Vermonters for Health Care Freedom is a 501 (c) (4) organization of individuals and businesses who are deeply concerned about health care reforms being implemented by Governor Shumlin, and seek patient-centered reforms that protect the traditional doctor-patient relationship.

Health Care Reform Newsletter #43

Happy New Year! Vermonters for Health Care Freedom is a reliable source of news, information and commentary that is simply not available elsewhere. Through research and our own network of experts, VHCF regularly produces insightful commentaries and rebuttals of the many false and misleading claims about health care reform. VHCF is the number-one organization sought out by the mainstream media to critique the health care reform policies of the Shumlin administration. We are proud to have played a pivotal role in exposing the pitfalls of a single payer health care system over the past three years.

In 2015, we will focus on the impacts of Vermont’s continued push for a government-run health care system, and the state’s latest health care reform efforts. Our reports will continue to keep our readers informed about even the facts that the Shumlin administration would prefer to hide. No other Vermont organization is dedicated solely to this work.

Happy New Year 2015

Single Payer Won’t Work - But Shumlin Is Still Trying

In This Issue: The Single Payer Financing Report – A Closer Look

Quotes of the Week:

"The only other public voice against single payer has been Vermonters for Health Care Freedom, led by the indefatigable Darcie Johnston. VHCF was all over every development in this three year saga, shining light into some dark corners. Johnston has yet to be wrong about anything she said."

-The Caledonian Record Editorial, “Credit where it’s Due”, 12//26/14

“The numbers didn’t say this was going to just be hard on business…they said it was going to be hard on working Vermonters.”

-Governor Peter Shumlin, admitting what has been clearly obvious for years

“A foolish man built his house on the sand. The rain fell, and the floods came, and the winds blew and slammed against that house; and it fell-- and great was its fall."

-From the parable of the wise and foolish builders, Matthew 7: 26-27

The Single Payer Financing Report – A Closer Look

On December 17, 2014, Vermonters and Vermont businesses heaved a collective sigh of relief at the news that the Shumlin administration had thrown in the towel on single payer. But that relief was short-lived when they noted that the Governor said it won’t work “at this time”, and that “the timing isn’t right”. Indeed, in his introductory letter, Shumlin says he hopes that the report will ”provide a foundation for future efforts to usher in a publicly financed health care system…”, and the Executive Summary says that the Governor asked that the report be competed, “to show the promise of Green Mountain Care as a future step.”

Despite compelling evidence to the contrary, Shumlin strangely insists on continuing to pursue single payer. The battle is won, folks, but the war is far from over.

That was made evident by both the tone and content of the report, not to mention the title, “A Comprehensive Model for Building Vermont’s Universal Health Care System”. One would think that after reaching the conclusion that this model is impossible, the title would have been changed. This is just one of many oddities in the report.

After four years of delay, this document was a huge disappointment. For $1.6 million in taxpayer dollars, Vermonters deserve a well-reasoned, professional and unbiased analysis of whether or not a government-run health care system can actually work in Vermont. If the conclusion is that single payer will not work “at this time”, then the report should detail for Vermonters what must occur for it to work, and when and how those criteria are to be met. If it will never work, there is no point in stating that it will not work “at this time”. It’s either one or the other. 

Instead, the Shumlin administration produced a waffling report replete with contradictions, opinions, and unsubstantiated suppositions. There is the impression of a late-night term paper thrown together the day before it was due. No attempt was made to deliver to Vermonters an accurate, well-researched and unbiased report. The conclusion on Page 57 that a government-run health care system is financially untenable might come as a surprise after reading on Page 6 that, “we must preserve for another day the vision universal publicly financed health care..” The report seems almost desperate in its attempt not to reach the obvious conclusion. It is also clear that when the “last-minute revelation” of single payer’s unaffordability occurred, little effort was made to go back into the report and realign statements and premises based on the findings.

Below are just some of the inconsistencies and unsubstantiated suppositions found in this report.

Providers: Act 48 requires that “health care professionals are reimbursed at levels sufficient to allow Vermont to recruit and retain high-quality health care professionals”. The report says the objective is to “pay health care professionals and organizations fairly…”. This very important criterion has somehow morphed into paying providers “fairly”, rather than ensuring that Vermont retains high quality physicians.

Who is Covered: First, on Page 2: GMC would cover “all Vermonters”. Page 13: “Vermonters who have Medicare (128,739) would remain on Medicare. The supplemental market would remain active”. So GMC would not cover all Vermonters. However, Page 3 says that GMC will “interface with existing programs of universal coverage, such as Medicare”. So which is it? Page 13 again: “It would be important (when the GMC benefit plan is defined) to determine whether further integration of Medicare with GMC is affordable..”. Since the benefit plan has already been defined (Page 3 and Page 16), why is this important determination missing from the report? Meanwhile back on Page 4, there is suddenly an all-payer rate setting system under which …”payments would be made (by the state) to providers for Vermonters covered by Medicare…”.

This, after the Governor and his health care team have steadfastly denied for two years that they intend to touch Medicare at all. VHCF will fully address the “all-payer waiver” and its impact on Vermonters’ Medicare in an upcoming issue.

The report also assumes that ERISA employers covering 20% of all Vermont employees would drop their plans in favor of GMC. There is no evidence that this would occur either - another supposition without foundation.

