Legislative Update, March 21, 2015

It was good news this week when the administration reported to our committee that it has finally agreed to consider using a federal health insurance exchange if Vermont Health Connect does not become fully functional by this May. Next week, we will begin looking at proposed bill language that would establish a clear time line for this decision-making process.

This follows a week after agreeing, under growing pressure, to allow individuals to enroll in Health Connect plans directly with carriers next fall. So there may be light at the end of the tunnel. These are both “fixes” that I have been fighting for.

Important news for Berlin and Northfield: the House Fish, Wildlife and Water Resources Committee has decided that it will not take up a bill that would have allowed towns to prohibit fishing, swimming and boating on their drinking water sources that are located in other towns.

This bill was brought by Montpelier representatives to gain control over the use of Berlin Pond. The committee determined that these decisions require the consistency of state, not local oversight, since water is a public trust.

Meanwhile, a number of policy bills occupied House floor time in the week after the crossover deadline for House bills heading to the Senate. Next week is the deadline for money bills. Most House Committees will now spend the rest of this session reviewing bills sent over by the Senate.

Here is a sampling of House bills passed and sent to the Senate:

Revenge Use of Sexually Explicit Photos

Taking photos of someone who is nude or involved in sexual activities in places where they have an expectation of privacy is already illegal. But what if one consents to pictures being taken (“just having fun,” or because it’s within a trusting relationship, “just between us,”) and when a relationship turns sour, the pictures get posted on Facebook in revenge – or worse yet, for profit?

The point of this bill is to make that a crime, ranging from misdemeanor to felony depending on the level of harmful intent of the person doing the posting. When technology changes, and a new means of people harming other people emerges, we need new laws to address it.

There is always a balance required by the First Amendment. What you do in the town square (that is, with no reasonable expectation of privacy), can’t be blocked from being filmed as it happens or from being transmitted later. I introduced an amendment to help clarify this in order to protect the integrity of the new law, and it was adopted on the floor.

Accessible Roads for Trailer Parks

There is a good amount of law on the books to protect the rights of mobile home park tenants to have safe premises, but concerns arose after Irene about the failure of some owners to maintain safe road access for emergency vehicles. This bill automatically deems it a safety hazard if there is not reasonable access, and allows for withholding of rent or for fines up to $10,000 for a single violation.

“Reasonable” (to the tenant) was the sticking point for me: that isn’t a very clear standard. As any of us living on dirt roads know, that there can be times, whether in mud season or in the middle of a snowstorm, that roads are impassible. It is the town that determines what is reasonable to maintain safe access, not any one of us as an individual – and we can’t withhold property taxes if we disagree with the town.

Thus despite supporting the intent of this bill, I but voted no on the first vote; it passed on a 95-47 roll call.

The next day, we received additional information about the mechanisms within existing law that enables the owners to resolve problems, and that provide eternal review. Based on this, I was, along with others, able to shift to support the bill on its second vote; the roll call was 117-24. Details can matter!

When Do Kids Become Adults?

Vermont is only one of two states in the country that allows the start of the prosecution of any level of crime by a 16- or 17-years-old to be in adult court. Most state systems require serious crimes to go to adult court, and allow a Family Court to send other felony charges to adult court, but Vermont allows total discretion by prosecutors on that decision including for misdemeanors.

Among other things, it means that if the court later decides that the situation is more appropriate for Family Court, it’s already too late in terms of the public record. A 16-year-old making a youthful mistake may already have his or her name in the paper as an arrested criminal.

This bill requires the initial charge filed by law enforcement to be cited as a juvenile offense (other than in serious crimes); then the prosecutor can file it in the court he or she deemes appropriate. This is still far less protective than 48 other states, since the prosecutor, not the court, makes that decision. But it is a step forward. I voted yes.

This went hand-in-hand with a bill the week prior that banned a sentence of life without the chance for parole for crimes committed before age 18. It doesn’t mean that an offender cannot be held for life imprisonment, but it means that there must at least be the opportunity for a parole board to eventually consider whether a release is appropriate. I also supported this.

Limited Liability Corporations

This bill rewrote the law on the licensing and functioning of a type of corporate entity. It was 80 pages long in the calendar, and is a good example of a type of bill that a representative cannot fully understand – either by reading it or listening to the floor presentation – without having been part of the detailed committee consideration. How does one decide how to vote? There is reliance on the committee process and the reassurance of an 11-0 vote by the members of that committee. It passed on a unanimous floor vote.

Emergency Involuntary Procedures

Last year, we addressed the difficult balance between individual rights and involuntary treatment when a person with a mental illness is objecting to the use of medication. This year, we looked at a similar issue when a court is not involved, because there is an immediate emergency regarding self-harm or harm to others by a person within a hospital.

Vermont sets a “best practices” standard that is above the “floor” set by federal rules, and this bill clarified certain parts of requirements under state rules. I was concerned that we were not including children under these protections, and offered an amendment that included them while also allowing variation where the best practice standard might differ for children. This amendment was accepted unanimously on the floor.

Town and School Budget Reports

The week before town meeting, there was a Front Porch Forum exchange on the subject of our state law regarding the distribution of town reports. The Government Operations Committee took a look at the issue this week, and concluded that the law is clear: a town can either individually mail or deliver the reports within 10 days in advance, or it can – by vote of the residents – give notice of where it is available, within 30 days prior to town meeting.

It appears that many towns, like Northfield, have recognized that individual delivery is too costly and making it easily available in public locations makes more sense. But they haven’t necessarily held the required vote to do so, and don’t have it available 30 days in advance.

It seems that the state should either expect the existing law to be followed, or change the law to follow the change in standard practice; the committee will continue to consider this issue.

Major Bills Pending

There are major bills getting media attention because they were voted on by committees, but that will not actually reach the House floor until next week or later because they have a secondary or third committee that must review them, most often based upon taxes or spending. These include the education funding reform bill (with proposed spending cap), the transportation funding bill, the water quality bill, and the ban on teacher strikes. Underlying all of them is the general fund budget, which is projected to be up for debate on the floor this Thursday and Friday.

