The cost of health care and health insurance will be one of the biggest issues in the Vermont legislature this year. Rep. Henry Holmes of Bethel and I expect to be right in the middle of the discussion.
Insurance rates in Vermont have increased by 10-20% these past few years while the national average has gone up about 5% each year. Insurance companies have indicated these increased rates are required to catch up with the cost of increased utilization, cost shifting caused by the state not paying its Medicaid bills, increased mandates and pharmaceutical costs. This increase has thrown school budgets into a tizzy. Some employers are deferring pay increases to cover increased premiums and some employers are dropping insurance and letting employees fend for themselves.
Only two firms still offer individual health insurance in Vermont where there used to be more than a dozen. That means there is little or no choice of health coverage in Vermont now. There is also a hidden tax to consumers in the growing cost shift of Medicaid expenses onto private health insurance carriers. Vermont has quadrupled its Medicaid programs but pays only 10-60% of its charges, leaving doctors and hospitals to try to collect the difference from private insurance companies.
State policies have pushed many insurance companies away and the expansion of Medicaid and the increased cost shift has hurt. Also, the state-sponsored health insurance programs (Medicaid, VHAP , Dr. Dinosaur) are superior to what employers or private insurance offers and the premiums are often less than fifty dollars a year.
In January, Rep. Henry Holmes and I introduced a bill that will frame the Republican views on health care. Our proposal was presented to the Republican caucus and the House Health and Welfare committee. The caucus was excited to have something on the table but the Democratic response was to protect the status quo and seek more data to identify whether a problem really exists. Also, Governor Dean indicated insurance rates are under control and he intends to prevent any further rate increases. He has proposed some minor changes and the Democratic leadership has proposed more studies in lieu of action.
Our bill encourages people to take charge of their health care and addresses higher premiums caused by regulation that prevents competition in Vermont. Although the bill was introduced as a comprehensive approach in addressing health cost, access and competition, we’re hoping to attract bi-partisan solutions based on fact. The Governor’s reaction has been defensive and condescending by calling these initiatives divisive.
The bill calls for Medical Savings Accounts paid for by tax credits. It also would offer vouchers for Medicaid recipients to buy their own private insurance and increase the eligibility for prescription drugs that would be means tested. It allows ratings that favor healthy people while creating a high-risk pool for “extraordinary conditions”. A multi-state rating pool would boost competition.
We further believe that people should be more responsible for their health and be rewarded accordingly. Currently, 50% of Vermonters are overweight, 25% smoke and 75% have little or no exercise. The bill offers a credit for the purchase of goods or services promoting healthy lifestyles.
In January, I coordinated a health insurance care/cost forum with the Ethan Allen Institute at the State House. Speakers included Steve Kiernan, editorial writer of the Free Press and David Wilson, former Administration Secretary for Governor Snelling and Dean. Over 50 people attended and the discussion was informative as it addressed the affordability of Vermont’s health policies. The speakers wanted to preserve the advances we’ve made in health care but believe state policies must change to restore individual responsibility in health care and more private insurance competition and choice will lower premiums.
One speaker stressed that the financial condition of Blue Cross and MVP is on thin ice. Both are in need of capital reserves and further rate increases to prevent insolvency. An independent analysis shows the liquidity measurement for Blue Cross has decreased 33% in the last few years (’96 to ’98). Washington and Kentucky have mandates and community rating practices similar to Vermont that have forced out competition and their health care insurers are in financial trouble today. Community rating means everyone pays the same rates regardless of age or health condition.
During the budget FY2000 adjustment debate on the House floor, two health related amendments were introduced. My amendment, called the Kids Access Plan (KAP), would remove all state mandates and allow parents to purchase a basic, inexpensive no frills policy for kids. My argument was that the cost of kids’ health insurance shouldn’t reflect the ratings of an older population, nor include mandates like pregnancy benefits. Also, parents should have the choice of private insurance rather than rely on the state’s Dr. Dinosaur program for coverage.
Rep. Walt Freed’s amendment would have increased state Medicaid reimbursements by $8 million to slow down the cost shift to other payers. As Freed indicated in his argument, underfunding is really a hidden tax and a contributing factor to the premium cost spiral.
Both amendments were defeated along party lines.
The Governor claimed the Freed amendment was an organized plot by the hospitals
“to put money in their pockets”, and that my amendment was a attempt to
“throw people to the wolves”. It’s unfortunate that the health care
crisis debate has turned so political and that the Administration and leadership
think the problem can be regulated away or studied to death.
Constructive action is required sooner rather than later.