Hsiao and the Chocolate Factory-The Sequel

by Charlie Bucknam

The Vermont legislature has embarked on a plan to completely overhaul Vermont’s health care system based upon a deeply flawed report submitted by William Hsiao, the consultant engaged by the legislature last summer at a cost of $300,000. House Bill 202 (H.202) establishes a vague outline of a new health care plan called Green Mountain Care. The bill, like the Hsiao Report, raises many questions and concerns.

How can a five member part time board (proposed in H. 202) possibly manage the complexities of a $5 billion health care system given the following range of responsibilities?

·To represent all major players including employers, state government, consumers, and all recipients of benefits and payments.

·To set payment rates for providers (physicians, hospitals, other providers)

·Negotiate updates/changes and scope of benefit packages (including co-payment levels).

·Negotiate contracts for claims administration. (This is the one area where Hsiao

acknowledges that competition through competitive bidding will work to reduce costs.)

·Establish global budget annually for Green Mountain Care, subject to legislative approval.

How will Green Mountain Care be funded? Hsiao recommends that it be funded with a payroll tax at the level of 3.6% for employees up to $106,000 in income and 10.9% for employers. Hsiao recommends that employees earning less than 200% of the federal poverty level (FPL) be exempted from the payroll tax. H. 202 does not specify how it is to be funded, but simply suggests that funding will have to come from some form of new tax on Vermonters. In addition, both Hsiao and H. 202 assume higher levels of payment reimbursements from the federal government for Medicaid, certainly not a foregone conclusion. Co-payments by health care consumers will also contribute to funding.  Hsiao recommends a 13% co-payment while H. 202 is not specific.

What will my benefit package include under Green Mountain Care? Hsiao recommends that a benefit package design should be equivalent to the average of plans currently available in Vermont. Both Hsiao and H. 202 indicate that the 5 member Health Care Reform Board will have authority to design and alter the package with legislative approval. . Of course, the benefit package will depend on how much funding is available, and how “sustainable” that funding is. Look for reduced benefit packages in the near future when the legislature finds out its cost estimates did not reflect reality.

Will my health care be free? No. In addition to the payroll tax, you will be subject co-payments, the level of which will also be determined by the Health Care Reform Board.  Also, Vermonters will need to purchase additional insurance depending upon the scope of the state’s “basic benefits” package. There is no estimate in Hsiao’s report as to the cost of this insurance.

Will I be denied access to costly health care treatment? Yes. The purpose of the Hsiao and legislative proposals is to reduce cost. Imaging technology, organ transplants, cancer treatments are all expensive. Expect to see those services limited for certain classes of people based upon yet to be determined criteria that will likely include age and/or the degree to which a disease has advanced. Also, under “global budgeting”, accountable care organizations will have a fixed budget to be allocated among all patients within that organization, a built in incentive for providers to avoid costly treatment.

Will I be permitted to take advantage of out-of-state health care providers? The Hsiao report suggests that there should be negative incentives built into the State’s accountable care organizations to discourage going outside of Vermont’s borders. H. 202 simply says that cross border issues will need to be addressed without offering any specifics. The legislature has essentially kicked the can down the road to avoid the controversy that will be generated when Vermonters realize they will not be able to afford treatment at Dartmouth Hitchcock, for example, under the new health care regime.

Will I be able to choose my primary care physician? H.202 suggests that you may not be able to do so because you will be “attributed” to a particular accountable care organization. The Health Care Reform Board will decide which accountable care organization you will belong to.

Will I need to purchase additional health insurance? H. 202 implies that many people will want to purchase a wrap around policy to cover care not included in the Green Mountain Care benefit package. The Hsiao Report strongly indicates the need for wrap around policies to be provided by private insurers.

Will Catamount Health continue to be an option? No. The Hsiao Report identifies this program as one of those state-run programs that is unsustainable. H. 202 proposes to eliminate Catamount Health and fold it into the Medicaid-funded Vermont Health Access Plan (VHAP). Physicians are compensated at a lower rate under VHAP and may opt not to accept patients previously enrolled in the Catamount plan.

Will long term care be provided under Green Mountain Care? No. Hsiao recommends that it not be included and H. 202 does not address it.

Will tort reform be incorporated in Green Mountain Care? Hsiao claims that tort reform is a necessary component. H. 202 simply states that we should investigate further.

The Vermont General Assembly is proposing to ram through a bill that would turn one sixth of our economy over to government control, put a government panel in charge of our health care decisions, limit our freedom of choice and substantially raise taxes, all based on a badly flawed report with a pre determined conclusion. We as health care consumers, taxpayers and citizens should be demanding that our legislature slow the process until the issues are more thoroughly researched. Moving too fast on an issue as important as this puts the Vermont economy and health care consumers at risk.