Please keep sending me your thoughts and concerns – they are important to me. Contact me any time via messages at the state house (828-2228), home (485-6431) or by email: counterp@tds.net. You can read my past updates on my blog site, www.representativeannedonahue.blogspot.com.

 

Special Health Care Bill Update, March 14, 2015

My committee (House Health Care) passed a major bill this week, so this is a bonus week update for those interested in reading a very in-depth report on this multi-piece bill.

We also passed a bill that represents a change in policy and very good news for individuals who have been forced to enroll for health insurance on the dysfunctional Vermont Health Connect system even when they were not applying for subsidies.

The big bill included the sugar-added beverage tax. I received a number of responses to my request for feedback on that issue, and not surprisingly, there were a wide range of opinions. All of them, however, had productive thoughts or insights that helped broaden how the issue might affect Vermonters – whether positively or negatively.

I did not support the bill, but it is also important to know that the context included other parts of the bill and alternatives that were discussed.

The New Spending

First, the bill is focused on $47 million annually in new spending for a list of specific health care initiatives. When combined with federal matching funds, this brings the total budget of new expenditures to $91 million, annualized. The governor’s health care proposal this year was to impose a .7 percent payroll tax for a list of similar initiatives. Our bill includes two revenue sources: the two-cent-per-ounce sugar tax, and a .3 percent payroll tax. In effect, our committee bill substituted part of the payroll tax for the sugar tax.

There are two other changes from the original budget proposal from the governor. The committee bill repeals the current “employer assessment” levied against employers who do not provide health insurance.

Some people have felt that the payroll tax would mean “double dipping” from these employers. This is because, at least in theory, the payroll tax on employers who do currently offer insurance will be returned to them through lower health insurance premiums because Medicaid will be reimbursed at a higher level, reducing the amount private insurance carries part of Medicaid costs (the “cost shift.”) They will be “held harmless” from the impact of the new tax. The payroll tax on employers who do not currently offer insurance will not benefit them through lower insurance rates (since they don’t offer insurance.) Thus, also maintaining the assessment would doubly penalize them for not providing coverage.

Repealing the payroll tax, which would have raised $18.3 million, means that the addition of $47.2 million in new spending over a full year requires raising at least $65.5 million in total revenue to create a balanced package. The new payroll tax would raise $39.7 million, and the beverage tax is projected to raise $30.9 million.

Those are the figures when rolled out for a full year. Since it most pieces would not begin until next January, covering the half year in the upcoming budget requires $29.8 million in new state spending ($56.6 in new initiatives, with the federal funds added.) The tax projections are $17.8 million from the payroll tax and $17.8 from the beverage tax, minus $4.4 million from the elimination of the employee assessment in the fourth quarter.

Moving the Medicaid Cost Increases

The other change from the governor’s original proposal with the .7 percent payroll tax is that our committee bill does not include the cost of the $16 million increase in existing increased Medicaid expenses, which really does belong in the existing budget, not a budget for new initiatives. The administration now agrees with that perspective.

However it is important to realize that this $16 million increases the amount of new revenue or cuts that other committees will have to identify beyond the governor’s proposed cuts and revenues, since it was originally proposed to be funded as part of the payroll tax. The other addition to the gap beyond the governor’s original proposal is the $18 million in revenue shortfall reported in January, thus $34 million in total.

On to the vote:

Our chair allowed for recognizing committee members’ positions on the significant separate issues through straw polls.

We first voted on the policy directions of initiatives in the bill. It further supports the Blueprint for Health costs for coordinating care for chronic health conditions; reduces the price disparities between state payments for health care (Medicaid) and private insurance payments; increases subsidies for low income individuals buying insurance on the Exchange; focuses on specific support for enhancing universal access to primary care; provides the resources for increased oversight responsibilities of the Green Mountain Care Board; and provides an inflationary increase to health care service providers not covered by the Medicaid increase.

Some of these initiatives do not have consensus support, in part because they would help support a future single payer financing structure for health care. They are initiatives that I do support – they are investments in better health care and less spending over time -- and to the question, “if resources were not an issue, how would you vote?” I voted, “yes.”

We then voted on the use of the two-cent-per-ounce sugared beverage tax as a revenue source for the bill. Note that this did not use any of the revenue to fund other programs that have been suggested as linking to the tax purpose, such as making fruits and vegetables more affordable. It also includes no funding for a public education campaign.

I told the committee that I would be ready to seriously consider this tax if it was proposed after first having an aggressive education campaign about the health risks of significant added sugars. It’s what we did, for example, with nicotine – and still do, as a combined education and tax effort. To spring it on consumers without doing that first, I think, is unfair and counterproductive. Given our budget shortfall, I would even support a small beverage tax in order to fund such a campaign. That approach did not receive committee support.

The other issue of particular concern is the impact of any really major tax differential between Vermont and our surrounding states. That is counterproductive to our critical need for economic development – something essential to addressing our structural budget deficit. So I voted “no” on this straw vote.

The same issue rings true if we were to become the first state to impose a state payroll tax, regardless of good motives or policy efforts. We do not stand in isolation, and what might be otherwise argued as good policy is bad policy if it puts us in a significant economic disadvantage compared to other states. I voted no on that component as well, and thus no in the formal vote on the bill as a whole as well.

Many More Steps to Go

Note that this is only a first step in a long process. I think our committee has set itself up to have wasted all of the time we spent in developing this bill, given the realities of our bigger budget picture.

This bill will next travel to the House Ways and Means Committee to assess the tax proposals. Will some survive? There is a question as to whether there is much support there for either the sugar tax or the payroll tax. At the same time, that committee will without doubt be assessing some new revenue sources as a part of the existing $34 million gap (or $112 million, if you do not start by assuming the governor’s revenue proposals will be accepted.)

Ways and Means will also have to look at sustainability. The sugared-beverage tax revenue amount is only a rough estimate, and will raise less over time if it succeeds in its purpose of reducing consumption. So we will have started new programs that will grow in cost, and they will require other, additional sources of new revenue to keep them going in the future.

