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H.202 Update 3/20/2011
The House Health Care Committee Passed H.202 late Thursday night on an 8-3 vote. There were significant changes before passage. Among other changes were two that I found significant enough to allow me to support the Bill.
First all references to “single payer” were removed and replaced with universal and unified health care system. The title of H.202 will become: An Act Relating to a Universal and Unified Health Care System. This more accurately reflects what H.202 actually does and does not make a promise that we can not keep.
The second major change is that on April 21, before the end of the current session, there will be a fiscal analysis by the Joint Fiscal Office of both the anticipated costs of the system and an analysis of the anticipated savings given the provisions of H.202. Many of the cost factors are known. H.202 sets a floor for benefit coverage at the level of current Catamount Health. It states Legislative intent to keep cost sharing to 13%. We know utilization from our all payer claims data base. We know how many new people will be included in the system. The only real question is how much of the Hsiou savings will be realized given the parameters set forth in H.202. The JFO analysis will be done before the anticipated end of the session this year.
The taxes that are likely to be used for financing the plan are listed in H.202. What is not known is the mix of those taxes and more importantly what the Federal contribution will be. We have no way to accelerate the decisions in Washington, but to know how much of the system will require financing from within the state is central to telling people how much they will pay.
Even with these changes H.202 is not the Bill I would prefer. I would rather start with sound business plan and financial modeling which could be discussed and scrutinized first. If the projected savings are real, the system should sell itself to the voters, business, and providers.
I see both tremendous opportunity and tremendous risk here. The opportunity is to provide health care coverage to all Vermonters. We can and we must. The risk is that we could drive both jobs and providers out of Vermont. In my poll offered to all physicians with an active license in Vermont, presently with over 500 responses, there is an even split of those favoring and those opposing a single payer system. Yet 28% of physicians answer yes to the question : “ Would you be likely to stop practicing in Vermont if a government run single payer was enacted in Vermont?”. That would devastate access to health care regardless of insurance coverage. The idea that physicians will pour into Vermont is pure speculation, based on no data whatsoever. I believe if we get it right and it actually works as we hope for 4-5 years, physicians may come to Vermont but physicians are largely a risk adverse group coming out of school with a large amount of debt averaging around $200,000. Physicians will understand that once the system is in place the next time we face a large financial shortfall at the state level, there will only be two ways to reduce costs: reduce utilization of services or reduce reimbursements.
On the question of jobs, some employers are likely to do better with the new system, others will find it more costly. Large multistate companies with self insured plans have made it clear that want to continue to offer the plans they offer to employees nationally and will not support a system that forces them to pay a payroll tax in addition. Even if we could force them into our system should we try because they may simply move jobs out of Vermont.
H.202 will come to the floor Tuesday and if passed move on to the Senate. We will see what changes are made there and whether I can continue to support the Bill.
george till 3/20/2011
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My Issues with Single Payer
These points apply to a Vermont Only “single payer” system. It is a very different discussion when we talk about a national system.
Many confuse single payer with universal coverage , universal access or affordable health care. These are different things. One can have universal coverage and universal access without single payer. One can have single payer without universal coverage, universal access or affordable health care . Single payer is about who pays providers.
Vermont insurers have admin. Costs of 7.1-12.3% not the 30% quoted by single payer advocates (BISHCA 2009).
JFO has estimated that a single payer system would include only 37%-50% of hospital revenues.
We will spend nearly $5Billion on health care in Vermont this year.
Hospitals estimate an administrative savings of $2.9million from a Vermont only single payer across all Vermont Hospitals. There would be some savings in private physician offices not owned by hospitals but many physicians are hospital employed in Vermont and already included in this estimate.
Single payer would be a misnomer. The system wouldn’t include New York and other out of state insurers which account for nearly 20% of hospital revenues. The system might not include Medicare…they have not previously issued a waiver for this purpose. Veteran’s Administration, Federal workers and military insurance would not be included. There is disagreement about whether self insured systems such as IBM could be compelled to join.
Hospitals and physician offices would need to maintain enough billing people to deal with 14 insurers from New York, as well as the others listed above. The expensive and time consuming portion of the billing process, coding claims and follow up on denied claims, would still need to be done.
If a Vermont “ single payer” system included Medicare and Medicaid Vermonters would have tremendous financial risk or the system would need to purchase expensive reinsurance. Presently we spend 50% of healthcare dollars on just 5% of people. For these expensive patients on Medicare presently, the Federal Government assumes all the financial risk. For Medicaid the Federal Government now assume 60%-70% of the financial risk. If these extremely high cost patients were in a Vermont “single payer” system Vermonters might assume all of the financial risks and burdens.
If just a small number of very high cost patients moved to Vermont , the system could be bankrupt.
Most Medicare patients are quite happy with Medicare. How will the nearly 20% of Vermonters on Medicare react to us taking away their Medicare and starting them on a Vermont only experimental insurance. It is not “Medicare for all”, that would require a Federal program not a one state program.
