Newsletter – June 1, 2012

Vermonters for Health Care Freedom

Kimbell the travelling salesman?

Reports are coming into Newsletter that Commissioner of Financial Regulation Steve Kimbell is reaching out to business associations whose members tend to be dominated by firms with fewer than 51 employees. Given that this is one of the first groups to be captured by the Vermont Health Care Exchange starting in January, 2014, this should not be a surprise.

Since 100,000 Vermonters will be forced to drop their current health plans in less than 2 years, does it not make sense that Administration officials would want to warn these businesses? Or perhaps Kimbell is interested in learning what these businesses are looking for in plan coverage so the limited number of state-designed plans offered through the exchange will meet their needs.

But no, that’s not it. Kimbell is reaching out to the business community with a simple sales message: “Drop your employer-based health care plans altogether and save a boatload of cash.” As for your employees, “don’t worry about them, Obamacare has them covered.”

Newsletter has some advice for any association or other business group inclined to entertain Commissioner Kimbell’s offer: 1) Read between the lines – “boatloads of cash” might just turn out to be the single largest tax increase your business has ever seen; 2) Obamacare may not even exist 60 days from now, but even if it does it won’t “cover” all of your employees – many of your employees may be left with little choice but to go without health insurance altogether, or seek employment with a competitor who chose not to heed the commissioner’s advice; 3) ask the commissioner why the Shumlin Administration is so anxious to see all the small employers drop their coverage (hint: low income individuals forced to purchase insurance through the Vermont health benefit exchange will become conduits of federal funding to support Green Mountain Care, the state’s government-monopoly single payer experiment); and, 4) make sure you also invite someone who will tell your association the rest of the story. Call VHCF at 800-243-7579.

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State Global Budgets force closure of RRMC in-patient rehab unit 

VHCF and Newsletter have repeatedly warned Vermonters that global budgets and state control of health care will lead to restricted access to health care services and rationing of care. Last week the board of the Rutland Regional Medical Center voted to shut down the hospital’s in-patient rehabilitative services unit, one of only three such units operating in the state, to address half of a $7 million revenue reduction required by state-mandated caps.

The decision was widely covered in the media and was decried by the hospitals’ management, board, staff and the broader Rutland community. But the state revenue cap left the hospital board with the choice between closing the unit or more severe across-the-board cuts that would have compromised the quality of acute care at the hospital. Shutting down the program was judged to be the least-worst option.

In a carefully written commentary published in the Rutland Herald, hospital President and CEO Thomas Huebner said, “We want health care costs to be controlled. Government has acted to make this happen, and I believe they will be successful. But it comes at a price. We cannot do everything and think that it can cost less.”

And so it begins. But is Huebner right? Is Vermont’s heavy-handed, top-down, restriction of health care services and takeover of the private insurance market the only way to reduce costs? See the next item below regarding the State of Maine.

VPR coverage of the RRMC decision is available here: http://www.vpr.net/news_detail/94680/rutland-regional-hospital-cuts-acute-care-program/

Rutland Herald coverage is here, for subscribers: http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20120531/NEWS01/705319859

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Maine health insurance premium drops getting national attention 

The Wall Street Journal has now published a commentary on news recently covered here regarding the remarkable early results of Maine’s health care reform efforts, which move that state in the opposite direction Vermont has chosen. Titled “ObamaCare in Reverse:”

“Then the 2010 electoral wave carried in Republican Governor Paul LePage and a GOP legislature, and they took modest steps to deregulate the insurance market. Insurers are now allowed to sell policies for premiums that range from 3 to 1 on the basis of age, rather than the prior 1.5 to 1, and to offer incentives or discounts for consumers to choose high-value providers.

The returns are now rolling in for the new coverage that can be offered starting on July 1, and premiums are falling by as much as 69% for Maine’s dominant insurer, Anthem. . .

The old and new products are not identical, so the comparison isn’t perfect. On top of the rule changes, the benefits are slightly different, such as separate deductibles for in- and out-of-network services. And many of the year-over-year reductions are less dramatic, in the range of 10% to 20%, while a few older consumers will see rate increases.

Still, any premium decrease is remarkable on the U.S. health cost escalator, which is being accelerated by ObamaCare. Maine consumers who choose to stay with their current policy (same benefits, old rules) will see an average premium rate increase of just 1.7% from 2012 to 2013—compared to an historical trend of about 10%. Some 46% of the existing book of business will see a rate decrease.

The major irony is that Maine’s reform merely brings its community rating rules into compliance with ObamaCare, which is actually less restrictive than the rules the state passed in 1993. The new national health law will block a further Maine liberalization that is due for 2016.

Maine learned the hard way that the most heavily regulated insurance markets are the most expensive.”

Maine learned the hard way. Our question is, will Vermont ever learn?