After Ways and Means, it goes to House Appropriations. That’s the committee already “spilling blood” (in one committee member’s words) in terms of cuts to balance the budget even assuming some new tax revenues.

Will Appropriations embrace the $30 million in additional state budget spending for the half year that would be covered in the fy 2016 budget? (And then a commitment to $47 million to continue in the following year?)

Every penny of that $30 million, along with the existing $34 million gap, must be filled by other, even deeper cuts, or through proposed additional new taxes, or both, just to get through the current year. I think that my committee was irresponsible to even suggest to our colleagues that a $30 million combined spend and tax-to-pay-for-it package be added to the current fiscal crisis.

Whatever the House ultimately passes, all goes to the Senate for scrutiny.

So you have not heard the last word on the spending or the taxes – sugar and otherwise – that left my committee on Friday afternoon.

****

Direct Enrollment

I referenced some good news at the very start of this update: last week we also passed a bill that will permit individuals to enroll for health insurance directly from the insurance carriers, instead of from the broken “Vermont Health Connect,” as long as they are not applying for subsidies. (Federal law requires that enrollment for subsidies go through the computer exchanges.)

The insurance products will the same as those on the Exchange. This will take effect beginning with the next open enrollment period next fall. This is the same process that we allowed for small business last year, but we were forcing individual purchasers to continue to enroll through the Exchange.

This is a reversal of a policy the state and legislature had insisted upon from the beginning of the Exchange.

Just a few weeks ago, my committee debated this issue. The governor’s office opposed it, insisting the Exchange would be working soon. The three Republicans tried to push back, but the best we could get at that time was agreement to allow direct enrollment for this fall only, and only if the system was still not working by mid-summer.

Under the onslaught of bad publicity and pressure over the ongoing level of dysfunction, the administration had a change of heart, and our committee chair and other committee members immediately followed suit. 

 

Legislative Update, March 8, 2015

Rep. Anne Donahue

Legislative Update

March 8, 2015

 

Having a week away from the legislature at about the halfway point of the session gives a window to look at issues not immediately in front of one’s own committee. We will soon begin to spend more time voting on bills on the House floor, and less time deeply submerged in our committee specialty areas.

The biggest task – always our most significant responsibility – is establishing the state’s budget, and it remains hard to predict how this year’s $112 million deficit will be addressed.

I do want to correct myself from my last update. I passed along misinformation stating that there was an added hole of $16 million due to increased Medicaid enrollment. That hole is, in fact, part of the $112 million. It was confusing because it is a hole that the Governor’s budget proposes to fill as part of a .7 percent payroll tax in a separate package that also adds new health care spending.

Beyond that, however, are dozens of other issues and challenges: the education fund and property taxes, addressing child protection services, gun control proposals, and the sugar-added beverage tax, to pick only a few.

***

Education. Just before the break, the House Education Committee put forward its reform bill. It does not propose radical change to our current combination property tax-income tax funding mechanism. It does put more pressure towards creating larger school districts, although the debate continues over whether this is important to either quality or cost containment or both.

The key language is the requirement that towns develop “integrated education systems” that include an average daily membership of at least 1,100 students in prekindergarten through 12^th grade by 2019 unless granted a waiver by the State Board of Education.

To put those numbers in perspective for our area, the current Washington South Supervisory Union (Northfield and Roxbury) has about 650 students: too small. Washington Central (Berlin, East Montpelier, Worcester, Calais and Middlesex) has 1,490: just fine.

Who might Northfield be able to partner with? Montpelier is growing and expects to reach about 1,000 students by 2019. Williamstown currently has about 550 students.

This is not a proposal that would mean closing schools, but a single governance structure would be making those decisions. Are Northfield or Williamstown students best served by their current high schools that may be more limited in what they offer based on size? If these discussions move to real-life, there will be a lot to consider.

As far as budgets go, the state legislature likes to point to local town decisions, but your school boards – your neighbors – are the ones trying to keep those numbers as low as possible. There aren’t a lot of people willing to take on that tough job, as board vacancies attest. Changing the funding system to make voters “see the connection” between their vote and their taxes won’t necessarily reduce costs.

That’s partly because local taxes can get driven up because other town budgets increase. That is a part of the system that has to be built in in some way because of the need for equity in education: poorer towns can’t be left with inadequate budgets, so we must have a statewide component.

Yet unless budgets change, reducing property taxes only means increasing other taxes, and most Vermonters are already paying based upon income.

The House bill shows no real appetite for a radical revision to the current system. So that’s my not-very-optimistic, but trying-to-be-honest, appraisal of the prospects for any major changes in education funding this year.

***

Child Protection. There has been a great deal of legitimate concern over the deaths of two toddlers last year whose families already had involvement in our state child protection services. A special legislative committee took testimony last summer and fall, and came back armed with proposals to improve our laws.

I am always a bit fearful of “reactionary” bills: those we pass after something bad happens. They run the risk of over-responding to a narrow issue, and creating unanticipated new problems. We do not live in a perfect world, and sometimes bad things do happen that, when we try to fix them, we make worse.

A frequent comment last year was that Vermont had gotten “out of balance” in the challenge of weighing parent’s rights against what is in a child’s best interests. The data don’t necessarily bear that up: our rate of termination of parental rights of children ages 0-3 is in the top five states in the nation.

The Senate has now passed S. 9, and the House Judiciary and Human Services Committees will be taking it up. Most of the bill includes solid, practical steps to increase the sharing of information and the ability to intervene appropriately.

I do have concern with some changes in language, and hope the House will scrutinize it carefully.  Physical injury has been redefined to mean “any impairment of physical condition by other than accidental means.” (Any? What does that mean?)

Risk of harm now includes “leaving a child without developmentally appropriate supervision.” (“Developmentally appropriate”? How is a parent supposed to interpret that?)

“Sexual abuse” has been clarified to be identified as behavior defined in our criminal laws, but includes behavior that “constitutes a potential violation” of those laws. (What is a “potential violation”?)

In our important desire to protect children, I fear that we sometimes forget that removing a child from his or her home can itself be extremely traumatic to a child. I am not weighing parents’ rights in looking at this balancing. I am weighing the right of a child to be protected from over-zealous interference from the state.

