Monday, January 25, 2016

January 9, 2016 Legislative Update

A new year and a new legislative session have begun, and it sounds a bit like a broken record: a mid-year budget deficit and an even bigger deficit looming for the coming fiscal year. We just keep on passing budgets that spend more than the economy is expected to grow, and should hardly be surprised by the outcome.

The chair of my Health Care Committee took a moment for reflection, nonetheless, to ground us for our work ahead, reminding us of the “extraordinary ongoing experiment in democracy” that we are participating in.

Imagine the concept, he said, of people deciding to have every town elect someone from among themselves – just another ordinary lay person without any special expertise – to send to Montpelier to try to make decisions about what is best for the town and the state.

We’ve only been trying it for a few hundred years, and it’s not a perfect system, but it’s what we’ve got and it’s better than the alternatives other folks have tried.

For the 11 of us around the table in the Health Care Committee room – six Democrats, three Republicans, one Progressive and one Independent – it was a time to remember that we share the common purpose of trying to make Vermont a better place for us all and future generations, even if we don’t agree on how to best get there.

Our Chair, Bill Lippert, suggested that in the midst of the turmoil of pressing issues of the months ahead, we keep in mind our goals and aspirations for a better system for the delivery of health care, even if they cannot or will not be achieved in the short term.


What are those most pressing short term issues?


Headlines have been telling us that a third of Vermonters are now on Medicaid, and that we hadn’t projected the size of the Obamacare increase, driving our tax burden to unsustainable levels.

That’s not fully accurate; the devil is always in the details.

About a quarter of Vermonters now have Medicaid as their primary form of health insurance. The rest of those leading to the “one third” number are those who receive some level of financial help through Medicaid for their regular health insurance: premium assistance for insurance bought through the health exchange, for example, or Medicaid as a secondary payer while on Medicare but financially needy.

Our forecasters were actually pretty accurate about how many persons would be eligible for help, but the numbers of which persons would fall into which category were off. More people were eligible for regular Medicaid as a result of both the economy (lower incomes) and the changes in federal definitions of what constitutes “income.”

Fewer ended up on premium assistance, and the cost ended up $52 million higher than expected this year. Of that, $23 million is the state’s share.

That $23 million shortfall is the largest, but not the only increase in health care spending being proposed for this mid-year adjustment to the current year’s budget. The “$1 million here, $2 million there” other increases (called “upward pressures” in government bureaucrat language) bring the total shortfall to $35 million.

That, of course, will carry forward into the needs in the budget for the year ahead.


All Payer Model

When the governor decided last year what some of us had known for a long time – that Vermont couldn’t go it alone to create a universal health care system – our Green Mountain Care Board began exploring other mechanisms to achieve payment reforms that would create a fairer and more sustainable way of financing our health care.

The Green Mountain Care Board was created by the legislature to lead health care reform, and this five-member board was vested with significant power to regulate hospital and private insurance rates.

Many parts of the Affordable Care Act (Obamacare) are still rolling out. Medicaid expansion was only one piece. The federal government is in particular pushing for cost containment measures for Medicare. (Refresher: Medicaid is health care funded by the state and federal government for those with low income; Medicare is the federal health insurance paid for through payroll deductions for the elderly and persons with disabilities.)

One of its tools is the “Accountable Care Organization” – ACOs – which are a lot like old managed care companies except that the management of care and costs is done by the provider organizations themselves, rather than an insurance company. Many Vermonters are not even aware that their Medicare is now being managed by an ACO.

The ACO gets paid for the Medicare services delivered, and if, through better management of patient care, it costs Medicare less than the estimate of what it would have cost otherwise, the ACO gets to split the savings with the government.

In our current payment system, care providers are paid differently by private insurance, Medicare, and Medicaid. One of the things that drive health insurance premiums up so high is that Medicaid doesn’t pay its full share of costs, so that cost is transferred to private payers, something called the “cost shift” that amounts to a hidden tax to pay for Medicaid.

The vision of the “all payer model” is for Vermont to set payment amounts for all providers: payments by Medicaid (which it already does); by private insurance (which it does indirectly, through its insurance rate-setting authority); and for Medicare (which would require federal approval, called a “waiver.”)

An ACO could then manage care for all the patients it serves without receiving different rates for different patients. The actual services a patient receives would remain controlled by existing law. In other words, if Vermont obtained a “Medicare waiver” in order to build an all-payer model, it could not touch the benefits that Medicare recipients are entitled to, but it could set the rates that are paid to the ACO.

The Achilles heel in this that isn’t discussed much is that an all payer model would mean Vermont would have to start bringing Medicaid rates up to even off into a similar range as the other two payers. Where would that money come from?

This whole idea needs a great deal of care and thought, but right now, under Vermont and federal law, the state can seek the Medicare waiver without the consent of the legislature.

Another member of the Health Care Committee – Paul Poirier, an Independent from Barre City – and I are having a bill drafted to require legislative approval before a waiver could be signed with the federal government.

This model may actually prove to be a valuable tool for payment reform, but it is full of potential pitfalls as well. We need to have the scrutiny and the confidence of much more oversight if we are going to take this plunge.


The Health Exchange

Much more out of the public eye these days is Vermont Health Connect, the exchange for signing up for health insurance that was such a fiasco in its first year of attempted operation.

It’s doing better, but it’s far from functioning smoothly or the way intended, and new glitches keep erupting.

One of the new “glitches” has to do with people who discover their insurance has been cancelled because they didn’t pay their premium by the due date, even after receiving a grace period.

Nothing wrong with that, it would seem.

Except that we are cashing their checks!

Usually, in business, if your check is cashed it means acceptance of a late payment.

The state says it plans on fixing this, not cashing checks if a person is being cancelled, but it isn’t a priority. There are too many other priorities – other “glitches – that are ahead of it in line.

That gives an idea of how much work is still ahead.


Thanks for the honor of representing you! You can contact me or Rep. Patti Lewis by email ( for me;  for Patti) or by leaving a message at the statehouse at 828-2228. We welcome your feedback and input.

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