Exponential cost increase feared by Vermont official

by Vermonters for Health Care Freedom

Lunge: Vermont May Face “Exponential Cost Increases in 2016”

As reported here last week, the Department of Vermont Health Access (DVHA) has recommended Blue Cross Blue Shield as the “benchmark Essential Health Benefits Plan” (EHB) for the Health Benefits Exchange as required by the federal Affordable Care Act (ACA). Health Care Reform Director Robin Lunge’s presentation to the Green Mountain Care Board, who will make the final decision, contains an ominous warning on slide 15:

“ EHB approach to be reviewed by the federal government in 2016

– leaves open the possibility of an exponential increase in state costs in 2016”

Anytime you see the words “exponential increase in state costs” coming from the Administration it is wise to take note.

The reason for the warning is as follows. The ACA will provide subsidies to low and middle income Vermonters who purchase insurance through the Exchange to help with the cost of premiums. The cost of the premiums represent the full suite of benefits required by both the ACA and the State of Vermont, which has been more aggressive than most other states in mandating coverage for a wide range of additional services. The federal government will provide subsidies for all of these benefits for 2014 and 2015, but . . .

“[The Department of Health and Human Services] intends to evaluate the benchmark approach for the calendar year 2016 and will develop an approach that may exclude some State benefit mandates from inclusion in the state EHB package.” (Center for Consumer Information and Insurance Oversight, Essential Health Benefits Bulletin, December 16, 2011)

In other words, the feds may not provide subsidies for state mandated benefits starting in 2016. Furthermore, any benefit that the state requires that is not subsidized by the feds MUST be subsidized by the state. Hence the potential for an ‘exponential cost increase.’

How much might this cost? The Administration has not investigated this, but the potential exposure is, in their word, “exponential”. To estimate the worst case exposure the Administration would need to calculate the cost of premiums for the benchmark plan assuming only the federally-mandated benefits were included. When asked about this Director Lunge indicated that the analysis had not been completed due to “limited resources.” Newsletter submits that answering this question should be a top priority so policy makers have a clear picture of the contingent liabilities Vermont is assuming. (See the next item for a look at the resources available).

Director Lunge’s PowerPoint presentation is available here: http://gmcboard.vermont.gov/sites/gmcboard/files/BenefitExchange080912.pdf

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Vermont’s Health Reform Technology Price Tag: $278 million

In response to questions from the Legislative Health Care Reform Oversight Committee, DVHA Commissioner Mark Larson presented a summary of the cost and funding of the administrative and information technology systems to implement health care reform in Vermont. Here is the breakdown, all figures in millions:

System                                                          State Funding                                 Federal and Other Funding                     Total

Health Benefits Exchange                                   $0.00                                                             $113.00                                           $113.00

Medicaid                                                                    $12.50                                                           $112.50                                           $125.00

Enterprise Eligibility                                               $2.15                                                             $19.35                                              $21.50

Heath Information Exchange & Blueprint       $6.20                                                             $12.30                                             $18.50

Total                                                                            $20.85                                                        $257.15                                          $278.00

The vast majority of the ‘federal and other funding’ is coming through the federal Affordable Care Act.

Commissioner Larson emphasized that not all of these funds have been received and the total reflects the cost over several years to design, construct and implement these systems.

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Sorrell, Donovan, Expect Legal Challenge to Green Mountain Care

WCAX used their August 12 edition of You Can Quote Me to quiz Attorney General Bill Sorrell and his Democratic Primary opponent, Chittenden County State’s Attorney T.J. Donovan on a variety of issues, including Governor Shumlin’s Green Mountain Care single payer health care reform.

Both said they anticipated the governor’s program would face legal challenges. Sorrell said:

“We’re going to face challenges in Vermont, and we have been preparing for that. I sent one of my AAGS down to a conference in New York with other state AAGS looking at federal health care and state experiments on that. The Green Mountain Care Board had some very able legal counsel. They hired one of my attorneys to be their lead counsel, and we’ve worked closely with some of the other lawyers advising them. As this moves from a concept or a plan to litigation, we will be engaging with them. I hopefully they will be asking us so that it doesn’t just pop out either from the administration or for some legislative committee, but we will be in there just as we typically do responding to requests from the legislature under statute for advice but also when we can see issues coming proactively going and talking with the speaker or the president pro-tem or particular committee chairs and say please don’t give us this at the 11th hour. We want to be there early to see it coming, and we’re happy to meet with you privately or publicly to discuss any concerns that we might have. So that we do get it right and whatever is ultimately enacted has the greatest chance of being successfully defended. “

Newsletter notes that the Attorney General appears to be pleading for administration and legislative leaders to consult with him before “popping out” legislation that will surely be challenged. Given the criticism Sorrell has received for his past inability to prevent adverse federal court decisions on landmark legislative initiatives, one can hardly blame him. But his use of the future tense is telling, given that the legislature has already enacted two laws to implement this reform.

During the floor debate on H.559 – the “Exchange” bill passed last session – Rutland County Senator Peg Flory asked the reporting committee chairs whether the committees had sought comment or advice from the attorney general regarding whether the bill might violate federal law. The answer? “No, that question did not come up.”

WCAX’s transcript of the program is here: http://www.wcax.com/story/19263103/you-can-quote-me-august-12-2012

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U.K. National Health Service Hospital Compromises Hygiene to Save Money

The U.K. Daily Mail carried a story a while back about Good Hope Hospital in Sutton, Coldfield, issuing orders to flip but not change bed sheets between patients as a means of addressing a budget deficit. The hospital is also targeted for having as excessive incidence of “super bug” infections such as MRSA.

“Tony Field, chairman of Birmingham-based MRSA Support, said: . . . ‘It is utterly disgraceful and tantamount to murder because hygiene like changing sheets is essential to protect patients.

‘It proves beyond all doubt that cost-cutting is directly contributing to hospital acquired infections.’”

Britain’s National Health Service is a government financed system, but unlike Canada private hospitals and doctors are allowed to operate. Primary care facilities like the one in this story are operated by local non-profit trusts and provide services under contract with the NHS. Cost containment under the NHS system is enforced through contracts but operating decisions such as the one described here are locally made, similar to the way Vermont enforces revenue caps on hospitals here.

Local trusts in other communities are reported to have decided to prescribe cheaper medicines, reduce the number of sterile packs used, cut hospital tests, remove every third light bulb from corridors and ask patients to bring drugs in from home to help meet budget targets.

The Daily Mail story is here: http://www.dailymail.co.uk/health/article-448395/Hard-hospital-orders-staff-Dont-wash-sheets–turn-over.html

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Green Mountain Care Board Begins Hospital Budget Review

One of the duties assumed by the Green Mountain Care Board is the review and approval of hospital budgets. Hospitals recently submitted their budget requests for the fiscal year beginning October 1, and the GMC Board took public comment on Tuesday via statewide Vermont Interactive Television.

The Board had set an overall budget growth cap of 3.75% earlier this year. The 14 hospital budgets collectively propose to spend a little over $2 billion next year, or about 7.1% more than 2012. However, the Board intends to exempt some expenditures – such as those that increase hospital spending but decrease health care delivery spending somewhere else, as happens when a hospital purchases a physician’s private practice. If all these exemptions were approved the overall spending increase would total 3.1%.

VermontBiz.com carried this summary: http://vermontbiz.com/news/august/green-mountain-care-board-begins-vermont-hospital-budget-review-public-hearing-august-14