It also matters what we offer a child as the alternative. We know it is damaging to children to bounce them from one home to another. In Vermont, 24 percent of children are moved three or more times in the first 12 months of foster care, compared to an average of 14 percent among other New England states.

So this bill needs careful monitoring.

***

Gun Control Proposals. The very controversial universal background check provision that would have affected private sales has been declared dead in the Senate, but two other provisions in the bill remain under consideration.

One creates a parallel state crime to federal law for gun possession by a person with a violent felony record (federal law is for any felony). The other requires reporting the names of persons who are court-committed for mental health treatment (outpatient or inpatient) to the federal data base. (Under federal law, such persons may not possess or be sold guns.)

Both of these, on the surface, sound completely reasonable; both require digging deeper. Do we actually have a problem?

On average, among all deaths from gun violence in the state (about 50 per year), three percent are accidental, seven percent are homicide, and ninety percent are from suicide. The suicide data is not new to me. Counting all means of suicide, we lose almost 100 Vermonters every year. This far more than motor vehicle deaths and includes many young Vermonters, and yet with much less effort invested in prevention.

Providing names to the data base doesn’t address that; it addresses only the fear of a higher risk of violence to others, which is actually almost statistically nil. It also only addresses persons who have received treatment, rather than those who may be at higher risk because they have not.

Most solutions that appear simple, are not.

***

The Sugar-Added Beverage Tax. Not diet soda, but yes, sports drinks. (Remember the old days, when we were being warned about the dangers of artificial sweeteners in diet beverages?)

What is the motivation here? It depends on who you ask: a “sin tax” (like alcohol) that raises revenue by taxing something that you don’t need and is bad for you; or public health initiative that aims to promote healthy behavior (like cigarette taxes) and raises money as a side benefit.

From a health perspective, there is little doubt that we take in far too much sugar and it is hurting our health, which hurts all of us by helping to drive up health care costs. Drinks are hardly the only source of sugar. It’s hard to find a loaf of bread to buy that doesn’t have added sugar. But they are the most visible and concentrated part of the sugar-added market.

This is a big tax: two cents per ounce is 64 cents for a 32 ounce bottle of soda. It really is intended to try to change behavior. And no one has to pay the tax if they don’t want to: just don’t buy the stuff. If there are going to be new taxes of some sort voted in as part of filling the budget gap, that may make this one less offensive than others.

Is this an appropriate role for government, to not just educate, but try to force us to be healthier? Is mandatory exercise next? (Except that I gave up my prime source of physical activity, downhill skiing, because I was running up health care system costs with my propensity for injuries.)

I’m actually somewhat split on this one, and would welcome constituent feedback.

***

Please always feel free to share your opinions on this or other topics before the legislature. You can leave a message at any time by email (counterp@tds.net) or phone (485-6431) or at the state house (828-2228.) My updates can be found at www.representativeannedonahue.blogspot.com

Legislative Update, February 22, 2015

Legislative Update

Feb. 22, 2015

Rep. Anne Donahue

 

In case anyone is counting, the official budget shortfall has reached $130 million, without counting anything towards Lake Champlain clean-up. We started the year at about $95 million in the red for the coming budget year, but shortly afterward, the new forecast was down by another $18 million.

It has now been officially recognized (as I suggested it needed to be, two weeks ago) that the $16 million in state dollars in new Medicaid caseload has to be counted as part of the deficit, because it is a cost that reflects continuation of a current program.

If we didn’t count it as deficit, we would be pretending we didn’t raise new taxes to fund it, which is the way the governor’s budget presented it.

Our economic engines just haven’t revved back up, so our spending is catching up with us. So how do we even begin to address these numbers?

Most committees have been told that they must find additional cuts beyond what the governor proposed. My committee – health care – has a whole list of increases proposed by the governor that would be paid for through his proposed payroll tax, and we have been told we need to begin to prioritize them in case we cannot do them all.

They are mostly very good initiatives, but I find it hard to imagine any of them as being more important than reducing the amount we will be cutting from essential human services. It is almost inevitable that there will be proposals for some tax increases as well as further cuts when the majority party presents the budget and tax bills several weeks from now.

Here’s what the proposed health care expansions include:

The Blueprint for Health. This is Vermont’s signature health care program to create community health teams to support primary care practices in integrating care for people. It was experimental at first (can we provide better care and save money?), but is beginning to prove its worth, particularly with high-cost chronic illnesses that really need good coordination of care.

If you compare Blueprint practices with others, the cost increases for care are on a slower slope. However, it requires an investment to create the health teams, and it requires a small per patient payment to the providers for the extra time they spend coordinating services.

Although it started as a Medicaid initiative, Vermont has succeeded in making it an “all payer” initiative. Private insurers and Medicare now contribute to the pool of money that makes it work.

Now it faces two problems. The percentage of Vermonters on Medicaid has increased, as part of the effort to get every Vermonter insured. That means the Medicaid share for the community health teams needs to be increased proportionately, since it has more patients in the pool. Otherwise we are adding to the cost shift onto private payers.

The amount of money that the primary care practices receive for providing the coordination of care ($2 per person per month) hasn’t gone up in years, and we all know that costs have gone up.

So those are two of the pieces in the health care budget: increase those two funds by $2 million.

Insurance subsidies. Uninsured Vermonters have dropped almost by a half, down to 3.7 percent, in the year since the insurance exchange (Vermont Health Connect) has been open. About two-third of those folks were eligible for Medicaid – which is what caused our caseload growth. However, many of the others were eligible for federal subsidies to help pay for health insurance.

Vermont chose to provide added support above the federal level, but it still leaves a pretty big affordability gap for low and middle income folks who do not get insurance from their jobs and are buying their own. So another budget item is an increase in those subsidies, at a proposed price tag of $2 million.

The Cost Shift. I’ve discussed this quite a bit. The governor’s budget proposes to not increase the cost shift (and to not leave a $16 million hole), through funding the Medicaid increases with the proposed payroll tax (that’s the new $16 million), but to also attack it more directly by increasing what the state pays providers for Medicaid patients.

