Burlington Free Press
By Nancy Remsen, Free Press Staff Writer

MONTPELIER — Consultants who analyzed administrative expenses for the public/private management of the state’s Catamount Health insurance product over the past two years concluded it might have cost $1 million less per year had the state run it. The Douglas administration disputes this conclusion.

The Legislature created Catamount Health in 2006 to give Vermonters without health insurance a more affordable option. In negotiations to win support from Gov. Jim Douglas, the Legislature agreed that private
insurance companies would provide the coverage, while the state would determine eligibility for the coverage and subsidize the monthly cost to reduce the expense to customers.

As part of the deal, the Legislature required a study of the administrative costs after two years of operations. Catamount Health was launched in the fall of 2007. The Center for Health Policy, Planning and Research at the University of New England in Maine conducted the study and reported this week.

Researchers suggested if the same state office that administers Medicaid and the Vermont Health Access Program also ran Catamount, administrative costs would decrease by about $1 million a year.

Susan Besio, director of the Office of Vermont Health Access, disagreed. “The assumption there is $1 million savings is way over-inflated,” Besio said. “The assumption in this is that we could do it without our existing administrative costs. I don’t think that is true.”

Besio pointed out that Catamount reimburses health-care providers at a different rates than Medicaid and has an annual deductible that Medicaid doesn’t — just to name a few differences. Accommodating those differences would increase the administrative burden on the state, she noted.

Finding savings and avoiding increased costs in government are important in this year of shrinking tax revenues. Officials are grappling with a projected gap of $150 million between revenues and expenses for the budget year that
begins July 1.

“In this economic time, we need to turn over every rock,” said House Health Committee Chairman Steve Maier, D-Middlebury. “Here is an analysis that says we can save some money. It is complicated, so we need to spend some time with it.”

“There are some inherent inefficiencies having this partnership handle things,” Maier continued, “but it is a system that is working right now.”All the state’s health-care programs, including Catamount, are headed toward insolvency, because revenues can’t keep pace with mushrooming health-care costs. Catamount Health will become insolvent in several months, the researchers said.

Some lawmakers had hoped the study would show big savings if the state ran Catamount, said Jim Hester, director of the Vermont Health Care Reform Commission.

“There was a hope there might be enough savings on administration to make a dent in insolvency,” Hester said. “It helps, but it doesn’t really close the gap.”

Peter Sterling, executive director of the Vermont Campaign for Health Care Security Education Fund, called the researchers’ finding significant: “We have overpaid at least $2 million to let private insurance do what the state could have done.”

The question of whether to make some change in Catamount is part of the larger dilemma facing lawmakers this year: What, if any, health reforms can the state afford?

Lawmakers entered the session thinking Congress would produce health reform, but that effort has stalled.

Maier said he still holds out hope, but added, “I don’t think we can wait much longer after Town Meeting break.” The Legislature won’t meet the first week of March.

The Senate Health and Welfare Committee wrestled Friday with what steps to propose this year. Chairman Doug Racine, D-Chittenden, said the whole health-care system — not just the state programs — “is out of control. It is not sustainable.”

He doubts, however, there is political will to enact major reform this year. “So what do I do?” he posed. “I’d like this committee to find something we could have consensus on.”

Dr. Deb Richter, a primary care physician and strong supporter of a  government-financed health-care system, urged lawmakers Friday to
be bold.

“We have to act at the state level,” Richter said. “We can’t wait for the federal government.”