Presently many working Vermonters receive a Federal and State subsidy of their insurance premiums. These are paid as an employment benefit with pre tax dollars. No other system limited to Vermont would continue to help working Vermonters in this way. Individuals now buying health insurance outside of employer plans pay with after tax dollars. We can’t change Federal tax law so working Vermonters could be big losers in the new system. Everyone would pay for insurance with after tax dollars.
Medicare is in essence a single payer for those over 65 years old. Medicare has not controlled the increase in health care expenditures. Medicare spends over three times as much in some locations as in others with no improvement in outcomes and no differences in the underlying health of the populations. We are now looking a 21.5% cut in Medicare reimbursements to providers. If a Vermont only system made this kind of cut for all payments doctors would leave the state in droves. Vermont Single payer is about who pays the providers, not about how much we spend on health care. To me, Vermont only single payer is a distraction from the real issue of controlling health care spending.
No developed country, single payer or not, has a health care system on a sustainable economic trajectory. All countries’ health care costs are rising faster than GDP’s.
We need universal access and we need universal coverage for all Vermonters. We are required to have a functioning insurance exchange by 2014. I believe we need a competitive and viable “public option’. What we need most is to continue down the path of a fully integrated health care system where the incentives do not reward just doing more. We need a system that stresses prevention of diseases as well as prevention of complications from chronic diseases. We need a system that rewards good outcomes and efficient care not just more care. I believe the key is integration of the system, not who writes the check to providers.
Again these points apply to a Vermont only system. A National system is an entirely different issue.
As always I’m willing to be convinced to change my opinion if someone can show me real and applicable data. I don’t believe data from other entire countries is applicable as they do not face the same issues of cross border usage and large portions of the population which will not be included in their single payer system.
george till 7/2010
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Would you be in favor a publicly financed, state government operated “single payer” health system paid for by broad based taxes?
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Response
Percent |
Response
Count |
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yes |
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45.2% |
232 |
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no |
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45.4% |
233 |
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neutral |
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9.4% |
48 |
Would a single payer system with decisions and reimbursement rates set by an independent appointed Board be preferable one with a standing government agency making decisions?
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Response
Percent |
Response
Count |
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yes |
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55.5% |
282 |
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no |
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23.4% |
119 |
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neutral |
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21.1% |
10 |
Would you be likely to stop practicing in Vermont if a government run single payer health care system was initiated?
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Response
Percent |
Response
Count |
|
yes |
|
28.4% |
146 |
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no |
|
54.1% |
278 |
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neutral |
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17.5% |
90 |
Would you be in favor of a “single pipeline” system which uses a single claim form, a single set of claim edits, and a single set of requirements for preauthorization but still maintains private insurances?
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Response
Percent |
Response
Count |
|
yes |
|
63.4% |
326 |
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no |
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20.4% |
105 |
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neutral |
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16.1% |
83 |
Do you support a public option for health insurance available to any Vermonter, to compete with private insurances?
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Response
Percent |
Response
Count |
|
yes |
|
63.3% |
323 |
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no |
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23.9% |
122 |
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neutral |
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12.7% |
65 |
Should Vermont have a single statewide preferred drug list for all insurers?
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Response
Percent |
Response
Count |
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yes |
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62.9% |
322 |
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no |
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20.5% |
105 |
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neutral |
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16.6% |
85 |
Would a no fault medical compensation system make Vermont a more attractive place to practice medicine?
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Response
Percent |
Response
Count |
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yes |
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70.6% |
363 |
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no |
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5.6% |
29 |
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neutral |
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23.7% |
122 |
THE HSIOU REPORT 3/3/2011
Dr. William Hsiao and his team recommend a Single Payer Health Care System for Vermont financed by a payroll tax of 9% on employers and 3.5% on workers. He suggests the payroll tax be imposed on all employers regardless of whether they currently offer insurance or even if they are a self funded ERISA plan. He foresees $580million in savings and recommends spending $395million of those to cover the uninsured and underinsured, provide basic dental and vision services and $50million to recruit and retain primary care work force.
H.202 the Administration’s Health Care Reform Bill has 3 main components. It sets up the Health Insurance Exchange as mandated by Federal Health Care legislation. It institutes a new board: The Vermont Health Care Reform Board. It sets up Green Mountain Care to operate the single payer system and commits to single payer as the future of health care in Vermont.
As do many others, I have questions both about the report and about H.202. In the Hsiao report, the calculation was that for each FTE physician, the billing and collection functions cost $68,000 per year. During my 22 years in practice, we spent under $8000 per FTE on these functions. That level of inaccuracy across 1700 practicing physicians is a huge amount of money. The contention was that physicians would see more patients if the administrative burden were reduced. Every doctor I know does the administrative work on their own time, after seeing a full schedule of patients. It affects their quality of life and time with family but doesn’t reduce patient visits.
