Details Still the Hang-up on Vermont Health System

September 25, 2014

Stowe Today

Two state officials tried last Friday to sell a room full of hospital executives on the state’s pending universal health insurance system by appealing to its fairness, while offering scant details on how the state would raise the $2 billion to fund it.
Their remarks came during a panel discussion at the annual meeting of the Vermont Association of Hospitals and Health Systems, held at Stoweflake Resort in Stowe.

“There are only two types of taxes: simple taxes and fair taxes,” said Michael Costa, deputy director of health care reform. “Everyone should have skin in the game.”

Costa said the state is eyeing a 12.5 percent payroll tax to help fund Vermont’s Green Mountain Care health insurance system. He said the rest of the money needed to fund the system is “right there in the middle of the room,” in the high amount of money Vermonters already pay for private insurance.

New taxes are never popular, but that setup would be far more transparent than the way health care is financed now, said Robin Lunge, the state’s director of health care reform.

“We’ve funded health care in such convoluted ways, we don’t know what we’re paying for,” she said.

Lunge said Green Mountain Care has a long way to go before its possible implementation in 2017, with action still needed from the Legislature, the administration and the Green Mountain Care board. The administration won’t release its proposed coverage plan until December, and its financial proposal until January, two full years after the original financial framework deadline set by Act 48, Vermont’s health care reform law that was passed in 2011.

Mel Patashnick, CEO of Copley Health Systems, which oversees Copley Hospital in Morristown, thinks Costa’s and Lunge’s status update is consistent with previous information from Montpelier.

He said health care providers are all on the same page: Bring health care costs down and make sure everyone is covered, based on their ability to pay.
“I think they tried to tell us their current thinking, and I think we really need to wait until it’s more developed, and it’ll be possible then to deal with the plan as presented,” Patashnick said. “It’s easier to address the concepts.”

Bea Grause, CEO and president of the Vermont Association on Hospitals and Health Systems, noted the impatience some feel about just how universal health care would be financed.

“What’s most interesting to Vermont’s health care leaders is that there is a clear consensus around the core principles of reform — lower cost, universal access and patient rights — but growing concern about the many questions that have not yet been answered,” Grause said after the meeting.

Despite the lack of concrete details, Lunge and Costa were able to offer some general morsels of what Green Mountain Care might taste like.

Costa says the Green Mountain Care architects envision a public-private system, with the public portion coming from a 12.5 percent payroll tax. Costa said there is a possibility the law could give small businesses a few years to save, and prepare to pay the 12.5 percent, or whatever it ends up being.

Bram Kleppner, CEO of Danforth Pewter in Middlebury, said he would gladly pay the 12.5 percent payroll tax, since he already spends 15 percent of his payroll providing insurance for his 50 employees through the private sector.

He said no amount of soda tax, “no matter how high you set it,” will pay for health care. And, he said, the state health system would take a burden off him.
“We know how to make pretty things, not how to administer health care,” Kleppner said.

Lunge said much of Green Mountain Care is based on essential health requirements laid out in the federal Affordable Care Act, signed into law in 2010 by President Obama. According to Healthcare.gov, those requirements include benefits from at least 10 categories:

• Ambulatory patient services
• Maternity and newborn care
• Mental health and substance-use disorder services
• Rehabilitative services and devices
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care.

Lunge said patients insured through Green Mountain Care would still have some out-of-pocket expenses. And Medicare recipients will keep their federal benefits, with Vermont’s system offering secondary coverage.

The state is going to go down the path toward universal health care no matter what, predicted William Sayre, an economist formerly with the Federal Reserve, a director of the Ethan Allen Institute, and a commentator for “Common Sense Radio” aired on WDEV.

Sayre said Gov. Peter Shumlin has a “political dilemma” — though the health system is having problems, he has to proceed because so much of his legacy rests on that issue. While Shumlin has been openly disappointed in progress, Sayre thinks businesses are wrong to assume the governor will scrap the initiative.

“Many businesses will be surprised, because they expect the plug to be pulled,” Sayre said.