That would be an increase of $14.5 million in payments. It actually isn’t a pure increase to providers to get closer to actual cost. A good part of it just keeps up with current cost increases and thus prevents an increase in the cost shift.

The chairman of the Green Mountain Care Board, Al Gobeille, addressed the cost shift with our committee last week, and used the term “price differential” instead of cost shift to describe the problem that we need to address. We shift the cost to private payers to make up for the fact within overall health care spending that we underpay what we are buying, but that does not change the fact that the prices being paid are radically different.

That does not make for a rational, or honest system, and it is something that Gobeille thinks is essential to fix.

In addition, the Health Care Advocate’s office has a shortfall of about $40,000 to stay even with the expansion of issues that it needs to be on top of to protect consumer rights.

The Green Mountain Care Board itself needs money in three buckets in order to do three new things the governor wants done, totaling about $1.5 million. First is to study whether the board should be regulating our health care system as though it were a public utility, which would make it more formal – almost like a court – in how it functions.

The second is to prepare the application for an “All Payer” waiver to the federal government.

The third is a directive to move forward with setting rates for professional services – something it was empowered to do under Act 48 (the universal health care bill), but hasn’t acted on yet, given how full its plate has been.

What is an “All Payer” waiver? Here are two things it is not (despite the rumors): it is not a mechanism to pull Medicare funds into a Vermont-controlled health fund and take over the administration of Medicare. It is also not a step that locks us in to moving to a single payer system, although it would, indeed, make it easier to do so in the future.

Medicare would continue to control Medicare payments, just as private insurers would continue to maintain their separate balance sheets, and the state would maintain the Medicaid budget.

However Medicare and private insurers work as completely independent systems right now. In our Blueprint for Health model for primary care, those three payer groups all come to the table to develop the plan to act in a unified way in how to support the community health teams and the Blueprint practices – creating a more uniform care delivery system.

The All Payer waiver would mean the federal government would sit down at the table and share in the same kind of planning for the whole system. It would include a guarantee that Medicare would not pay any less than is due and owing for what it pays now, and would not reduce any services that Medicare enrollees receive.

The private insurers would do the same thing; they’ve already agreed to the concept. Gobeille calls it a “coalition of the willing” to create better integration. The “waiver” basically is the federal government waiving its normal “we are our own system” approach in order to become part of a joint approach.

My bottom line question: if we never moved to a step where private insurance was shut down because Vermont took over all health care spending (the “single payer” plan), could this exist as a way of coordinating among various funding streams, without taking them over? In other words, it is a better system, all on its own?

Gobeille said, yes, and I think that in understanding it that way, it does make sense.

Act 48, the single payer plan, is still on the books. The governor said he didn’t believe it was possible to do right now. He did not say he was throwing out the long-term intent.

My own position has never been far from that. I have simply not believed it was ever feasible unless and until we were not trying to go it alone as a tiny state with tiny purchasing power. If not the whole country, at least a significant region would need to be participating.

Rate setting for doctors: So what about that second piece, having the state establish physician rates around the state?

Gobeille is the one in charge of doing it, but he doesn’t think that’s the right way to develop a more uniform system. He thinks there should be standards and values that are applied, but not individual professional rates. I think that’s a far better approach, and I will be suggesting language to my committee next week to revise the Act 48 language accordingly.

All of these new budget items, in the governor’s plan, come from a new payroll tax that could produce double the revenue by drawing down federal Medicaid matching money. The theory is that this would raise enough money to do the new stuff while also cycling the payroll tax money back to employers through the reduced private insurance premiums that should result.

Vermont would be the only state in the country imposing a state payroll tax. That’s not a very good way to be competitive in drawing in business and rebuilding our economy. The legislature as a whole has been making big noises about not being in support of that plan.

It was also developed before we discovered we were going to have an extra $18 million shortfall in the budget.

But then, where would the money come from to do any of this, given that we are already $130 million in the hole? And that’s without counting the absolutely essential work we need to do to restore the water quality of our lakes and rivers.

It’s no wonder we are hearing so many new revenue proposals floating around, such as the new sugary drinks tax.

We didn’t get into this situation in a year, and we probably can’t get out of it in a year. But major cuts will clearly have to be a part of the mix. So I’m hard-pressed to consider supporting any new health care spending, however much I think it is the right thing to do, knowing that – even if one assumes some new tax proposals -- it will result in even bigger cuts elsewhere.

Please keep sending me your thoughts and concerns – they are important to me. Contact me any time via messages at the state house (828-2228), home (485-6431) or by email: counterp@tds.net. You can read my past updates on my blog site, www.representativeannedonahue.blogspot.com.

Legislative Update, February 8, 2015

Rep. Anne Donahue

Legislative Update

February 8, 2015

 

Once one is plunged into the complex details of our health care system, it can be difficult to take a few steps back and provide a useful “big picture” about the challenges and options we face. At this stage of the session, major bills are not yet reaching the House floor. We are all digging into details in our committees. Mine is the Health Care Committee, so I will try to share some of the facts without going too far into the weeds.

To start: the Governor’s proposal to cut back the cost shift (which contributes to increased insurance premiums) by imposing a payroll tax on businesses (which would, in theory, then result in reduced insurance premiums).

What is the cost shift?

It begins when we, as a state, decide to provide health coverage for those in poverty. That is defined in Vermont as earning less than $15,650 a year for a single person, and $24,250 a year for a family of four. But then we don’t have the money to pay for what we want to buy. So we require health care providers to give the care anyway. They lose money.

They are all non-profits, and can’t just close their doors. So they charge private insurance rates that are higher than what it costs for the service, in order to balance their budgets. (You have probably seen your insurance “explanation of benefits” that lists the discount from the full price of the service. But that is like a store doubling its price list and then giving a 30 percent discount. The price list is far higher than the actual cost.)

The insurance companies (virtually all non-profits as well, in Vermont) set their rates based on how much they have to pay. Thus, anyone buying health insurance is paying a part of the Medicaid budget because of the inflated price charged to the private insurance companies. The cost of the underpayment of Medicaid “shifts” onto the private insurance rates.

