Pete Shumlin: Credit Where Credit is Due

by Hamilton E. Davis

   One of the conceits of the journalism trade is that its practice constitutes the “first rough draft of history.” That is true in important ways; simply constructing generally reliable reports on events is essential to the civilized functioning of society. When journalists begin to function as historians, however, the results are often much less satisfactory.
   For one thing, it’s much harder to do. The sheer lack of time means that the consequences of this action or that haven’t fully played out yet. The heat of contentious issues hasn’t receded enough to permit penetrating analysis. These problems are particularly acute in assessing the careers of important politicians.
   Case in point: Pete Shumlin, governor of Vermont from 2011 until a week or so ago.
   Shumlin was one of the most interesting and complex governors of the modern era. After a short tenure in the Vermont House, he got himself elected to the state Senate in 1992, and played a leading role in that body for most of two decades. He became minority leader soon after his election and in 1996 led the drive to achieve Democratic control of the upper chamber. In 1997 he became President Pro Tem and served in that capacity until 2002 when he ran unsuccessfully for Lieutentant Governor. Shumlin was out of office until 2006 when he won his old Senate Seat and got elected again as President Pro Tem.
   He ran for governor in 2010, and won two very difficult elections—a primary against four credible Democratic opponents, and then a very close race against a popular Republican Lieutenant Governor.
   The centerpiece of Shumlin’s platform in 2010 and of his tenure as the state’s chief executive was single payer health care reform. Early on he was also a strong advocate of closing Vermont Yankee, but there were also powerful outside forces acting on that issue, and those forces took Yankee out without a major struggle.
   The early stages of health care reform, meanwhile, went extremely well. Shumlin put a strong team in place, led by Anya Rader Wallack, a highly capable policy analyst; and Steve Kimbell, a veteran lobbyist who had unparalleled credibility in the Legislature and who took over the health care regulatory machinery. From a standing start in early 2011, the Shumlin team produced a ground-breaking reform bill that swept easily to passage in the Democratic-dominated legislature.
   Based on that performance, as well as public approval of the way he handled the recovery from the catastrophic floods and destruction of Hurricane Irene, Shumlin crushed a capable Republican in the 2012 gubernatorial election. The Republican, State Sen. Randy Brock, couldn’t crack 40 percent of the vote, the threshold of a serious effort.
   The whole thing began to go off the rails, however, when it became clear in 2013 that the Shumlin administration had botched the launch of the federally-financed insurance Exchange, a component of Obamacare. Shumlin made two serious miscalculations during that period.
   The first was his propensity to assure voters that getting his health care project up and running would be a cinch—no problem. The second was his failure to recognize and act on the fact that his management team at the Agency of Human Services had no capacity to cope with the technical complexities of getting the Exchange operating properly.
   It is important to understand that there is no direct connection between the Exchange and the Vermont reform project. The Exchange is simply an expansion of Medicaid, which has operated without major problems since 1966, 50 years. The Exchanges had problems in Vermont, and many other states, but they were essentially computer problems.
   The Vermont project was the ultimate attempt to remake the delivery of medical care: it aimed first at getting costs in the state’s health care system under control by shifting reimbursement from fee-for-service to capitation—block payments to a group of doctors and hospitals for delivering a full spectrum of care to a big group of patients. By agreeing to take such a block payment, the doctors and hospitals would, for the first time, take responsibility for the financial performance of their own system.
   The second goal of the Shumlin project was to eliminate the system of private insurance and self-financing by big employers and to shift the source of those funds to the state’s tax base. Roughly half the cost of health care now is paid by federal and state governments; the other half is private financing. A critical caveat in Shumlin’s original proposal was that the shift to full government financing could not take place until the costs in the state’s delivery system were reliably under control, fully sustainable year over year.
   I recite these factors simply to make the point that there is no necessary connection between the Exchanges and Shumlin’s project. You could have a state Exchange with no systemic reform at all. And you could have a fully-elaborated state reform project without an insurance Exchange.
