Single payer in Vermont enters utility phase

January 01, 2015

Valley News:

The push for health care reform in Vermont entered a new phase last week, when Gov. Peter Shumlin announced that he would abandon his attempt to design a system that used broad-based taxes and other public sources to replace premiums paid by employers and employees. The sticker shock of the necessary taxes and fees would just be too great, he said.

Although no longer united under the “single-payer” banner that so enthused progressives locally and nationally, reformers say they intend to continue to address deep-seated problems in Vermont’s health care system.

And while this next phase may prove less dramatic and is less likely to attract national attention than the quest for single-payer, health care reform may pose wrenching choices and cause tests of strength among stakeholders. The nature of those choices and tests will depend on what problems get moved to the front burner, and what recipes for reform get agreed upon by Vermont’s lawmakers and interest groups.

Shumlin, in the speech that struck the single-payer colors, described what might emerge as a new theme for reform. The Legislature should beef up an existing state panel, he said, so that it could be “a central regulator of health care so it can treat health care like the public utility it is.”

A spokesman for the governor did not respond Friday to a message seeking elaboration about that passage.

The term “public utility” generally refers to a market in which consumers depend on a monopoly supplier for a vital product or service, and the government regulates the costs incurred and rates charged by that monopoly.

Shumlin’s call for health care to be treated as a public utility attracted little immediate notice. Instead, Vermonters across the political spectrum continued to scramble to react to Shumlin’s dramatic reversal on single-payer.

Some single-payer advocates were outraged. Shumlin “broke five years of campaign promises to Vermonters” by abandoning his quest for single-payer, the state Progressive Party said in a news release.

And while the role of progressives is rarely, to put it kindly, pivotal on national political issues, the Vermont equation is different. The Progressive Party website lists eight of the Legislature’s current roster of 180 senators and representatives as members. Its release Friday noted that it “did not run challengers against Governor Shumlin in the last three (general elections) in large part because of his unwavering promise to lead on single-payer.” So Vermont progressives are likely to continue to play a role in debates about health care reform.

But as evidenced by the breadth of support for health care reform — which, with some definitional variation, can claim the allegiance of hospitals, doctors, business groups, and some moderates and conservatives — there is more at work here than progressive passion.

First and foremost is the state’s expensive health care status quo. In 2010, prior to the enactment of recent national and state-level reform laws, Vermont, at $407, trailed only Massachusetts, at $431, in an analysis by the Kaiser Family Foundation of the average monthly premium per covered individual in the individual health insurance markets in 44 states.

The next year Kaiser also found that Vermont’s annual per capita spending on health care of $7,635 was well above the national average of $6,815.

There is also the reality of a health care “market” that has already been carved up by providers. “Vermont is divided into non-overlapping service areas, which reduces competition among hospitals, mental health agencies, and other health care organizations,” according to a report earlier this year sponsored by the Robert Wood Johnson Foundation, a nonprofit organization that promotes health care equity and efficiency. Only two private insurers sell policies in the Vermont market, which is dominated by Blue Cross Blue Shield of Vermont with an 80 percent share, according to the foundation.

Some in the industry who say they recognize the need for changes in the health care system welcomed the governor’s decision to avert his eyes from the single-payer prize. “I actually think it will add momentum to health care reform,” said Bea Grause, president of Vermont Association of Hospitals and Health Systems.

Paul Harrington, executive vice president of the Vermont Medical Society, said that although the society’s governing board had not yet met, there seemed to be “general agreement that the governor made the right call.”

The current health care reform push dates to the passage, in 2011, early in Shumlin’s first term, of Act 48. Publicly financed health insurance, the element tossed aside by Shumlin last week, was only one element of that legislation. Earlier this year, the Johnson Foundation characterized Act 48 as a move “toward a more government-regulated and -controlled health care system.”

Shumlin sounded a similar note on Wednesday when — albeit on page nine of an 11-page speech — he described health care as “a public utility” that should be regulated by the Green Mountain Care Board, a five-member, appointed panel that currently reviews hospital budgets and some health insurance premiums.

Al Gobeille, the chairman of that board, reacted cautiously to Shumlin’s vision of the board as a utility regulator: “I, like you, want to find out exactly what he meant by that.”

Gobeille, a Burlington restaurant owner, said he had had some discussions with Shumlin’s staff about an enhanced role for the board and the view of health care as a public utility in the context of a move toward a publicly financed system, but not since the governor’s decision to back away from public financing.

But the discussion had not gone beyond consideration of asking the board to “investigate” how the public utility model might be applied to its work, Gobeille said. He stressed that any such investigation would include input from stakeholders, including any “regulated entities that are concerned about” how the public utility model would apply.

There are some concerns.

“We’ll need to see greater detail,” said Harrington, whose Vermont Medical Society has a membership of more than 2,000 doctors and medical students. “We already have a highly regulated health care system in Vermont,” he added. “I don’t think anybody wants to see the state micro-manage the health care system.”

Grause, the hospital association leader, said she did not recall hearing Shumlin’s characterization of health care as “a public utility” and declined to comment.

Sen. John Campbell, a Quechee Democrat and Senate president pro tem, said he heard talk of the board’s enhanced role not as a call for stronger regulation but for “a partnership.”

But Rob Roper, president of the conservative Ethan Allen Institute, heard in Shumlin’s use of the term “public utility” a call for more “government control of health care that won’t work.” The state should get out of the way and seek a free-market solution, and recognize that the drawback of the public utility concept. “If you’re a doctor,” he added, “why would you want to come to work for a utility in Vermont?”

But Elliott Fisher, the director of the Dartmouth Institute for Health Policy and Clinical Practice, said he saw an ongoing role for the state. “I think we should look at health care as something that requires government to be engaged in improving care and lowering costs,” he said. “Right now it does not work as a market.” Fisher is an advocate for payment reform.

That’s another central theme of health care reform in Vermont. So-called payment reform is widely embraced as a weapon against rising costs, especially when described in general terms such as paying doctors according to the health of the populations they serve rather than with fees tied to the provision of more services. That would remove incentives for wasteful spending, advocates say.

On Wednesday, reining in health care figured prominently on Shumlin’s list of new health care reform priorities. Shumlin said he would “make sure our cost containment is rock solid by strengthening the efforts of the Green Mountain Care Board to change how we pay health care providers.”

Gobeille, the board chairman, said changing how doctors and hospitals get paid is key to the board’s efforts to contain health care costs. “If we can’t get that right in the next couple of years, we will not have done very well.”

Other groups will have their own ideas about what should be moved to the front burner of health care reform. Harrington said that, among the ideas raised by Shumlin, the state Medical Society’s two highest priorities are increased funding for Medicaid reimbursements to primary care doctors and more funding for the Vermont Blueprint program, which coordinates primary and community care to chronically ill patients. “This can be done immediately,” Harrington said.

There are practical considerations. Recalling Shumlin’s suggestion in his speech that oversight of the state’s efforts to build a statewide network of electronic records systems in hospitals and doctors offices be given to the Green Mountain Care Board, Gobeille said he was “listening to the speech and (thinking) ‘that’s a lot of work.’ ”

Harrington, who chairs the executive committee of the nonprofit group that is building that network, said the proposal to make that entity subject to the board’s oversight was “somewhat unusual.”

Such are the mundane issues that seem likely to confront health care reformers in the near future. And while single-payer advocates may feel the need to mourn the passing of what had seemed their best chance to introduce in the United States a system used in other countries, others are getting organized to define the agenda in health care reform’s next phase.

“I am hopeful that we are still on the path toward leading the country,” said Grause. “We’re not giving up.”

By Rick Jurgens