This means businesses that provide insurance for employees, as well as individual purchasers. Since most insurance is bought by employers, they are the ones paying most of this cost shift.

Of course, it isn’t really the employers paying. Health insurance is considered part of one’s compensation package, which also includes salary and any other benefits offered. So you, the employee, is actually paying for the cost shift.

Think about the last time you looked for a job. You probably didn’t look only at salary. You looked at whether health insurance was included. Employers compete based upon total compensation packages. As many have become painfully aware in recent years, businesses can’t give unlimited increases in compensation, so as premiums go up, they usually begin to increase the employee’s share of the costs.

Ironically, we, the employees, who pay for underfunded Medicaid through lost compensation, are pretty much the same people as we, the taxpayers, who started the whole cycle by not wanting to pay the full cost (in taxes) for the Medicaid we are buying. This is what the model I’ve attached demonstrates.

This explanation of the cost shift is an oversimplification.

It leaves out even some of the very basic additional pieces: for example, the fact that many employers do not offer health insurance. In addition, the total cost shift is much larger than just Medicaid. Medicare – which is all federal money -- doesn’t pay full cost either, although it pays more than Medicaid.

It also ignores other inequities. If we paid full cost for Medicaid in our taxes, it would be based on our progressive tax rate: the more you make, the higher the percentage of your earnings you pay. When we pay for it through our compensation, the CEO and the maintenance person are contributing the same amount – so it is a much lower percentage of the CEO’s earnings than that of a low wage earner.

So, on to the Governor’s proposal.  

The Governor suggests addressing the cost shift through a payroll tax to begin to increase Medicaid to the Medicare rate (still lower than actual cost.) This doesn’t actually reduce the cost shift. The only way to do that would be to pay 100 percent of the cost of Medicaid services in our individual taxes (shared between state and federal taxes.)

What it does is to make the tax shift more transparent. Instead of being hidden in the insurance rate, the Medicaid shortfall would be paid through the new payroll tax. What it still hides is the fact that you and I are ultimately paying for it, because businesses don’t pay taxes. Only people pay taxes – it’s just that sometimes it’s more hidden because the cost is passed on through higher prices for good or lower employee benefits.

The tax of .7 percent would raise about $40 million. Since it’s being used for Medicaid services, it can be matched with federal Medicaid funds, so the fund becomes about $90 million. The theory is that we can then take the $90 million and use enough of it to pay towards Medicaid services so that insurance rates go down, and thereby pay it back to employers by the same amount as what they paid in the tax. That would still leave us with a lot of extra new money.

One result would be that all businesses would be paying. Those that currently give generous health benefits might save money overall. Those that give none would have a new tax burden, and since these are usually small businesses that couldn’t afford to offer health insurance, they will have a hard time affording the new tax.

There is a very big question involved:

Is the cost shift such a clean money flow that money paid in on the Medicaid side will flow back out to reduce premiums at the same level? The answer is a definite no, as far as an equal dollar-for-dollar, but the unknown is, by how much? Our Joint Fiscal legislative experts say that it is very questionable that it will have a major effect on insurance rates.

And then, this week, we found out how the Governor wants to use the $90 million. Only $25 million would go towards paying health care providers closer to the cost of their services – in other words, towards the existing cost shift, even though employers are paying in $40 million.

About $20 million will go to new expansions of various state initiatives to reduce overall healthcare spending (which could save us some in future cost increases), and $5 million to administer the new tax. There’s $5 million in “unspecified,” which leaves $30 million to go.

That $30 million will go to “new caseload.” That means it will go to the increase in the number of people that have enrolled in Medicaid through Vermont Health Connect.

This increase is generally a good thing. We have cut our uninsured population by almost half in the past two years, mostly through getting eligible people onto Medicaid. But yes, it costs money to do this. We don’t have the money in the state budget to pay for it. So we will use the new employer payroll tax to pay for it.

The Governor’s staff – with a straight face – says that this $30 million counts towards addressing the cost shift, making it $55 million in all, compared to the only $40 million employers will be paying in. Why would it count?

If we don’t have the money to pay, they said, then we would have to balance the state’s books by reducing what we pay the providers even more. That would increase the cost shift even more. So this is a prevention strategy: employers will be paying the tax in order to prevent the cost shift from getting bigger! This is like protection money: pay up, or you’ll get beat up worse.

Why would we do it this way?

Without this payroll tax to pay for the increased Medicaid costs, we would have a $16 million hole in the budget, because this scheme is part of the Governor’s plan to fill our $100 million deficit.

There are only two other ways to fill that hole.

One would be to find other areas to cut back, and live within our means.

The other would be to raise taxes to pay for the increased Medicaid cost, and the Governor says he has heard the message from Vermonters: no new taxes.

Hmm? What exactly is a new payroll tax?

 

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I welcome your thoughts on this or any other subjects before the legislature. You can contact me by message at the statehouse (828-2228), at home (485-6431) or by email (counterp@tds.net.)  My complete file of legislative updates can be found at www.representativeannedonahue.blogspot.com

Legislative Update January 24, 2015

Legislative Update

January 24, 2015

Rep. Anne Donahue

 

New legislative proposals are beginning to gain speed as we near the end of the first month of the new session; I can only touch a few highlights in an update. The legislative website has been revamped this year, however, and is much more user-friendly if you want to track bills or hearings, or any of the reports that now cram the committee web pages of legislators.

In my Health Care Committee alone, we have already amassed more power points and briefings documents than we can keep up with. Six of our 11 members, including the chair, are new to the committee, and four of them are new in the legislature, so we are catching up with a lot of information.

Most staggering is the administration’s budget adjustment request for an increase from $550,000 to $5.5 million for the second half of the year for the unexpected increased costs of maintaining the Vermont Health Connect infrastructure. That’s the technology that combines our Medicaid enrollment and insurance exchange products, and that is still only partially functional. Most of the initial money has been federal, but we are must now pay for all operating costs.