The WSJ commentary is available here for subscribers: http://online.wsj.com/article/SB10001424052702304707604577426162012576398.html?mod=WSJ_Opinion_AboveLEFTTop

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Administration and GMC Board hearing turns into infomercial for Vermont Workers’ Center

On May 31st, the long-awaited join hearing of the Agency of Administration and Green Mountain Care Board was held in 11 Vermont Interactive Technology sites around the state. The 4 hour marathon was sliced into 2-minute snippets where witnesses could offer any advice they wanted to on the question of what benefits the GMC plan should ultimately cover. Witnesses were given the opportunity to call or email ahead for reservations to testify, so the well-organized folks associated with the Vermont Workers Center turned the event into a 4-hour infomercial for their agenda.

Jeff Wennberg testified on behalf of Vermonters for Health Care Freedom, one of 2 non-Workers’ Center witnesses in the first 45 minutes. Wennberg’s message was one that is familiar to regular readers of Newsletter:

“Vermonters should have been engaged in a discussion of the scope, pace and structure of health care reform prior to the enactment of Act 48. The governor and legislature have already made those critical decisions. To now come to the people for guidance on benefits is to make this an exercise in cynical public relations. . .

The fact is, basic benefits have been defined by the legislature – they will at least match those offered through Catamount. Estimating the cost of Catamount covering 430,000 lives is a straight-forward calculation; just ask Wendy Wilton. There is no good reason why Catamount, which serves as the benefit baseline, cannot also serve as the financial baseline.

But the Administration refuses to do the analysis or discuss what Green Mountain Care will cost, or how it will be financed, or who will pay the bill.

In the end the benefits package will be dictated by the legislature and finances, not by testimony heard today. The closure of Rutland’s in-patient rehabilitative services unit is not a result of the public’s desire for benefits; it is the result of the state’s finances. And this is just the beginning. Contrary to what the single payer advocates would have us believe, the consequence of global budgets and total state control will be to restrict access – not expand it.”

Nearly all the other witnesses wore the Vermont Worker’s Center red T-shirts proclaiming “Health Care is a Human Right,” and many offered personal stories of financial hardships or bureaucratic stress imposed by the current system, as well as a long list of benefits that should be included under Green Mountain Care. Most frequently mentioned were dental care, vision, long term care, ‘alternative’ medicine, and pretty much anything else that anyone might need that is related to their health.

One recurring theme was the revulsion some of the Workers’ Center witnesses had for anyone involved in health care making a profit. Profits are so morally repugnant to many of these folks that the quality or availability of health care was clearly a secondary concern. None of these witnesses seemed to be aware that the only economic system to have consistently delivered higher quality products and services at lower cost is a free and competitive marketplace, coupled with the profit motive. They also seemed to be unaware that government monopolies, like the single payer health care model, have consistently delivered just the opposite.

Here is the full text of Jeff Wennberg’s testimony: http://vthealthcarefreedom.org/sites/default/files/05-31-12%20Wennberg%20Testimony.pdf

Here is a VTDigger article on the hearing: http://vtdigger.org/2012/05/31/at-hearing-activists-press-for-single-payer-health-care-system/

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Canada abandoning global budgets as Vermont embraces them

The Financial Post online carried a story explaining how several provinces are ‘experimenting ‘ with new hospital funding systems to address excessive delays for access to services and unsustainable cost escalation. The new approach? Activity based funding, known here as fee-for-service.

Canada’s single-payer government monopoly system has for decades relied upon global budgets to control costs. Global budgets are basically a block grant to hospitals and providers, from which the hospital must fund the services required by the community served. The result of this approach is summed up in the Financial Post story:

“Decision-makers have always regarded the old funding model as easy to administer and useful for reining in rising costs. However, this cost control — which has not in fact prevented expenditures from rising — has historically come at the price of service rationing: Given continually increasing demand, hospitals have had no choice but to limit admissions in order to stay within budget. The chronic problem of waiting lists in Canada is therefore rooted in part in hospitals’ funding models.” 

So Canada is now experimenting with activity-based funding, which basically reimburses the hospital on a service by service basis. The UK moved from global budgets to the fee-for-service model in 2003 for the same reasons and the results were dramatic:

“The average length of stay fell rapidly after the reform was implemented, while better use of resources by hospitals led to more patients being treated, with no reduction in care quality.

Reforming hospitals’ funding model also paved the way for other changes to the English health-care system that have produced beneficial results. Patients can now choose the hospital in which they will be treated, and hospitals compete to attract them. This increased competition, which stems directly from the funding reform, has played a key role in the improvement of hospital management and in the quality of care provided for patients.”

The Post reports that British Columbia has experienced very favorable results from their trial of the new system, and Ontario is moving in the activity-based funding direction is a dramatic way.

Why, then, is Vermont marching double-time off the global budget cliff, when the experience of others has been abysmal, both from the perspective of access and cost? When Newsletter figures this out we will be sure to share it with our readers.

The full Financial Post story is well worth reading and can be found here: http://opinion.financialpost.com/2012/05/22/make-money-follow-hospital-patients/

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