Part 1
One distinguishing feature of our health care system in Vermont is its high costs. That’s why you have to hand it to the Governor when he addressed the average 20 percent premium rate increase and he said “…I’m very concerned and it cannot go on.—they may get some double digit increase this year…look out next year. I have no intention of allowing this to go back to a trend.”
Does the Governor know something that we don’t in controlling double-digit increases in health insurance premiums? Is he going to prevent choice to increase efficiency? Will he impose price controls and/or rationing through a single payer system under government control to achieve his objective? Or, has the Governor agreed to financially preserve BC/BS as Vermont’s single insurance provider, whose cash position has decreased 30% in 3 years, in return for fixed premiums?
Act 60 is trying to achieve equity funding in education. The Governor is achieving equity in health insurance through community rating, where everyone pays the same for health insurance premium regardless of their health. This cost shift forces low risk people to buy insurance to cover high-risk people. Another cost shift occurs in mandated health benefits, when you’re forced to buy certain coverage regardless of need.
This policy direction increases the cost of insurance, forces people to abandon insurance coverage. The number of uninsured rose to 13.5% in 1996 compared a national average of 2.7%. As a result, the Governor promoted policies to expand Medicaid program eligibility’s, increased the Dr. Dynasaur program for children whose parents make up to $49,000 as well as provide coverage for low income working Vermonter’s through the Vermont Health Access Plan. These are tough programs to criticize but their costs are growing uncontrollably. Though our uninsured percent has decreased, the Governor has created a health care plan that creates perpetual dependency on the state.
We got Act 60 because Vermont intentionally refused to fund education. We’re doing the same to health care by not funding these Medicaid programs adequately by conscientiously underpaying reimbursements for health services. Hospitals and home health agencies have lost millions, physicians are paid 8 to 65 cents on the dollar for services, dentists have refused to take more Medicaid patients because costs aren’t covered and nursing homes are forced to refuse Medicaid patients because they lose money on then. Those who have insurance (you and me) are being forced to pay millions to make up some of the difference. Are we being set up again?
The Administration is embarking on government policies that has bureaucratized the medical marketplace, plays Robin Hood in cost shifting and impedes market competition. The concept of free market forces no longer plays in Vermont health care and this has gone on for many years. Employers and consumers can’t shoulder the responsibility of government any longer.
I don’t think Vermonter’s want third party payers attempt to limit physician choice, hospital access, increasingly dictate the practice of medicine and interfere in other ways with the doctor-patient relationship. Wherever that has occurred, health care costs were temporarily checked at the expense of reducing quality of health care.
Are their free market solutions to achieve a check in high cost insurance? A few months ago, I hosted a meeting in Burlington with Rep. Henry Holmes (R,Bethel) and invited private health insurance representatives to address this question with a bi-partisan group of House members. Three companies and three health insurance trade groups participated. More were invited but refused to participate because of Vermont’s policies and unfriendly regulatory environment.
According to the participants, the major impediments to Vermont’s health insurance market are its mandates. The industry representatives indicated community rating is a major barrier to opening competition and that health insurance mandates are costly and unfair to consumers. They would also like to see a more predictable and consistent regulatory environment that recognizes insurance company solvency as a way to protect consumers rather than one that addresses affordability and availability of insurance. Disallowing premium pricing flexibility to cover insurance claims has caused most insurance companies to leave the state. In 1992, there were 17 carriers in Vermont selling individual policies. Today, there are only 2 selling on a limited basis.
Insurance representatives indicated hospital costs are high in Vermont and that the cost shifting in Medicaid to private insurance carriers is excessive. The companies believe individuals must have a stake in the cost of their care and be more responsible in their use of health insurance.
There is no silver bullet solution that will create an optimal health insurance market. But, Vermont has to look at a comprehensive approach that makes health insurance affordable, increase cost and quality competition to the market, empower all patients to make cost effective, medically appropriate treatment decisions and reduce health care litigation costs. When taken together, change in the landscape will occur and health carriers will begin again to offer choice health plans in Vermont.