Likewise Fletcher Allen Health Care believes they can save $5.3 from administrative savings with the single payer plan. The Hsiao report estimates $29 million. With this level of discrepancy shouldn’t the numbers be carefully vetted? The
Hsiao report recommends an "essential benefit package as a comprehensive package would cause $300million more per year than his projected savings. With an essential benefit package there would be supplementary insurance. The report includes no accounting for the cost of this insurance, the cost of care delivered under this insurance and the administrative costs associated with multiple other insurers, thereby significantly over estimating the savings from the single payer system. On page 46 the report itself suggests more Vermont specific data may be needed.
H.202 does not call for close examination of the numbers but to proceed as rapidly as possible down the single payer path. H.202 does not discuss how the system will be funded. Is it reasonable to commit to a $5 Billion a year endeavor without knowing how we will pay for it? The administration says it’s “irresponsible” to talk about financing until we know what the system will cost. That is impossible to know without defining the “essential benefit package”, yet that is left to a Board which does not yet exist. The Board will have many duties, from defining the benefit package, to designing payment reform, to negotiating reimbursement rates with providers, to approving the rates once negotiated, to approving hospital budgets, to approving a global health care budget for Vermont.
There is pressure to finish work on H.202 in the House within the next week, yet there are many important questions unanswered. When asked about the hurry the answer is always that we need to get to work on health care delivery and payment reform which will also be a duty of this new Board. We created a new position of Director of Payment reform in 2010. We already have a Director of Health Care Reform, a Health Care Reform Commission, a Director of the Blueprint for Health. Why can’t these people continue the health care delivery and payment reforms we've started until we have a full discussion of where we’re going and how we plan to finance the system.
Other issues with the proposal include the medical profession’s distrust of Government run health care. Every year we hear a bigger cut to Medicare reimbursements is needed. Most recently a 21.5% cut was threatened. What happens to our health care work force if Vermont is forced to make this kind of cut in payments during the next recession? The Administration proposal to roll Catamount Health into the Medicaid program is just the most recent example of broken commitment. That represents a 32% reduction of reimbursements to physicians who supported the institution of the program just 5 years ago.
There also remains the issue of self funded ERISA plans. There are over 105,000 Vermonters covered by this type of plan. We have already heard from both IBM and GE that they do not support a plan that forces them to pay a payroll tax when they want to continue the same health care plans they offer to their workers nationally. Will there be a prolonged court battle? Will they just pull jobs out of Vermont?
Testimony to the House Health Care Committee indicates that no developed country, single payer or not has a sustainable growth rate in their health care system. In terms of rate of increase the US is not even in the top 5 countries.
Given the real concerns about physicians leaving Vermont and these national companies eliminating jobs in Vermont, doesn’t it make sense to slow down and more carefully examine the issues? It is much more important to me that we get it right than we get it fast. We should have both access to care and coverage for care for all Vermonters. We can accomplish that, but first lets DO NO HARM.
WHAT DRIVES THE INCREASE IN HEALTH CARE SPENDING?
When you get a 20% increase in insurance, what are the drivers of the increases? What just costs too much but isn’t changing the slope of the increases. What factors are increasing the slope of the health care spending line?
There are several important things which cost too much but aren’t the drivers of price increases. In that category I’d put administrative costs and costs associated with malpractice and defensive medicine. To achieve the most cost effective system these need to be addressed, but they are not the core of the problem.
In the category of cost drivers which increase the slope of health care spending I’d put several things.
Utilization of health care services is the main driver. Utilization is a function of many factors to be sure. First is the health of the general population, including life style choices, unhealthy habits and diet, environment and genetics. The obesity epidemic will drive health care costs like nothing seen before. We have more chronic diseases, live longer with those diseases and therefore require more care over a longer period of time. We spend in Vermont and nationally about 45% of health care dollars on 5% of people, and nearly 2/3 of dollars on just 10% of people. Addressing high cost users is a must. Second, as we age we use more health care services. Vermont has the second oldest population in the country. We spend a disproportionate amount of health care dollars on care at the end of life and have not succeeded in having a conversation about what does and doesn’t make sense in end of life care.
A third driver of utilization is how many people you cover in your health care system. Vermont is second to only Massachusetts in percentage of citizens covered, and Mass. has a mandate to buy insurance. A fourth driver of utilization is the perverse incentives built in to our system now. You pay me more to do more and the most common reason to be sued is a failure to diagnose. That is a perfect prescription for increasing utilization. Some estimates put the rate of medical spending that does not improve health outcomes at as much as 30%. In Vermont we see significant variations in health care delivery. In one region you’re twice as likely to have back surgery as the rest of the state. In another region you’re one and a half times more likely to have a CT or MRI scan done.
Speaking of prescriptions, that is another fundamental driver of health care spending. Pharmaceutical costs have risen faster than general health care spending. If you cross the Canadian border, brand name drugs cost a fraction of what we pay here.
The other driver of costs is new technology. We live in a society of innovation. We also as a society believe the latest is the greatest and we’d all like the newest methods be used in our care. Estimates say that 1/3 to ½ of the medical cost increases above inflation have to do solely with usage of new technologies.
Reducing administrative costs is unquestionably important but misguided as the way to bend the cost curve.
GT 3/13/2011
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