   In the public mind, however, no such fine distinctions had any chance at all. In fact, there never appeared to be any such distinction in the minds of the Vermont legislature. In any event, the inability of the Shumlinites to get the Vermont Exchange up and running began to drain the health care reform project of its political momentum and Shumlin of his credibility, both as a manager and a political leader.
   The 2014 election completed that process. Shumlin very nearly lost to Scott Milne, a Republican candidate who had, in sharp contrast to Randy Brock, no credentials at all. Shumlin completed his own defenestration a month after the election when he pulled the plug on the whole financing side of the reform project. There was simply no credible way to shift north of two billion dollars to the state’s tax base.
   What tended to remain unremarked at the time was that the essential precondition to the shift—getting the costs in the system fully under control—had not been achieved. In fact, it wasn’t even close to achieved. The inflation rate in the system had been cut dramatically by straightforward regulation, but there was little visible progress on integrating the delivery system by changing the reimbursement structure.
    In fact, however, there was steady progress on integration; it just wasn’t visible to the public, the press or the legislature.
    By the date of his inauguration to a third term in January of 2015, therefore,  Shumlin’s political career had gone glimmering. He was a lame duck for a full two years, and he got basically nowhere over that period. Lt. Gov. Phil Scott began his move toward the governor’s chair, and the Democrats in the Legislature, deprived of strong leadership, began freelancing all over the place.

The Shumlin Legacy

   So, that was that for Peter Shumlin and we can now ask what he accomplished and how important was it.
   I believe his legacy is entirely limited to his health care initiative. In the financial management of the state, he was essentially a conservative, despite a lot of specious Republican yammering to the contrary. Over the last decade or so, the revenues available to state government have dropped markedly, meaning that there simply isn’t any serious money to play with. A powerful thread that runs through the governorships of Howard Dean, a Democrat, Jim Douglas, a Republican, and then Shumlin, is fiscal conservatism.
  That isn’t likely to change. The essence of Scott’s political posture is budget discipline. And it isn’t just Republicans. If you think that you can get some blue sky spending initiative by Jane Kitchell, the veteran Senate Appropriations chair, well, good luck with that. If you listen to the comments of the newly-elected House Speaker Mitzi Johnson, the message seems clear:
   There isn’t any money. If you have some big spending ideas, you can forget about it.
   So, the Shumlin legacy question rests on health care. When he abandoned the financing aspect of his single payer plan, Shumlin did more than just kill off his political career, he became the national poster boy for the failure of health care reform.
   In my view, that is a mistaken reading. The reality is that health care reform is in fact alive, if not particularly well at the current moment. The key to reform—shifting reimbursement in the delivery system from fee-for-service to capitation—has not been achieved, but it has made steady progress.
    The structure to do so is in place: in an agreement signed last summer, the state’s Accountable Care Organization (ACO) now contains nearly all the state’s hospital assets, and the bulk of the primary care doctors in the state, are now on board. The first actual “risk” contract is virtually complete. It involves an agreement by OneCare Vermont, the key ACO and the state’s Medicaid agency, to care for a block of Medicaid patients in the northwest quadrant of the state in return for a block-type payment.
   The period of that initial step will be 2017. By 2018, the program can be extended to the Medicare population. At present, the participants in the risk contract include the University of Vermont Medical Center, its partner, Central Vermont Medical Center; Porter Medical Center in Middlebury, which is in the process of aligning with the UVM system; and Northwestern Vermont Medical Center in St. Albans. That is just four hospitals, but their four county primary service area constitutes roughly half the state’s population. Within the next couple of years, nearly all of the rest of the delivery system is on track to come on board.
   It is true, of course, that no can predict the course of the Trump administration’s posture on the health care reform front. Even if the Trumpies wipe out the federally financed Exchanges, however, the Vermont movement toward integration of the system can continue. There could be a problem with the Obamacare anti-trust waivers, but if there is anything in Obamacare that is critical to save it is the anti-trust waiver, because payment reform is the only way to get costs under control. Plus, it doesn’t cost any money at all. Eliminating it would be extraordinarily stupid, even for the Trumpies.
