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.

Vermonters for Health Care Freedom Newsletter #47

Vermonters for Health Care Freedom is a reliable source of candid and insightful critiques of Vermont's health care reform efforts. Through research and our own network of experts, VHCF regularly updates Vermonters on the state's latest health care reform efforts.

We are proud to have played a significant role in exposing the pitfalls of a government-run single payer health care system, which fortunately met its demise at the end of 2014.

In 2015, we will focus on the impacts of the Shumlin administration's continued push for a government-run health care system. We will continue to keep our readers informed about the facts that even the Shumlin administration would prefer not to reveal. No other Vermont organization is dedicated solely to this work.

Four Years of Fiscal Mismanagement – A Heavy Toll On Vermonters

Peter Pan and Fiscal Adventures in Neverland

In This Issue:

  • Slash and Burn – New 2016 Budget Proposals
  • Vermont Health Connect: Another $27m Needed
  • Other States Are Bailing on Their State- Run Exchanges
  • Fiscal Responsibility: Raimondo Has a Better Idea

Quotes of the Week:

"We've got a few people that are giving up; they're so fed up, they tell us they're going without insurance."
Trinka Kerr, Chief Health Care Advocate, Vermont Legal Aid, commenting on Vermont Health Connect

"In the big picture this investment comes at the cost of other investments we currently make that will be terminated that are even greater determinants of health."
Rep. Anne Donahue, Ranking Member, House Health Care Committee, commenting on increasing Medicaid rates

"I don't want to de-emphasize that these are pretty serious things," Klein said.
Steve Klein, Chief of the Joint Fiscal Committee, commenting on a list of proposed cuts

Slash and Burn - Vermont's 2015 Budget Proposals

The chickens have come home to roost.

After four years of budget mismanagement, chronic overspending, and an unwillingness to focus on fiscal reality, the Shumlin administration and the legislature are trying desperately to fill a FY2016 budget gap of $113 million. Since the initial $94m budget gap was reported by the Governor in early January, revenues have fallen by another $18.6m. The state's reliance on one-time monies to fund programs and fill budget gaps was totally irresponsible, and now those monies are gone. Robbing Peter to pay Paul may have worked at one time, but now both Peter and Paul are tapped out. The Governor and the Democratic majority have shown that they can't plan, can't budget, can't manage money and have been part of the same denial-fest for the past 4 years.

Legislative committees are scrambling. The Governor has provided no leadership, instead leaving it up to the legislature figure out how to come up with the money. When news of the new $18.6m downgrade broke last month, House and Senate Appropriations Committee leaders sent a letter to the Shumlin administration requesting a proposal by February 13th on how to patch the gap. That deadline passed without a proposal.

Nearly everything is on the table. Among the cuts being considered just to close the newest $18.6 million gap are:

  • Cut subsidies to those adopting from the state foster care system ($1.8m)
  • Cut to Department of Information and Innovation (state computer system management) ($1m)
  • Close the Vermont Veterans' Home ($1m)
  • Close Southeast Regional Correctional Facility in Windsor ($820k)
  • Cut Vermont Tourism and Marketing, including Vermont Life magazine (750k)
  • Cut Vermont Public Television ($280k)

It is infuriating to see cuts to the social and cultural fabric of our state, while the Governor has diverted and wasted tens of millions of taxpayer dollars on his reckless and irresponsible single payer health care debacle.

Vermont Health Connect: Another $27m Needed

Vermont Health Connect: Another $27 Million NeededWhen the Vermont Governor and legislature decided that Vermont needed to build its own health care exchange instead of participating in the Federal exchange as 36 other states do, it was with full knowledge that federal subsidies for operating a state-run exchange would end on December 31, 2014. After that, Vermont taxpayers would be liable for the cost of continuing to run a state-based exchange.

Now, as predicted, the federal subsidies are disappearing. The mismanagement and cost overruns of Vermont Health Connect are legendary. In October of 2014, Health Care Reform Chief Lawrence Miller predicted that Vermont Health Connect could run nearly $20m over budget in 2015. At that time there was a shortfall of $ $11m compared to what was requested in federal grants. Miller concluded that, "the state of Vermont will need to find alternate funding to fill these shortfalls." However, he then went on to say that if Vermont Health Connect was in the red, he was "confident" that the Feds would bankroll the difference.

Apparently that is not going to happen. On February 26, 2015, Miller reported to the legislative health care and money committees that while the Feds had substantially supported the operations of Vermont Health Connect (VHC) through December 31, 2014, the gravy train is coming to an end. For FY2016, the total operating cost of VHC will be $51.8m, of which $27.7m must come from Vermont taxpayers.

Miller says that the remaining cost to get VHC actually working (it doesn't work yet for small businesses) is $72m - and that the Feds will supply the $72m. But that is the maximum the Feds will pay, and does not cover any cost overruns due to the state's mismanagement of its contractors, or any unexpected costs due to the state's lack of expertise. If history is any teacher, both of those outcomes are virtually guaranteed to happen.

