STATE BY STATE HEALTH CARE REFORM ISSUES -- VERMONT
By Conrad F Meier, Health Care News
The talking heads on broadcast media and the poll-driven press have been trying to convince us health care reform issues like, expensive health insurance premiums, the high uninsured rate, medical privacy concerns and HMO reform were some issues that neither persuaded nor dissuaded voters when casting a vote for president.Up to now I held out hope citizens at the state level would synthesize national issues into local issues, thereby more clearly understanding the negative impact government regulations are having on their finances and freedoms.
In an effort to prove myself either very astute or very naïve, I have set out on a state-by-state quest to interview a local elected representative of the people. The choice of state is accomplished using a highly sophisticated survey process called ”throwing darts at a U.S. map on my office wall.” Where it lands is where I go. Duplication is prevented by a technique known in research circles as “random selection:” I can never hit the same place twice with a dart.
Having explained the process, our first toss of the dart landed in Vermont with Representative Frank Mazur (R-VT).
HCN: Representative Mazur, the Vermont legislature, like many other states, defeated an attempt to pass a cloned version of the single-payer health care plan devised by the Clinton administration. Even so, Governor Dean began expanding Medicaid as a default plan for a state single-payer arrangement. His intentions may have been well founded, but in doing so it appears the governor has produced a dysfunctional health care system by forcing numerous anti-free market mandates. In turn, these mandates seem to be having a negative impact on state consumers. Representative Mazur, is that a fair assessment?
Rep. Mazur: It’s a fair assessment that is having an adverse effect on our health insurance market. Insurance costs have increased and affected business profitability as well as consumer affordability.
HCN: How would you describe the condition of the state’s current health insurance market?
Rep. Mazur: I think the health insurance industry in Vermont is a mess. Premiums are skyrocketing, the number of people covered by insurance is falling and Medicaid roles are increasing as the state tries to insure more people. If current trends continue, in a few years most of our new state revenue will be needed to fund Medicaid.
HCN: The Governor has signed into law numerous mandates that have been proven to increase the cost of health insurance. What mandates do Vermont citizens have to deal with?
Rep. Mazur: The Vermont legislature considered almost 20 separate mandated benefit bills and passed several into law. Some mandates imposed by the state on health insurance carriers in Vermont are community rating, guaranteed issue, minimum maternity stay, drug abuse treatment, alcoholism, mammography, mental health parity, diabetes supplies, emergency services, metabolic disorders, home health care, jaw joint disorders, and chiropractic care.
Individually, a case can be made that the cost of each mandate may not be too high but the cumulative affect of multiple mandates is very costly.
HCN: What has been the impact of those mandates?
Rep. Mazur: Our governor has admitted mandates have increased insurance premiums and medical utilization because insurance pays for our care and consumers have little incentive to control costs. I think community rating alone is the most expensive of all mandates not reflected in the Governor’s assessment.
HCN: It has been argued that having lower health care costs should lead to lower uninsured rates. Currently Vermont has an 11 percent uninsured rate while also having some of the lowest health care costs in the country. What is happening in your market that still leads to double-digit uninsured numbers?
Rep. Mazur: Governor Dean’s goal in Vermont is to make health care an entitlement and he has raised the threshold for Medicaid eligibility. All children whose parents earn just over $50,000 a year are eligible to be covered by state insurance. Every working family without health insurance in Vermont whose income is 185 percent of FPL is also eligible for a comprehensive state health care program.
With almost 20% of the state on Medicaid, the underpayment of charges by the state (and federal) government creates a cost shift charge to private insurance plans to make up the shortfall. Furthermore, state mandates and community rating has also increased insurance costs. Each of these cost drivers has affected insurance affordability and the choice of being uninsured grows as a result.
HCN: Twenty-eight other states have used the high-risk insurance pool (HIP) to provide affordable coverage for medically uninsurable citizens. What does Vermont do to help these citizens.?
Rep. Mazur: Vermont has instituted community rating where everyone is charged the same premium regardless of risk. That’s not insurance because insurance prices are related to risks. This is another way of cost shifting from each according to ability to each according to need.
HCN: Do you think that approach is the best?
Rep. Mazur: No I don’t because community rating forces low risk people to buy insurance to cover high risk people.
The younger population pays the same insurance rate as older individuals. This in effect takes the risk out of underwriting and forces the younger, healthier age groups out of the market because of high health insurance costs. The insurance pool is left with an older population, more susceptible to costly health problems. The natural progression is higher insurance rates and more people dropping health insurance.
HCN: Why isn’t Vermont’s current health policy good for Vermont citizens?
Rep. Mazur: There is no clear evidence the current health policy has increased enrollment in the private market or decreased the uninsured. All the expansion has come as a result of growth in the Medicaid program. Prices have increased for the lower risk purchasers while holding the prices for higher risk subscribers. Because of this, insurance pools are decreasing thus setting a spiral that eventually could result in insurance that is so expensive almost no one would buy it.
HCN: What should Vermont do to create competitive insurance premiums and increase coverage?
