Newsletter - May 18, 2012

 Here are the most interesting articles and opinion pieces regarding Vermont’s single payer health care experiment from the week ending May 18, 2012.

***

Governor Shumlin Signs Health Care Exchange Bill into Law

On Wednesday Governor Shumlin signed H.559, the Health Benefits Exchange bill, into law. The new law moves Vermont a large step closer to final implementation of the government-monopoly single payer health care system sought by the governor and legislative leaders. H.559 was opposed by Vermonters for Health Care Freedom and nearly every business group in the state, principally because it outlaws private insurance outside the highly-limited state-controlled exchange.

Vermont is now unique among the 50 states by creating a mandatory health benefits exchange. The federal Affordable Care Act (ACA), otherwise known as Obamacare, requires states to create exchanges (or provides for the federal government to do so if states choose not to) for the purpose of increasing choice, competition and transparency in the health insurance marketplace. Only Vermont has chosen to use the exchange to eliminate competition and strictly limit consumer choice.

Press accounts of the signing typically ran about three sentences, perhaps reflecting the fact that once H.559 had passed by both the House and the Senate the governor’s signature was assured.

Vermonters for Health Care Freedom has compiled a great deal of information about H.559, which can be seen at our web site www.vthealthcarefreedom.org .

***

Maine’s Market-Based Health Care Reforms Produce Dramatic Results

Vermonters for Health Care Freedom has championed market-based reforms over the government-monopoly single payer approach favored by Vermont’s leaders. And coincidentally, the same week the governor signed H.559 into law news from multiple sources flooded in confirming the success of market-based reforms.

The most dramatic news came from our neighbor to the East, Maine. Starting in 1990 and running until about 2010, Maine and Vermont followed much the same path regarding health care regulation and reform. But back in 2011, while the Vermont Legislature was putting the finishing touches on Act 48 - Governor Shumlin’s experiment in government monopoly single payer health care reform - the State of Maine was moving their health insurance system in the opposite direction – toward greater consumer choice and increased competition, and by allowing insurers increased flexibility in the way communities of people are actuarially ‘rated’ for the purpose of setting premiums.

According to The Maine Wire, health insurance premiums for small groups and individuals are headed down – in some cases as much as 60%. According to The Maine Wire,

“Since the law took effect this past October, we have primarily seen the laws impact to Maine’s small group insurance market with the vast majority seeing lower premiums,” said Joel Allumbaugh, President of the Maine Association of Health Underwriters and Health Care expert at the Maine Heritage Policy Center. “Now we are seeing huge progress in the individual insurance market as well, with rate decreases up to 60%, it’s a huge step forward for Maine.”

When the Maine health care benefits exchange law is fully implemented VHCF expects to see even lower costs, better coverage and fewer people without access to health insurance. Contrary to the Vermont law which forces 100,000 Vermonters into the state-controlled exchange, Maine not only will allow insurance companies to offer plans outside the exchange, it will allow Mainers to shop for insurance plans in the neighboring states of Massachusetts, New Hampshire, Rhode Island and Connecticut.

The full Maine Wire story is available here: http://www.themainewire.com/2012/05/individual-health-insurance-rates-set-drop-60-result-maine-health-care-reform/

***

RAND Study Supports Market Based Cost Containment

Dr.Paul Hsieh offered an excellent commentary in Forbes titled, ‘Just Who Should Control Your Health Care Spending?’ Hsieh summarizes the findings of a recent RAND Corporation study of 360,000 families who use Health Savings Accounts (HSAs) coupled with high-deductible insurance plans. Hsieh writes,

“According to health economist John Goodman: “Not only did spending go down by as much as 30 percent, there was no noticeable decrease in quality and no discernible difference in outcomes among various income groups.” Nor did patients with chronic conditions such as diabetes skimp on preventive care relative to healthier patients. The study authors estimate that widespread adoption of HSAs could reduce overall health costs by as much as $57 billion. Health economist Greg Scandlen thinks it could be much more.”

Hsieh uses the results to challenge the Left’s belief that the cause of health care cost increases is the ‘fee-for-service’ payment model. Global or ‘bundled’ payments are being pushed in Vermont and elsewhere as a way to end fee-for-service and constrain costs. But Hsieh points out that the problem is not fee-for-service (which is how pretty much how the whole economy operates) but third party payers that drive spending up.

“In theory, bundled payments will encourage “efficient” care. But in practice, they create perverse incentives for doctors to skimp on care, especially for the sickest patients. If you’re an otherwise healthy 25-year old with pneumonia, hospitals will gladly treat you because the standard pneumonia payment will exceed their expected costs. But if you’re a frail 60-year old diabetic who catches pneumonia, some hospitals may seek any semi-plausible pretext to transfer you to another facility. You’ll become an unwanted medical “hot potato.””

The solution, Hsieh concludes, is to implement market-based reforms that are now proving successful in the RAND study and in the State of Maine.