Last month, in a move that flew basically under the radar, Miller inked a new deal with Optum, VHC's primary IT contractor - to "normalize" the backlog of 11,200 change requests that Vermonters have been unable to make due to the dysfunctional exchange - and to finally deliver the automated change function. This brings Optum's contract value to $57.3m. Miller says he's confident that Optum will deliver, but that there are no guarantees.

How many times have we heard that before? Remember the millions of dollars wasted on CGI, the original failed contractor that Optum was hired to replace?

Miller now says that VHC will be "fully functional" by May 30, 2015. However, he says that even though the change function will be fixed by May 30th, small businesses (1-50 employees) still won't be able to sign up during the open enrollment in the fall of 2015!

To make matters worse, unless Vermont changes its 2011 law forcing small businesses to buy insurance only through VHC, the next group of small businesses (50 - 100 employees) will also have to buy through VHC this fall, and won't be able to use VHC to do it!

Vermont Health Connect a total fiasco, both financially and operationally. Clearly running a state-based exchange is beyond the state's capabilities. And Vermont taxpayers are ponying up millions after millions of dollars to fund this incompetence.

It is time for the Vermont legislature to shut down VHC and allow Vermonters to purchase through the Federal exchange or directly from insurers.

Other States Are Bailing

Only 14 states including Vermont are operating their own health care exchanges, and many are struggling to cover the cost. But they are doing something about it.

Oregon: On March 6, 2015, Governor Kate Brown of Oregon signed a bill to dissolve Cover Oregon, the state's dysfunctional health insurance exchange. State officials voted unanimously to switch over to the federal health insurance exchange,, citing the high cost of trying to fix the problematic state exchange. The Oregon exchange has cost the state $248 million, and has been plagued with problems from the start. The exchange has never had a functioning website. Oregon is suing its primary IT contractor, Oracle, blaming the contractor for the failed healthcare website. Vermont should follow suit.

Rhode Island: There is a bill in Rhode Island to scrap the state exchange and go with the Federal exchange to avoid a $24 million hit to taxpayers.

Washington State: The Washington State legislature has been asked to fork over $125m to fund their health insurance exchange. Republicans are angry because they were told that the exchange would be self-sufficient by the end of this year. Leading Democrats are also skeptical; they were expecting a much lower cost as the exchange bridges from federal seed money to being able to fund itself.

Colorado: The House voted 64-1 this week on a bill to conduct an expanded state audit of its health care exchange, Connect for Health Colorado. A limited state audit in December 2014 uncovered a lack of adequate financial controls, and more than $30 million worth of exchange payments and contracts that lacked proper documentation or procedural controls. Vermont should do the same.

Minnesota: Governor Mark Dayton is seeking $500k for a task force that would consider future options for its exchange, MNSure, including a potential switch to the federal exchange. The launch of the state's exchange has created serious problems for many consumers, as it has in Vermont, and there are still many unresolved problems.

Fiscal Responsibility: Raimondo Has a Better Idea

Rhode Island Governor Gina Raimondo has her own budget challenge: eliminate a $190m deficit while boosting Rhode Island's economy. But unlike Vermont, she has some creative and workable ideas on how to get there.

She has presented a balanced budget that makes significant progress toward eliminating the structural deficit, involves no broad-based tax increases, and calls for significant investments in economic growth and education. To reduce the structural deficit, Raimondo has cited the need to cut spending on Medicaid (Vermont has done the opposite). Medicaid in Rhode Island has grown to take up nearly a third of the almost $9 billion state budget.

The budget raises the state minimum wage from $9 to $10.10, and expands the earned income tax credit from 10 to 15 percent over the next two years. The budget creates measures intended to attract high quality companies and retain businesses already there. The budget eliminates tax on Social Security income for individuals earning less than $50k and couples earning less than $60k.

In a creative move, Raimondo's budget includes $20m to seed a School Building Authority within the State Department of Education. The program will help spur construction jobs while modernizing school buildings.

Raimondo calls her budget a "jobs budget." "We have to break the cycle we've been in, which is that a poor economy leads to painful cuts. The only way forward is to resuscitate our economy, and to do that we have to invest in growth, along the lines of building skills, attracting entrepreneurs and businesses, and innovating, including state government," says Raimondo.

"It amazes me to hear politicians say the present Vermont health care system is completely "broken" when by most national measures Vermont's health and healthcare always come out at the very top of the 50 states. Having served nearly thirty years in a solo orthopedic surgical practice involving call every night and 7 day a week coverage for Gifford Medical Center I proudly treated every patient whether they could pay or not - some even at home. My colleagues, nurses and staff at Gifford Medical Center equally serve their fellow Vermonters 24/7 without regard to ability to pay. It denigrates us all when our efforts are so callously categorized for political advantage in pursuit of the Holy Grail of a single payer which may or may not help solve the problems of health care funding."

William Minsinger MD, Randolph, Vermont

  • 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.