stroke patients get triaged better so that the ones who are uncomplicated stay at Central Vermont and the complicated ones get transferred quickly to Fletcher Allen. And in the long run that’s going to allow for efficiencies at both ends I think in terms of the kind of physical plant and human resources that they need to have to take care of those patients.
Q: Many Vermonters go to Dartmouth-Hitchcock in Hanover, N.H., for treatment. Is that figured into the state’s health care calculations?
Wallack: They’ve been very active in working with us. About 40 percent of their admissions come from Vermont so anything we do has to include them. And frankly, they’re pretty innovative thinkers, so we’re glad to have them involved in our efforts.
Q: The GMCB issued a recent report that found the number of uninsured in the state fell to 6.8 percent to 42,760 individuals. Any surprises there and does that change the equation in terms of reducing health care costs or providing insurance in the future?
Wallack: Not really because whether people are insured or not insured, the costs are too high. And so addressing that underlying health care cost trend is really imperative. It’s made more acute as we have more people who are paying the entire bill out of pocket. Certainly that increases the urgency but if we were at 98 percent of the population insured we would still have a incredibly strong impetus to work on changing our health care delivery system because it’s unaffordable.
Q: Dental insurance is not included in the insurance exchange that will be rolled out next year. I take it because of the added cost. Any regrets in not including it?
Wallack: The issue is a little more complicated than came across in most of the reports. The issue is if the state mandates that’s something is in these state exchange benefit plans that goes beyond the federal level of mandates, then the state has to pay the entire cost of that, not the people who purchase the coverage but the state itself. So the cost of the dental coverage was estimated to be as high as $80 million (a year). The majority of the board felt like it was not appropriate for us to mandate that cost on the state and the taxpayers at this point in time. On the other hand, we’re very cognizant of the fact that dental health is a piece of overall health. So as we look at how can we improve on the system in the future, looking at ways to efficiently and effectively incorporate dental health in the coverage that’s provided to everybody, is important to us. Actually, following up on our decision to not include that in the exchange benefits, we commissioned research to get a better handle on what the costs of dental care are, how it’s being provided now, and what the options would be for approaches to providing dental care for all Vermonters.