Rep. Mazur: The guiding principle of insurance reform should be to restore individual responsibility; put the subscriber back in control of decisions about coverage and their medical care. More effort should be concentrated on ways to make health care affordable and not reduce competition and innovation. Also, state mandates need to be reassessed with a cost/benefit analysis based on whether we can afford them.
HCN: Thousands of citizens in other states have purchased tax-free Medical Saving Accounts (MSAs). In addition to paying lower health insurance premiums they enjoy a favorable tax advantage. Why were Vermont citizens denied the right to buy MSAs?
Rep. Mazur: They have the right but the market for MSA’s is too uncertain at the national level to have any affect. Until Washington commits to promoting MSA’s as an alternative, there will be reluctance to accept them in any market.
Health insurance coverage should be used to protect against catastrophic loss and not routine medical bills. That is why I personally support MSA’s and/or catastrophic insurance as a more affordable and flexible health insurance alternative people could afford.
HCN: There seems to be a growing activist movement for the creation of a single-payer system in the state. What can we expect to see from the conservative and liberal side of this issue?
Rep. Mazur: Vermont is second only to Oregon for the percentage increase in state spending in Medicaid from 1999-2000. Vermont’s increase was 18%, while Oregon spent 23% more. The national average was 5.7%.
With the election of a more moderate house and under the control for the first time in 14 years by Republicans, I think you’ll see less pressure to expand government health care. If current policy trends continue, its costs will exceed our state’s revenue capacity and require ration care to meet politically determined budgets.
With health care expenditures and utilization increasing, policy makers will have to look hard at program eligibility, reimbursement rates with patient co-share, reducing utilization and controlling program benefits, which are superior to what most average working Vermonters can afford in the market. I don’t see the liberals being successful in promoting their single payer agenda in this changed political environment.
HCN: It has been documented that even though Canadians have a government-run health plan, growing numbers of citizens are forced into dangerously long waits before they get medical care. Why do advocates think single-payer would work in Vermont when it fails elsewhere?
Rep. Mazur: The current Vermont political agenda is really a social mission to protect all citizens with health care. Since 1995 Governor Dean, and his Democratic leadership in the General Assembly, have embarked on policies that expand Medicaid to cover more and more Vermonters and in the process, the private market has virtually collapsed.
As a small state with 600,000 citizens without any adequate private insurance market, the government has undertaken the role of being the people’s advocate to control health care policy and service. Hospitals and home health providers have no competition. Those who have private insurers through employment and the remaining few with personal coverage, pay very high rates to cover the cost shift caused by state and federal under funding of Medicare and Medicaid.
Under state control of a single payer system, there would be no choice and everyone would have the promised security of a “uniform benefits package’ under the management of expert decision-makers who specialize in the scrutiny of societal costs and benefits. Patients would have ombudsman to look out for their welfare and the state and/or agent would be managers in the drivers seat.
The advocates of the state single payer system really believe this is the answer to controlling rapidly rising health insurance costs. They think that universal access should be an entitlement and that free market competition is more for profit rather than consumer driven.
HCN: What do think is the best way to deal with the nagging uninsured rate?
Rep. Mazur: There is no silver bullet solution that will create the optimal health insurance market and reduce the uninsured. But we should not think the state bureaucrats will look out for our health care. The current path in Vermont has driven up costs, prevents consumer choice and competition, and increases dependency on government for coverage. Patient empowerment and competition is required to facilitate more efficient use of technology and innovation. Only then will affordable health care emerge which will give consumers what they need and want.
HCN: The latest health care “crises” is directed at the pharmaceutical industry. Do you think drug companies are exploiting Vermont residents with high prices?
Rep. Mazur: I think there is a political perception that drug companies exploit residents with high prices nationwide but when you look at the data, that’s not the case.
The price increases are partially driven by inflation but increased utilization and changes in prescription patterns account for at least twice as much of the annual increase in spending.
The other factor which must be considered is that pharmaceutical expenditures require a much higher reliance on out of pocket spending, so when there is an increase in drugs, there is a more direct increase to the patient. That’s why a crisis developed in Vermont which prompted Governor Dean and the Democrats to call for price controls. Fortunately, it failed in the House and the Maine bill, which Vermont tried to mirror, didn’t prevail in court.
HCN: My last question deals with Governor Dean’s suggestion that Vermont’s health insurance market should be directed to not-for-profit insurance and providers. What role does for-profit health care play in the Vermont market?
Rep. Mazur: In order to increase competition and choice in Vermont, health insurance providers must be able to make a profit. To do that, the private market must insure more people so that more of the health costs are spread across the entire population, rather than concentrated on those few who use the service. Looking at a multi state health insurance pool would help in achieving that purpose. Until the state makes such policy decision to allow more competition, and the cost/benefit analysis shows free markets can help provide more affordable health care to Vermonters, the for profit market in Vermont is very tenuous at best.
Thank you for your calls and notes. I can be reached at 658-3975 (home), 228-2228 (State House) and via e-mail
Rep. Frank Mazur
South Burlington