Another big mid-year adjustment comes from missed estimates about how many people would sign up under the broader eligibility for Medicaid, and for new individual market subsidies. The good news is that compared to two years ago, our rate of uninsured Vermonters has dropped from 6.8 to 3.7 percent.

However, our analysts had predicted about 35,000 new Medicaid enrollees, and 42,000 applicants for subsidies. Instead, there were 48,000 newly joining Medicaid, and 18,000 seeking a subsidy for the exchange, meaning most of the reduction in uninsured came from increased Medicaid enrollment. (The subsidy-eligible group reflect the next-up income bracket, between 135 and 400 percent of the federally-designated poverty level, or $15,755- $46,680 for a single person.)

Since full coverage for Medicaid costs is vastly higher than the cost of subsidies, the grand total difference (with other less dramatic adjustments added in) comes to an additional $11 million, or $4 million in state funding, for January to June of this year (and then carried forward at double that in the 2016 full year budget.)

The full budget adjustment bill will be on the floor this week for a House vote, and as a whole it reduces last year’s budget even beyond earlier cuts, to match our lower-than-projected revenues. So the increased health care system costs mean that more of something else was cut from somewhere else.

***

I have known for some time that Vermont is a “receiving” state: that is, as a whole, we receive more from the federal government that what we all pay in federal taxes, combined. Put another way: we’re not paying a cent of taxes toward federal government expenses. Or yet another way: other states are contributing to maintain our state budget.

Until last week, though, I had no idea how huge that discrepancy was in terms of paying for health care in Vermont. If you put everything together in one big ball of wax – federal taxes, tax exemptions for health insurance purchases, Medicaid cost-sharing, federal grants, and what we pay out of pocket or is paid by our employers – on average, Vermonters get back 30 percent more in health benefits value (what is bought) than what we pay for.

While it’s true that a big piece of that is because 21 percent are on Medicaid (shared state-federal) and 18 percent are on Medicare (all federal), if you look at the value received on a scale based upon income, all but upper income residents of Vermont are getting more than what they pay for. The break-even point is about at $190,000 in income for a family of four.

So if you think you are paying a lot for health care, you are likely still getting more than what you pay. Health care is that expensive, and our neighbors around the country who are chipping in to pay for our health care are in worse shape that we are. You can look at this analysis directly by going to the legislative web site; go to the House Health Care Committee web page, and look up the Rand report in the documents for Wednesday, January 14. It includes a chart of sample value received versus paid for different family sizes and incomes, and where the money comes from.

***

Legislators from Montpelier have introduced a bill that would allow towns to control the use of surface water that they use for drinking water but that is located in another town. The bill says that the municipal ordinance would control over any rule adopted by the state’s Agency of Natural Resources. The target is the Berlin pond, to give Montpelier the ability to control what happens in that body of water located in Berlin. It would overturn both the court decision that said that under current law Berlin controls the water in its own boundaries and the ANR rule that permits limited access for fishing. Is that even constitutional? Rep. Patti Lewis and I are consulting with Legislative Council.

***

There has been much attention to the introduction of a bill to expand background checks for gun sales between private individuals. It is hard to see what problem this is trying to address, since Vermont has the safest gun record in the nation. This bill will generate a great deal of controversy, and a large turnout of gun owners is expected at the state house on Tuesday to rally against restrictions.

One component of the bill directs the state to provide the names of persons who have received any court-ordered mental health treatment to be sent to the federal registry. This, also, misses a target, since the tiny percentage of persons who are at risk of violence as a symptom of a serious mental illness tend to be persons who have not received treatment, rather than those who have.

***

A big focus of the governor’s new health reform proposal is a .07 percent payroll tax on all employers that would be blended with federal matching funds. The money would be used for three things.

It would go to increased funding of health care reforms that are slowing health care cost increases, such as the “Blueprint for Health” that helps primary care to work collaboratively with other providers. It would also go to partially make up for the state’s underfunding of Medicaid. Finally, it would add money to increase the subsidies for low-income families that are buying their own insurance on the exchange.

There are several theories at work. First is that when we underpay for what we are buying in Medicaid services, health providers – in particular, hospitals -- make up the loss in their budgets by charging private payers more, and this results in higher insurance premiums, amounting to a hidden tax to pay for public Medicaid. This is commonly called the “cost shift,” and it is further increased by shortfalls in Medicare payments and hospital free care and bad debt. I was surprised to learn this past week that our economists don’t believe it is as significant a factor in insurance rates as we have always believed.

The second part of the theory is that if we invest more money in Medicaid payments, this shift will be reduced because private insurers will reduce their rates. Since employers will thus pay less for the insurance they provide employees, there will be no actual cost to them to pay the new tax. The bonus is that the $80 to $90 million raised by the tax will be more than doubled by the draw-down of more federal funds. In addition, since all employers would pay in, it would spread the cost more broadly. Right now, only employers who provide insurance coverage (or individuals buying their own insurance) are paying for this cost shift.

There are a number of questions our committee will be asking. Assuming the cost shift is real, this “solution” doesn’t actually help to resolve it. The cost of taxpayer underfunding of Medicaid will still be paid by employers, but just through a tax instead of through higher insurance rates. The only way to actually eliminate the cost shift would be for the state (that means us, as taxpayers) to fully pay for what it is buying. That would require a tax increase that no one wants to pay.

But are we already paying for it through a hidden tax, regardless? If we assume that employment compensation comes as a package of salary and benefits, then the higher costs of the health care benefit means a lower salary. Many employees have seen this effect as health care costs rise far beyond the rate of inflation: employers are requiring them to pay a larger share of health care benefits… in effect, a lowering of overall compensation.

So we paying one way or another, but in very inequitable ways, depending upon whether and what level of a benefit an employer offers. Five years ago I introduced a proposal to do an economic analysis to look at the actual money transfers involved, and what outcomes would result if we grappled with the whole issue transparently, by paying directly (taxes) in support of our decision as a public policy to provide health care for our lowest income residents.