The Forbes Op Ed by Dr. Hsieh can be read here: http://www.forbes.com/sites/realspin/2012/05/15/just-who-should-control-your-healthcare-spending/

A press release about the RAND study is available here: http://www.rand.org/news/press/2011/04/18.html

Another summary of the RAND study is available from Heartlander here: http://news.heartland.org/newspaper-article/2012/05/15/consumer-power-report-how-much-can-consumer-directed-plans-save

And perhaps the best analysis of the study anywhere by John Goodman at the National Center for Policy Analysis: http://healthblog.ncpa.org/consumer-driven-health-plans-could-save-57-1-billion-per-year/

***

Massachusetts Following Vermont?

Townhall.com offered an interesting analysis of legislative attempts to cure the ills of health care cost increases in Massachusetts. It appears the Bay State is taking a page from Vermont by proposing a ‘dizzying’ array of government controls over the entire health care system, essentially doubling down on the failure of Romneycare to constrain costs. The bills even create a Massachusetts equivalent of Vermont’s Green Mountain Care Board:

“Adding up the "dizzying and expansive" array of decrees in the House legislation, health-care analyst Joshua Archambault of the Pioneer Institute finds 941 instances in which the bill mandates that something "shall" be done. Among these are more than 25 kinds of penalties, fines, and surcharges, for price control and punishment always go hand in hand. Looming over all would be a new Division of Health Care Cost and Quality, a command-and-control behemoth that would dominate the state's medical and health-insurance landscapes, with the power to affect billions of dollars and millions of lives.”

The full commentary can be found here: http://townhall.com/columnists/jeffjacoby/2012/05/16/health_care_no_the_state_doesnt_know_best/page/full/

***

Commissioner Kimbell 0-for-2?

Commissioner of Financial Regulation Steve Kimbell made the VHCF Newsletter last week by deciding at the last minute to pull out of a health care reform forum in Manchester, as described in last week’s issue. Rumor has it that he did it again this week by failing to appear for a scheduled Friday taping of the WCAX TV News program “You can Quote Me.” This time his office gave WCAX no warning and when contacted by the station his office said he “forgot” and was unavailable.

In place of Kimbell’s scheduled interview with Kristen Carlson and Darren Perron, Carlson interviewed a WCAX reporter and photographer about a photographic series they were producing.

***

Rehab Unit at RRMC May Close

Vermont Public Radio carried a story about the Rutland Regional Medical Center expected to close its inpatient rehabilitation unit due to inadequate Medicare reimbursements and a state imposed revenue cap on the hospital. The decision will be made by the Board of Directors and will affect about 40 full and part time employees. Patients requiring the services of the unit would be forced to travel to Fletcher Allen or Mt. Ascutney.

“Hospital spokeswoman Jill Jesso-White said, "The sad thing is we provide excellent care and excellent service through our inpatient rehab unit.  Really the driving force of this is the federal government's very clear intent on driving care like the inpatient rehab unit out of hospitals - and they're doing that through very severe declines in Medicare reimbursement."

VHCF has warned that the combined effects of greater state control, increased costs and limited revenues will be rationing of health care services, as has happened in Canada under their single payers system.

The VPR story is available here: http://www.vpr.net/news_detail/94476/medicare-rates-may-cause-rutland-rehab-unit-to-clo/

***

Franco: Payroll Tax to Fund Single-Payer must be Heftier for Larger Employers

John Franco, writing an op-ed in the Rutland Herald, offered some critical insight into the challenges facing the Shumlin Administration as they attempt to develop a financing plan for their Green Mountain Care single payer system. Franco points out that the leading candidate for replacing the $1.35 billion currently contributed by businesses in support of employees’ insurance is a payroll tax. But, citing a recent consultant’s study, he also points out that small employers enjoy a significant ‘subsidy’ from large employers because two income households tend to have the spouse employed by the larger business provide coverage for the family.

“Consequently, small employers who offer health insurance nevertheless enjoy a substantial cross subsidy from large employers. According to this consulting study, Vermont firms with more than 100 employees account for one-third of total private employment but shoulder a whopping three-fourths of the total private insurance burden. In terms of payroll, there is almost an inverse relationship between the share of private payroll and the share of people privately insured: Sixty percent of the payroll pays toward only 22 percent of the insurance load.”

Franco advises that only a graduated payroll tax, assessed according to the size of the firm, would avoid forcing a much heavier burden on small businesses and a corresponding benefit for larger ones as compared to the current system.

The full commentary can be viewed here for Rutland Herald subscribers: http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20120513/OPINION06/705139987/1018/OPINION

***

Vermonters for Health Care Freedom provides a weekly summary of news and opinion each Friday. For daily news and updates click “LIKE” on our Facebook page (http://www.facebook.com/VermontersforHealthcareFreedom) and visit often.