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
Health Care Reform Newsletter #54
Vermonters For Health Care Freedom is a reliable source for candid and insightful critiques of Vermont’s ongoing 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 report on the impacts of the state’s continued push for a government-run health care system. We 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.
State Intends 2017 Takeover of Vermonters’ Medicare
In This Issue:
• Shumlin Administration Plans Takeover of Vermonters’ Medicare by 2017
• Single Payer Advocates Push For Huge Dr. Dynasaur Expansion: DD2
• Beware – Coverage for Non-Generic Drugs May Not Exist in Vermont Health Connect
Quotes of the Week:
“The whole idea of all-payer model is a five-year experiment.”
Bea Grause, CEO of the Vermont Association of Hospitals and Health Systems
“It’s all happening at lightning speed.”
Al Gobeille, Chairman, Green Mountain Care Board, remarking on the All-Payer Model implementation
“Under the agreement, Vermont ‘stands in the shoes’ of Medicare. Vermont’s strategy is to minimize federal specifications for the all-payer delivery system.”
Administration’s Report to House Health Care Committee 11/30/12
Shumlin Administration Intends 2017 Takeover of Vermonters’ Medicare
Governor Shumlin abandoned his single payer health care plan in December 2014, but his administration continues to push for a massive overhaul of Vermont’s health care system. During 2015, the Shumlin Administration, the Green Mountain Care Board and the legislature have quietly laid the groundwork with the Federal government for Single Payer II. This time they’re calling it the “All-Payer Model”, and it includes a state takeover of Vermonters’ Medicare payments.
Most Vermonters were unaware of the Medicare takeover until very recently when the mainstream press began covering it. However, VHCF has been raising the red flag on this for months. (For more on the “All-Payer Model”, see our September 21, 2015 VHCF Health Care Reform Newsletter #51. There has been no opportunity for Vermonters in general to understand this issue, or weigh in on whether or not they approve of direction their elected representatives are taking their health care.
Medicare Takeover Targeted for January 1, 2017: On November 28th, Al Gobeille, chair of the Green Mountain Care Board, told the House Health Care Committee that he expects to have the terms for an all-payer model agreement with the Feds this month. An all-payer system calls for a global budget for nearly all medical expenditures in Vermont. Health care providers would have to operate within these financial caps. Doctors and hospitals are worried that there won’t be enough money in the new system to provide all the health care that Vermonters need.
Elephant in the Room: The big elephant in the all-payer room is Medicaid. Over 200,000 Vermonters are on Medicaid. Medicaid vastly underpays providers, some 40% - 60% of actual costs. Even at that, the Medicaid program is running huge deficits. Vermont taxpayers’ share of the shortfall in the Medicaid program for 2016 is $36.7m, and projected to grow to $54.1m in 2017. It is unlikely that legislators will greatly increase Medicaid funding because, quite frankly, the money isn’t there without a huge tax increase. Lack of increased funding for Medicaid will put more pressure on other funds, including private insurance to make up the shortfall. While we hope that Medicare funds will be restricted for use only for Medicare patients, it is unclear just how this “global” health care budgeting system will work, or in particular, why it is necessary to include seniors’ Medicare in the mix.
State Must Pay Less Under Medicare: Under the new payment structure, the state’s hospitals and doctors will be put on “fixed incomes”. The U.S. Centers for Medicare and Medicaid would relinquish control over Vermont’s Medicare program under the agreement the state is seeking. The Green Mountain Care Board says it would “stand in the shoes” of Medicare. The Green Mountain Care Board (GMCB) will have the legal authority to control all health care funding, including Medicare. Providers will get a lump sum to take care of all the health care needs of all their patients. The state needs a waiver from the federal government to include Medicare funding in the all-payer system, and can only get the waiver by limiting Medicare compensation for providers. The state already has the power to control and distribute funds from Medicaid and private insurance.
Currently, the Federal government sets reimbursement rates for Medicare patients and Medicare is universal across the country. Under this new all-payer system, a doctor in Florida who treats a senior Vermonter might get paid less than traditional Medicare would pay. This could have a chilling effect on providers when they learn that a Vermonter does not have Federal Medicare, but another type of “Medicare”. Vermonters on Medicare should be very concerned about this.
Perverse Financial Incentives: There is another scary twist to this new payment system. The all-payer system budget would be administered through a huge network of doctors and hospitals called an “Accountable Care Organization”, or “ACO”. If the ACO spends less on patient care than its budgeted allotment, some of the “savings” is pocketed by the doctors and hospitals in the ACO. Conversely, if the ACO spends more than its budgeted amount, it faces financial penalties.
This “shared savings” arrangement offers providers perverse incentives. The most obvious one is to cut costs by providing less care. If it costs more to deliver all the care Vermonters need than the fixed amount providers are given, they will either have to ration care – or pay back the overage.
