A Truly Bad Shumlin Idea

By Hamilton E. Davis

   Having sunk the financing side of single payer health care reform by ignoring political reality, the Shumlin administration planners are now making the same mistake in dealing with the Green Mountain Care Board, the only part of the reform apparatus that actually is working well.
   The mistake is the proposal to turn the board into a public utility regulator, like the Public Service Board. The PSB regulates rates for electric, gas, telephone and some water companies. By contrast with the hideously complex health care system, public utilities are as simple as dirt. Everybody’s toaster has to fire up on cue, which it does, notwithstanding the occasional blizzard.
   Anyone who believes you can deal with the health care system with the rigidly legal structure of a public service board is simply not thinking clearly. The central problem is called ex parte contact, which is a fancy term for talking to people. If Green Mountain Power wants a rate increase, they have to go through an elaborate minuet—filing big piles of documents, replete with lawyers, hearing rules, etc.
   What can’t happen is for the chairman of the PSB and the president of Green Mountain Power to sit down in a private conversation to see if they could work out a solution that works for both of them. With public utilities, those kind of conversations would be illegal, and even if not illegal, would be a bad idea from a policy perspective.
   There is not the slightest resemblance between the public utility model and what the Green Mountain Care Board is trying to do. The health care delivery system in Vermont is in fact no system at all. It is a random collection of providers that has grown up over the last 100 years in a way that is clearly irrational and unsustainable. There are all sorts of political and policy differences in this crucible, but the overarching fact is that no responsible person denies that it has to change.
   How to change, however, is as difficult as any domestic policy problem that has ever arisen, short of something like a civil war. Vermont is hugely overbedded, which means that it has too much capacity, so that its costs are too high. Health care providers spend one dollar of every five produced in the state. Recasting that system involves changing how it is paid for, and how it is operated.
   The Green Mountain Care Board has to walk a very fine line between getting the costs in the system under control, without damaging the ability of our doctors and hospitals to deliver care. Doing that will require that all the stakeholders talk to one another as much as humanly possible. Each player has to be able to walk in the other player’s moccasins. Trust is critical. 
   An example: in 2013, the Green Mountain Care Board, which was established in 2011 to control costs in the system, was getting ready to rule on the budgets for the fiscal year 2014. The Board had a serious problem. Fletcher Allen Health Care (now University of Vermont Health Systems) had submitted a budget that exceeded the board’s cap.
   Fletcher Allen delivers nearly half the care available in Vermont, and if it was allowed to blow through the cap the board’s credibility would be badly compromised. The board had let its first hospital system budget come in too high and it could not afford make that mistake a second time.
   When Fletcher Allen President John Brumsted submitted his budget in the summer of 2013 he said that he couldn’t get it any lower. But on the day he was to actually present his budget to the board, he pulled it off the table and said he would resubmit it. When he did, it came in under the cap.
   No one has ever said what happened between the submission of Fletcher Allen’s first budget and the submission of the revised one. But you will look long and hard to find anyone who doubts that Al Gobeille and Brumsted had a private conversation and they reasoned together about the absolute necessity that Fletcher Allen meet the board target. The outcome was exactly what was needed. In the utility model, no such luck.
   The Fletcher Allen budget was child’s play compared to the work that needs to be done in recasting the whole Vermont system. Doing that within a public-service type framework is just plain impossible.
   And it isn’t that the Green Mountain Care Board lacks power now. Act 48, the single payer law the legislature passed in 2011, confers great power on the board. It has the authority to set budgets for the state’s hospitals, which also employ roughly two-thirds of the state’s doctors. It has the authority to rule on the insurance rates requested by Vermont Blue Cross and MVP, the major carriers in the state. It has been charged under Act 48 with a rebuilding the system in the most basic way.
   Once the system has been rationalized, then a public utility structure might make sense. For one thing, changing payment mechanisms and altering the care infrastructure would already be accomplished. What would be left would be setting expenditures, and that might be doable with a purely judicial type system. At this point, however, no such a system is even on the horizon. It is out at best four to five years and building it could take twice that.
   For now, the Care Board doesn’t need any more power, and it has never asked for more. The administration proposal would give it subpoena power, for example, which it does not need. Anybody who doubts that should look at the faces of the representatives of the doctors and hospitals and insurance companies who sit in the room during the board’s meetings. They hang on every word. Al Gobeille can talk to anybody in the health care arena at any time or place of his convenience. He doesn’t need any “help” from the Shumlinites on the Fifth Floor.
   When Mike Donofrio, the lawyer for the board laid out of the issue for the panel yesterday, the most trenchant comment came from Con Hogan, the board member who has more management and government experience than anyone in the room.
   “If it ain’t broke,” he said, “don’t fix it.”