Affordability: Page 5 states that the plan and the proposed financing, “would only work if Vermont has federal approval of necessary waivers and we are able to maintain current federal financial support for health care spending in Vermont”. Notwithstanding this clear-cut bottom line, the authors have, “embedded in this proposal certain assumptions about federal approval and federal financial participation that (they) believe are reasonable, but actual federal concurrence with those assumptions has not yet been received”. Again, assumptions were made without any factual basis about the most important element of all – federal funding. The new GOP-led Congress has vowed to dismantle ObamaCare one piece at a time, so the likelihood of continued federal funding at even the necessary levels is rapidly dwindling. However, there is no recognition of these facts in the report.

Why release a report that is so incomplete? It is obvious that the report was rushed through at the last minute to accommodate the Governor. Shumlin nearly lost the election and his credibility is at an all-time low. He wanted the single payer issue off his back for the 2015 legislative session. That hardly does justice to Vermonters who have waited four years for a definitive report on single payer.

Opinions, Opinions: Page 7: “Vermont’s health care system is broken”, “cripples business”, “is horribly complex”, and “terribly expensive”. Although most of these statements are simply opinions, in the areas where the report does try to document its findings it uses just one source, a source that agrees with its’ position. On Page 8 the report cites one source that estimates 30% of health care services provided nationwide are unnecessary. Using only the one data source, the report immediately extrapolates this finding to a potential savings for Vermont of $1.4 billion!

Valid and unbiased research looks at a broad spectrum of available information and draws conclusions accordingly.

Really Baseless Assumptions: On Page 51, the report shows how financially damaging a switch to single payer would be for small businesses in Vermont. In the very next paragraph, however, the authors decide and then assume - that employers would “gradually pay their employees more in wages”. And this fantasy goes on for the next four pages, with charts, graphs and tables.

Suddenly, ”…Vermonters would receive more in wages under GMC”. Never mind that all VT. employers would now be paying an 11.5% payroll tax that they may not have paid before. No, those “additional wages would boost income and consumption of goods and services”. And, “in turn, increased wages and consumption would increase taxes paid by households”. Apparently those Vermont households would not be burdened with paying their new “public premium”, aka health care income tax of up to 9.5%, and would spend wildly with their new “increased income”. This critical assumption must be accurate for the rest of the extrapolation to work. Business costs are continually rising. Was extensive research done with Vermont employers to determine if they would – assuming they had any – plow their savings back into their businesses instead of into the assumed wage increases?

It’s a Tax: The report falls all over itself trying not to call the single payer income tax - a tax. On Page 10 it is, “income based family contributions, rather than premiums”. On Page 2, the goal is to “replace…family premium payments with a fair and equitable system of tax-based funding.” Page 11 talks about the “public premium described in Chapter 6,” while Page 32 talks about a “per member per year premium equivalent”, and Page 34 calls it a “public premium.” So between Page 10 and Page 32, the tax becomes a premium. But of course we all know it is a tax.

While this waffling may seem trivial or even humorous, it is endemic to the entire report. The report comes off as a thrown-together, confused jumble of opinions, contradictions and unsubstantiated assumptions, upon which the authors attempt to build a credible argument for single payer. It is important because this is not the last time we will see this report. It will be hauled out again when the “time is right”, and all the assumptions will by then be cast in stone and considered gospel. File this away for future reference.

Additional Funding Needs:

Use Insurance Company Reserves: Beyond the employer payroll tax of 11.5% and the personal income tax/public premium of up to 9.5%, the report reveals additional weaknesses in single payer funding. Page 26 reveals that the state expects the selected insurance company administrator to hand over its corporate claim reserves, lock, stock and barrel to the state. The cutesy language for this is, “…”we believe the right private sector partner would bring strengths to GMC, including....…appropriate financial reserves to guard against the insurance risk inherent in the program”.

The “right” private sector partner would obviously have to be Blue Cross Blue Shield of VT. Can anyone imagine CIGNA turning over its reserves to the State of Vermont? However, it can be argued that the reserves belong to the Blue Cross ratepayers whose overpaid premiums allow the company to amass a surplus reserve. Certainly it would be legally dicey for Blue Cross to just hand over its health plan reserves to another health plan – GMC.

The other lesson here is that the state cannot afford to build or fund sufficient reserves for GMC on its own. Page 26 defines the necessary reserves as $146.2 million. Blue Cross has approximately $100m in reserves.

Float a Bond: Beyond the $146.2 million “borrowed” from an insurance company, Page 27 outlines the need for another $200 million in reserves. This money would be raised by a one-time bond issue of $200m to cover start-up costs. Repayment of the bond would cost $44 million each year for the first 5 years of the single payer program ($220 million). So this costly exercise would have Vermont taxpayers paying $44 million each year plus another $20m in interest for which there would be no value received.

And, if there were future revenue shortfalls, which there surely would be given Vermont’s fragile economy, the Commissioner of Taxes would come up with adjusted payroll and personal tax rates to fill the gap. With single payer projected to go into the red after Year 2, the Tax Commissioner could get going on that project relatively soon.

Earlier this month, a few dozen Vermonters gathered at the University of Vermont for a seminar billed as “Healthcare 101.” But first, they had to wait for a half hour in the fluorescently lit hallways of the George D. Aiken Center for a security guard to open the reserved classroom.

“This is what’s going to happen,” quipped one sardonic attendee, trying the door handle. “You’ll show up for health care and the doors will be locked.”

- Seven Days Newspaper; full article HERE.

  • Employers pay 40% of the healthcare costs – and were never consulted.
  • An appointed board will determine benefits, coverage, funding, deductibles, co-pays, premiums, technology, provider payments, etc.
  • Under this law, you will not be allowed to purchase insurance outside of the Vermont Health Benefit Exchange.