Doing that analysis was rejected in 2010, but is what we will need to figure out now in order to analyze the governor’s proposal. How do all these numbers actually work? Will a new tax on businesses that might be increased in future years be helpful or hurtful to the intended aims?  We need to always keep in mind that the different ways that we impair economic growth (whether through direct or hidden taxes) impacts how many jobs and taxpayers are contributing to our overall wellbeing as a state, and to how we pay for the things we want.

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Please always feel free to share your opinions on this or other topics before the legislature. You can leave a message at any time by email (counterp@tds.net) or phone (485-6431) or at the state house (828-2228.)

Legislative Update, January 10, 2015

Legislative Update

Rep. Anne Donahue

January 10, 2015

 

There was nothing typical about the opening week of the legislature this year. An inaugural day of ceremony, rich in traditions that remind us of the gravity of our roles, was turned into food for thought about what we mean by “the voice of the people.”

In the morning, we re-elected Governor Peter Shumlin under the constitutional directive that turns the decision to the legislature when no candidate receives a majority vote in the November election.

In the weeks before, some argued that we should follow the tradition of voting for the person who received the most votes, meaning Shumlin. Others said that each member should vote as their district voted; this apparently would have tipped it to challenger Scott Milne. Still others said we should vote based upon the cumulative majority of voters who chose someone other than Shumlin.

I believe the constitutional intent is fairly clear, which is none of the above. I believe that it says, in effect, that if there is no majority winner, legislators are called upon to decide using their own best judgment.

For me, that meant voting for Scott Milne. That was supported by the fact that my constituents in Berlin and Northfield voiced a strong majority vote for Milne, but it was not determinative.

I believe the secret ballot, which is also used in voting for judges, is intended as (and can be defended as) a mechanism to keep politics out of the process. Legislators are free to disclose their own vote, and if they do not, their constituents can vote them out.

Whether any of this still makes sense today, when a public revote would be far easier than 200 years ago, is something well worth looking at. The process for amending the constitution starts in the Senate, where the discussion has already begun.

***

That afternoon, the inaugural address became the forum for another mechanism of the “voice of the people” through both peaceful protest and nonviolent civil disobedience. Note that those are different (some news media appeared to use the terms interchangeably.) Civil disobedience involves a choice to violate the law and accept the consequences in the interest of making a public statement.

A day-long peaceful protest was focused on the governor’s decision in December to drop his efforts at establishing a universal, single-payer system of health care in Vermont.

When some of the protesters – a small minority – stormed into the House chambers and sat on the floor to block the passageway, then began a chant designed to drown out the speaker, state police could have arrested them.

I think the choice of legislative leadership to avoid that reaction was wise. A huge arrest scene would have given the protestors more visibility through an even greater disruption, and would likely have been their preference. Instead, it was only when they refused to leave when the building was closing at 8 p.m., and the House chambers were otherwise empty, that they were arrested and removed.

However that left it to the protestors to determine what respect they would give to the remainder of the ceremonies. There have been comments about violating “decorum,” but of course, that is the very intent of civil disobedience.

I believe that the line even for the role of civil disobedience was crossed not because of breaching decorum, but because the speaker involved was the minister offering the closing benediction, rather than a political speaker. The protesters later said they believed they were entering after the ceremony was over, but regardless of initial intent, it became immediately obvious to them that it was not.

The Rev. Robert Potter first reacted to their voices by saying, “When I think of what other countries do to silence the differences, aren’t you glad you’re in America?” Yes, indeed!

He received a lengthy standing ovation that drowned out the chants, and then continued in a tone both chiding and joking, “As long as they’re quiet when I pray.” But they were not. In fact, they out-shouted even his efforts to share a story about his personal encounter with the Rev. Dr. Martin Luther King, Jr.

Potter carried on with good spirit and temper, but most of his comments were completely cut off. It was the decision by the protesters to continue at that point that provoked so much negative reaction among legislators – certainly from me -- and many others.

We received a letter the next morning from “Vermont Health Care for All,” a long-time and dedicated group of advocates for single payer health care, who stated that despite the disappointment in Shumlin they shared with the protestors, “We regret and do not condone that our representatives, the Governor, and Reverend Potter were targets of disrespectful behavior during the inaugural proceedings. Our organization remains committed to working in a respectful, positive way with our elected leaders and citizen representatives.”

It was an important reminder to not cast a broad brush against an entire group of advocates based upon the actions of one sub-group allied in the same cause.

The demand shouted from the House floor was that the Speaker of the House make a commitment to a public hearing so that the legislature makes its own decision, independent of the governor, on whether to attempt to move forward with single payer. The governor changed course on them; they wanted a voice with legislators.

But the group had never asked House or Senate leaders in advance about holding hearings, something that will ordinarily occur. That made the “demand” a tad premature. They had never been rebuffed.

In the great tradition of both free speech and civil disobedience, they certainly had their voices heard last Thursday. However a failure to use good judgment in timing may have made them more enemies than allies.

***

It is worth noting that the anti-Shumlin sentiment among many voters had roots in the same anger that led to the outbursts on inauguration day. After delaying almost two years from the statutory deadline for presenting a proposal for a state-run financing plan for health care, Shumlin waited until after the election to announce that he had determined that it was unaffordable.

Whether one agreed with the goal or not, there is little question that he pulled the rug out from under folks who have worked very hard for this cause for a very long time, with timing that was deliberate and politically motivated. There is a question of integrity that goes beyond health care, and it was that issue that I heard from many of you who called or emailed me to urge me to vote for Milne.

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It has been my belief from the beginning that despite the worthiness of the goal, achieving universal health care access through taxpayer funding was never going to be viable on the part of a single, small state acting alone. I think we now have the opportunity to work together to really dig down into the many other pathways for achieving more equitable and affordable access.

For that reason, I am particularly pleased that Speaker Shap Smith has appointed me to serve on the House Health Care Committee this session. I believe I will be able to make meaningful contributions in this new assignment as we move forward with health care reform.

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As always, I welcome your input and concerns. You can contact me at counterp@tds.net; at 485-6431; or via message with the Sergeant-at-Arms office at 828-2228. You can also email me if you would like to be on a blind list to receive this update automatically.