By Daniel Barlow
Vermont Press Bureau
MONTPELIER – Many of Vermont’s health care woes stem from the fact that the state has an ineffective patchwork system of private insurance plans and government-funded programs, a Harvard economist told lawmakers Thursday.
Dr. William Hsiao, an economic professor at Harvard’s School of Public Health, has been hired by the Vermont Legislature to design three new health care models for the state. Just weeks into his job, Hsiao gave a sobering assessment.
Hsiao, who helped Taiwan design its health care system several years ago, told the Health Care Reform Commission that when the private insurance industry doesn’t work for certain populations, usually the government steps in with programs such as Medicaid, Medicare and Dr. Dynasaur.
“You are trying to do it right, but really you are just plugging holes,” Hsiao said Thursday afternoon to a packed room at the Statehouse. “It is a patchwork system. It doesn’t cover everyone, it is not effective and at times it overlaps.”
Struggling to get health care costs under control and to expand coverage to the state’s uninsured, lawmakers allocated $300,000 this year to hire a consultant to study the state’s current system and bring them three new models early next year to consider.
Two of those models will be a single-payer plan – where all residents would be included in one insurance pool – and a public option, which would be a government-backed health care plan designed to compete with private insurance plans. The third plan is undefined.
Hsiao told lawmakers that he is in the “very, very early stages” of his work, which includes a team of nearly a dozen people. His first approach will be to not just look at the problems of the state’s health care system, but to diagnose the causes of those problems.
But he also acknowledged that any new health care models he brings to lawmakers next year needs to acknowledge the political, economic, federal, institutional and operational constraints.
Quite simply, he said the perfect model for the state might not be allowed under federal guidelines. or the political support to enact it may be lacking.
That become clear when one lawmaker mentioned that he hadn’t heard Hsiao yet mention ERISA, the 1974 federal law that prohibits states from enacting laws related to employee benefit plans – a stumbling block for some suggested reforms.
“I have not forgotten about it at all,” Hsiao said to a roar of laughter in the room. “It’s my nightmare.”
Hsiao said he was realistic about what he could accomplish with $300,000 (he is also donating some of his own time to the project) and the tight deadline. So while he said he would bring several designs to the Statehouse next year, there may be some issues he can’t look at closely enough – what he called “lower priorities.”
That included the economic impact of the various plans on Vermont’s economy. Putting together a macro-systematic look at Vermont’s economy would take upwards of two years and at least a half million dollars alone to pull off, he said.
If health care costs are cut for employers, they’ll likely spend the extra money to hire more workers, he said. If premium costs are cut for people, they’ll likely spend that extra money stimulating the economy by purchasing goods, he added. But that may be as far as the assessment might go.
“How it would affect Vermont’s very specific economy is a very complicated question,” Hsaio said. “It’s a whole new set of equations.”
That troubled some lawmakers, especially the Republicans on the commission. Sen. Kevin Mullen, R-Rutland, reminded lawmakers that when they tried to reform health care in 20006, companies like IBM threatened to leave the state if the system was too different than in other states they operate.
“Unless we address these lower priorities, I worry that we will just be spinning our wheels again,” Mullen said. “I would like to see some progress.”
Daniel.Barlow@timesargus.com
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