   Credit for the current situation, with Vermont leading the country on getting a delivery system integrated and functioning on a financially sound basis, belongs to Pete Shumlin. He ran his winning campaigns on the issue; he put in place an unusually capable team to get it moving; he got the best single state statute on health care reform ever written in the United States adopted by a huge majority; and he basically kept it afloat for six years. Granted he failed to accomplish the financing side of the project, but the fact is that if the costs can get wrestled into sustainable shape, there would be nothing to prevent returning to the financing issue sometime in the future.
   Of course he didn’t do it alone; he had critical support in many quarters along the way. Moreover, there is no gainsaying the significant botches in bureaucratic management as well. But that is how the governor biz works. The guy at the top gets the credit and the blame. And the critical point to me is this:
   Without Pete Shumlin we wouldn’t have serious health care reform.
    We wouldn’t have Anya Rader Wallack’s ground breaking architecture in Act 48; we wouldn’t have Steve Kimbell coming back from his sheep farm to remake the regulatory bureaucracy; we wouldn’t have the Green Mountain Care Board, which has imposed the only effective cost restraint on the hospital system that we have achieved in more than 30 years of trying; we wouldn’t have Al Gobeille, the Board chair,  persuading the federal government that the Vermont plan could be a template for health care restructuring across the country.
   In practical terms, possibly most importantly, we wouldn’t have a new Republican governor who is willing to let the process go forward, in the face of hostility of much of his party.   
   If one accepts this reading, then how does it stack up against the performance of Vermont governors in the modern era? Quite well, it seems to me. I talked this issue over with Steve Terry, who has a long and distinguished career as a journalist and then corporate executive in Vermont. Steve isn’t responsible for my judgments, but he is the main source of the historical record.
   We agreed the onset of Vermont’s modern political trajectory began with the election of the Democrat Phil Hoff in 1962. Vermont in the first half of the 20th century was one of the most Republican states in the country.
   Hoff changed the whole environment for state government, Steve said, establishing the proposition that government could be a player in improving people’s lives. His signature policy initiative was the movement to union schools, which brought secondary education into the modern era. Hinesburg High School couldn’t begin to deliver the level of education offered today by Champlain Valley Union High School. The same is true for union schools across the state.
   How about the late Governor Dean Davis? Davis (no relation) was a conservative Republican, who ran for office in 1968 on the promise that he would be a prudent manager of the state’s finances. He is noted for two policy issues. One was the establishment of the state’s first sales tax. The second, however, was a landmark environmental program know as Act 250, which saved Vermont from the ravages of uncontrolled development. That law, passed in 1970, prevented the despoliation of the state’s landscape and placed Vermont at the forefront of the environmental movement in the United States.
   The achievements of Hoff and Davis, it seems to me, puts them at the top of the Vermont pantheon. How about some others? Richard Snelling, a Republican, was a highly competent manager, who had a good eye for bringing talented newcomers into state government. Madeleine Kunin, a Democrat, took her own crack at health care reform and put in place Doctor Dynasaur, a program to get medical care to children and pregnant women in the first trimester. Dynasaur filled a serious gap in medical services for a vulnerable population more than two decades, and is still part of the policy mix in the reform era.
   I know it is too early, but for me Shumlin belongs right up there at the top of the pantheon with Davis and Hoff. For sheer nerve and vision, remaking the health care system is as tough a challenge as one gets in government outside of civil war or an economic collapse such as the Great Depression.
   For one thing, it is hideously difficult technically. I have watched and participated in the process for more than 35 years and I have never seen anything quite like it. It has baffled the press and the legislature alike. Union schools and Act 250 were monumental political issues and success in those endeavors delivered huge benefits to the state. But both could be understood intellectually by a mildly promising seventh grader. Not so health care.
   No one can tell yet how health care reform will finally play out in Vermont. Perhaps it will all somehow just fade away. My view, however, is that the Shumlin effort will live on, if not in Vermont then somewhere else. His errors were serious, but not serious enough to derail the project. To me, that makes the Shumlin years memorable and important.
   Perhaps the real historians will give him credit for that.