Galbriath Plan: Universal Basic Care and Two Percent Payroll Tax

July 13, 2016

Vermont Digger

Peter Galbraith outlined a health care plan Wednesday that he said would improve Vermonters’ access to primary care while restricting hospital executive pay and “monopolistic behavior” in the health care system.

Galbraith was a latecomer to the race for governor, running against Matt Dunne and Sue Minter for the Democratic nomination. The only available poll puts him behind each candidate by more than 20 percentage points.

But he told reporters that his health care plan is more substantive than those of his competitors and that if other politicians can’t outline how they will finance and implement their health care reforms, those aren’t real plans.

Galbraith said he would implement universal primary care, cap salaries for hospital administrators at $350,000 a year and make insurance companies pay independent and hospital-affiliated doctors equally.

Starting next year, he said, his plan could provide Vermonters with primary care, pediatric care, gynecological care, primary mental health care and substance abuse treatment for about $225 million a year.

Galbraith said the cost of care would be $174 million, and administration would add $12 million to $36 million. He would increase reimbursement for doctors by about 10 percent.

He proposes a 2 percent payroll tax on employers, which he said would raise $240 million.

Galbraith unveiled the plan at a small event on the Statehouse lawn. He stood next to Dr. Deb Richter, a family doctor who has been lobbying for universal primary care, and Roger Albee, the chief executive officer of Grace Cottage Hospital in Townshend, who also serves as his campaign’s treasurer.

“My plan would be free to the patient,” Galbraith said. “There would be no copays, no deductibles, no premiums, and I’m going to do what the other candidates haven’t done. I’m going to tell you how to finance it.”

Galbraith said universal primary care would lower the administrative burden on doctors, allowing them to spend one-third more time with patients, theoretically increasing how many primary care doctors are practicing in the state.

He said businesses would be able to deduct the payroll tax from their federal income taxes and that the cost of the tax would be “partially or entirely offset by savings in health care premiums for employees.”

Hospital Executive Pay

Galbraith wants to limit hospital administrator salaries to $350,000 a year.

A VTDigger investigation of hospital executives’ compensation found that in 2013, at least 40 in Vermont made more than $391,000, including bonuses, benefits and other compensation.

In 2012, Grace Cottage Hospital, the smallest in Vermont, had the lowest compensation for its chief executive officer — about $204,000, including benefits. Albee, who became CEO in 2014, did not say how much he makes but jokingly told Galbraith that his job includes “a lot of volunteer work.”

In a tacit dig at Dunne, who served on the board of trustees of Dartmouth-Hitchcock Medical Center in 2012 and 2013, Galbraith said the board approved a 25 percent increase in administrative salaries from 2012 to 2013 — from a total of about $12 million to about $16 million.

“These are publicly financed nonprofit institutions,” Galbraith said. “These outsized salaries are paid by the taxpayers. The Green Mountain Care Board has not exercised its oversight functions, and I call upon them to do that.”

Galbraith said he would not shut down the Green Mountain Care Board, which he helped create under Act 48 of 2011 when he was a senator. But he said overseeing pay of administrators is “a responsibility that has not been exercised.”

Under Act 48, the Legislature gave the board the task of defining and then regulating hospital administration. The board’s hospital budget expert said in February that it needs to develop a timeline and process for defining hospital administration.

“I’ve given it some thought, and I think that most people can get by on $350,000 a year,” Galbraith said. “I dare say that all of you could get by if that were your salary. It is a really significant salary.”

‘Monopolistic behavior must end’

Galbraith also said independent doctors offices should be paid the same amount for the same procedures that hospital-employed doctors perform, and that hospitals should charge different insurance companies the same amount for the same service.

According to an organization of independent doctors, Blue Cross Blue Shield of Vermont paid an independent physician $78 for a 15-minute office visit in 2014 but paid a practice affiliated with the University of Vermont Medical Center $177 for the same service.

At the same time, different insurance companies pay different amounts for the same service at a given hospital or doctor’s office based on how well they can negotiate. The federal Medicare program often pays less than private insurers, and the state-federal Medicaid program usually pays the least.

Galbraith said that if Vermont wants to pay for emergency rooms or teaching at an academic medical center, the Legislature should subsidize that in a transparent way, not through higher reimbursement rates from insurance companies.

He said the University of Vermont Medical Center and Dartmouth-Hitchcock Medical Center are operating as a duopoly that controls who provides health care in the state, while Blue Cross Blue Shield of Vermont controls who can be an insurer.

“The providers give Blue Cross Blue Shield (of Vermont) a discount as compared to other insurers, and that makes it very difficult for new entrants to come into the market, and as a result we have a higher cost of health care, significantly than other states,” Galbraith said.

In economic theory, oligopolies, duopolies and monopolies can maintain dominant positions in their respective markets if it is too expensive or cumbersome for competitors to enter the market. Those obstacles are called barriers to entry.

“So what I say is, that procedure, that monopolistic behavior must end,” Galbraith said. “There must be the same (price charged to) all insurers to allow new entrants” into the health insurance market.

He said Vermont is lucky to have an institution like the Green Mountain Care Board, but that he wants “regulators who are really going to take a tough look at what the regulated industries are doing, and health care is a regulated industry.”

Primary Opponents’ Positions

Jessica Bassett, the spokesperson for Dunne, said: “It’s heartening to see that Peter Galbraith agrees with Matt that we must move to universal health care, including a system of publicly funded primary care.”

“Matt first proposed universal health care legislation in 1994, and as a member of the board of trustees of the Dartmouth-Hitchcock Medical Center, he worked hand in hand with providers to devise policies to address the health care needs of everyday Vermonters,” she said.

“While capping administrators’ salaries makes for a nice sound bite, Matt has decades of policy experience and the relationships needed to effect real change as governor,” Bassett said.

Minter, the former secretary of transportation, has said “health care is a human right” and that “the rising cost of health care is breaking our family budgets, school budgets and our state budget.”

“We need to reduce the skyrocketing cost of health care by reforming our system of payment and incentivizing health and outcomes, rather than incentivizing payment for more visits, prescriptions and procedures,” she said.

Minter’s prepared statement said: “As we reform our payment system and reduce cost I will also work to put us back on track to universal health care as through either Dr. Dynasaur 2.0 or universal primary care as a first step to universal health care.”