In an 11/30/15 report to legislative leaders, the Green Mountain Care Board defined their “Financial Targets in the Model Agreement” (with the federal government):
• All-Payer Target = a defined goal for spending
• All-Payer Ceiling = upper limit on spending; actual spending must be lower
• Medicare Savings = minimum savings required under the agreement
• Regulated Revenue (Covered Services) = Spending categories subject to the all- payer
ceiling and from which Medicare savings are derived
Real Health Care Cost Drivers Untouched: The all-payer model theory is that this new payment system will somehow save money – hence, the “savings” targets. However, one of the primary drivers of health care costs is the unbridled inflation in prescription drug costs - caused by the inability of Congress to control Big Pharma. Until there is meaningful reform on the federal level, health care costs will continue to escalate. The all-payer model merely addresses who pays and how much – it does not address the basic drivers of health care costs at all. The Shumlin administration has said that the Federal government would not agree to issue a Medicare waiver to create the all-payer model unless the state can prove it would provide savings to the federal Medicare trust fund. This practically assures that providers will be reimbursed less for treating Vermont seniors than under the current Medicare program.
Single Payer Advocates Push to Expand Dr. Dynasaur: DD2
In addition to the all-payer system, single payer advocates are attacking on another front. Their latest effort is to try to get the 2016 legislature to fund a study on expanding Dr. Dynasaur, the program covering children of low-income families who qualify for Medicaid. This proposed expansion is called “Dr. Dynasaur 2” (DD2). DD2 would lift all income caps from Dr. Dynasaur, so that all Vermont children - regardless of whether they already have coverage under another health plan – would be covered under the state Medicaid program. DD2 would move all Vermont dependent children from birth to age 26 out of their current insured family plans, where they already have coverage, and make them “wards of the state” for health care coverage.
DD2 is sheer insanity on so many levels. Just within the past week, four pediatricians announced that they are leaving Franklin County because Medicaid isn’t paying them enough. That’s a huge loss.
Too Many People; Not Enough Money: Supporters say that this deal would move an additional 120,000 people from private insurance into Dr. Dynasaur (Medicaid). That would shift the cost of coverage from their families where it belongs – to Vermont taxpayers – and increase the Medicaid rolls to 320,000 – more than half of all Vermonters! Already the legislature is trying to dig out of a huge Medicaid budget deficit caused by the Shumlin administration’s failure to verify Medicaid eligibility, coupled with increased outpatient utilization by current Medicaid enrollees. Already one in three Vermonters is on Medicaid – a level unheard of in other states. Vermont has the highest Medicaid population per capita in the United States.
No Savings; More Cost: In the commercial insurance marketplace, family plans pay providers well for their children’s health care. DD2 would shift children out of those plans and into Medicaid, which woefully underpays providers. We learned during the last legislative session that the state needed a $90 million payroll tax to raise Medicaid reimbursement rates to a reasonable, although not optimal, level. How much more would it cost to add 120,000 additional children to the Medicaid rolls , many or most of whom don’t need it because they already health care coverage through their families? Children to age 26 are usually considered “good risk” in an insurance plan. Removing all the good risk from family health plans will cause what is called a “death spiral” in their insurance plans. Families would devolve to 1 or 2 persons. Premiums for those plans are lower. Claims would then exceed premiums because the adults have more claims, and premiums would keep rising until health plans were out of reach for working Vermonters. This is a very predictable actuarial outcome.
The DD2 proponents somehow imagine that state can come up with more money to fund Medicaid. Given the fact that we’re running budget deficits to cover those who are currently insured, there’s little likelihood of that happening, and the legislature should not waste a dollar of taxpayer money on a DD2 study. DD2 is another social welfare scheme that Vermont cannot afford. VHCF will be watching this issue closely during the legislative session and lobbying against it.
Beware – Coverage for Non-Generic Drugs May Not Exist in Vermont Health Connect
Just this week VHCF heard from a Vermonter who is being denied a non-generic (brand name) drug needed for their health care. The patient had an interesting encounter with Blue Cross Blue Shield (BCBSVT), their carrier through Vermont Health Connect. Under their VHC plan, BCBSVT is unwilling to cover a treatment the patient requires performed by a neurologist. The patient is being treated for a significant pain syndrome by a neurologist, who has prescribed Botox injections in the affected sites. The patient reports that this treatment has been life changing. However, Botox is a non-generic and there is no generic equivalent. The patient said they were told by a BCBSVT representative to “seek alternate treatment if I did not like their coverage on this one”. The patient continues, “Besides paying $968 a month in premiums, they are…not covering it because they want me to use a generic but there is no generic on the market at this time. Why can BCBSVT tell me to get alternate treatment, isn’t my treatment between me and my doctor? I feel there is something very wrong with this scenario”.
Regarding the all-payer model, new ideas are fine, but one must look to: (1) the ability of the planners to carry them out, and (2) the results that will come from the implementation. The same team that is in charge of the still-botched VHC rollout is now handling the switch to an all-payer model. That should keep you up at night. This administration and legislative majority have proven repeatedly that they cannot manage health care plans, they cannot manage contractors, they cannot manage costs – running up huge contractual cost overruns, and they generally don’t know what they’re doing on health care reform.
The only good news is that the all-payer system will take some time to implement, so there is time (2016 elections) for Vermonters to elect candidates who will put the brakes on this. In 2016, voters need to get out to the polls and elect representatives who will insist that an idea be tested in other venues and found to be affordable and beneficial, before foisting it on Vermonters. The old saying, “If you’re not at the table, you’re on the menu”, was never truer.
“If you think your health care freedom is slipping away, that’s not an illusion. It is.”