Though the Governor “forbade” double digit rate increases, it’s unlikely to have an effect. Industry experts who attended the Burlington meeting agreed that the Governor has to decide whether to continue the current path of health insurance regulation that is driving up costs or change state policy to empower patients to be more fiscally responsible, make mandates optional, adequately fund Medicaid, and nurture competition. This will improve product offerings and bring more products choices to consumers.
Health care is personal. It’s about your doctor, your hospital, your health insurance and free markets that allow you to measure the outcome and not some state bureaucracy that will regulate choices. If Vermont is serious about real health reform, it should look to market-based solutions, not more threats and state control.
Part 2
It’s been said in politics, you have to give the electorate a tune they can whistle. The tune the press has been playing about Vermont’s health care is that there’s too much demand for services, HMO’s prevent choice and costs are too high. Also, some political leaders say the cause for the cost increases in health care is that hospitals and doctors charge too much. These are all good tunes to whistle, but we have to address the cause without exacerbating the problem.
One distinguishing feature we can all agree about our health care system in Vermont is its high costs. That’s why you have to hand it to the Governor when he addressed the average 20 percent premium rate increase and said “…I’m very concerned and it cannot go on.—they may get some double digit increase this year…look out next year. I have no intention of allowing this to go back to a trend.”
Does the Governor know something that we don’t in controlling double-digit increases in health insurance premiums? Does he have a deal to financially preserve BC/BS as Vermont’s single insurance provider, whose cash position has decreased 30% in 3 years, in return for fixed premiums? Or maybe the state will impose price controls and/or rationing through a single payer system under government control to achieve his objective like they do in Canada? These approaches call for more regulations and current experience shows that don’t work.
In Vermont, a lot of yesterday’s solutions are today’s problems. We’re achieving equity in health insurance through community rating, where everyone pays the same for health insurance premium regardless of their health. This cost shift forces low risk people to buy insurance to cover high-risk people. Another cost shift occurs in mandated health benefits, when you’re forced to buy certain coverage regardless of need.
This policy direction increases the cost of insurance, some say as much as 25% and forces people to abandon insurance coverage. The number of uninsured rose to 13.5% in 1996 compared a national average of 2.7%. As a result, the Governor has promoted policies to expand Medicaid program’s eligibility, increased the Dr. Dynasaur program for children whose parents make up to $49,000 as well as provide coverage for low income working Vermonter’s through the Vermont Health Access Plan.
The Medicaid roles have increased fourfold since 1992 as a result and total Medicaid spending in this state has increased 208% to a ½ billion. These are tough programs to criticize because we all want to be compassionate but costs are growing uncontrollably. Though our uninsured percent has decreased, the Governor and this state has created a health care plan that creates perpetual dependency on the state.
We got Act 60 because Vermont intentionally refused to fund education. We’re doing the same to health care by not funding these Medicaid programs adequately by conscientiously underpaying reimbursements for health services. Hospitals and home health agencies have lost millions, physicians are paid as little as 8 cents on the dollar to treat cancer, dentists have refused to take more Medicaid patients because costs aren’t covered and nursing homes are forced to refuse Medicaid patients because they lose money on then. Those who have insurance (you and me) are being forced to pay millions to make up some of the difference. Are we being set up again?
Vermont is embarking on policies that has bureaucratized the medical marketplace and plays Robin Hood in cost shifting. The concept of free market forces no longer plays in Vermont health care, in that only a few are willing to sell health insurance in Vermont because of state regulations which increase health costs. Employers and consumers can’t shoulder the responsibility of government any longer.
There is no silver bullet solution that will create
an optimal health insurance market.
Though the Governor “forbade” double digit rate
increases, it’s unlikely to have an effect. He has to decide
whether to continue the current path of health insurance regulation that
is driving up costs. The alternative is to change state policy to
empower patients to make cost effective, medically appropriate treatment
decisions, increase cost and quality competition to the market, adequately
fund Medicaid, and reduce health care litigation costs. This will
improve product offerings and bring more products choices to consumers.
Health care is personal. It’s about your doctor, your hospital, your health insurance, what your willing to pay and free markets that allow you to measure the outcome and not some state bureaucracy that will regulate choices. If Vermont is serious about real health reform, it should look to market-based solutions, not more state control.