Vermont State Government Wanders into the Weeds on Health Care Reform

by Hamilton E. Davis

   The Vermont Legislature is ensnarled in a struggle with Governor Phil Scott over how to pay for health care for the state’s school teachers, an end-of-the-session mud wrestling spectacle that is extraordinary even for players inclined to mud wrestling.  The total amount of money said to be involved is $26 million, which may or may not be accurate. In any event, the Legislature is headed into its third unnecessary week, with no agreement in sight.
   It is ironic that while the governor and the legislators were hardening into a stalemate, there were two other health care issues seething under the surface, one of them in the Legislature itself, the other at the other end of State Street in the meeting room of the Green Mountain Care Board. There was magical thinking to spare in all of this activity—nobody on the field was playing well, and some were just terrible.
   If you have to pick the worst performer, not an easy choice, it would have to be Phil Scott. Elected last November, Scott began his tenure by springing on the Legislature a demand that they completely rework how overall school budgets in the state be handled. He gave them, oh, a week to buy into this proposition. Some of the town budgets were on the way to the printer when Scott made his move. Naturally, it died.  
   His latest foray didn’t surface till sometime in late April, far too late to move a major new initiative through a Legislature trying to adjourn by early May. Achieving the goals of the teachers health insurance revamp is both technically and politically complex. Thrashing out those issues in a few weeks was simply not realistic; Scott might prevail on it, but the result is certain to be ugly.
   In my view, Scott’s most critical dereliction is his molasses-pace in filling the openings on the Green Mountain Care Board, the five-member body that now has just three members; one of the missing is a chairman. Scott had to have known by last Thanksgiving that he would ask Al Gobeille, then the Board chair, to run his Agency of Human Services, creating one of the openings. Yet Scott didn’t even submit his names to fill out the nominating commission for Board seats until March…those seats are still open.
   The governor has said he is close to making the appointments, but even then, the new members will take considerable time just to come up to speed on the very difficult choices facing the Board.
   Health care amounts to 20 percent of the whole Vermont economy and the Green Mountain Care Board is the entity charged with getting those costs under control, which includes a tortuously difficult reorganization of the doctor-hospital system in the state. The politest thing you can say about Scott’s performance here is that it is irresponsible. Which is puzzling, because Scott has a chance to take the lead on health care at no real cost to himself. The core reality is this:
   Today, Phil Scott is the only governor in the United States who has a significant piece of his Medicaid budget under control. And the only one who has an excellent opportunity to get his Medicare spending under control. He even has a shot at getting private sector spending close to or at a truly sustainable track.
   The reason for that conclusion is that OneCare Vermont, the main ACO in the state, has in place the infrastructure necessary to shift reimbursement from fee-for-service to capitation. OneCare is one of just a handful of so-called Next Generation ACOs that are authorized by the federal government to move a state’s Medicare (the elderly) population to the new financing model.
   OneCare has already taken responsibility for capping costs for 20 percent of the Medicaid (low income) population; OneCare began sending out the checks for that cohort in February. And OneCare and the state of Vermont have signed an agreement with the feds to extend the program to the Medicare population beginning next Jan. 1, a historic step that could be lost if health care reform doesn’t get competent political leadership from somewhere.
    Instead of building on the last six years of this reform work, Scott is handling health care like a man juggling a live hand grenade.

The Senate Campaign to Derail Reform

   Scott’s not alone in performing badly. There is the Vermont Senate, led by a new President Pro Tem, Sen. Tim Ashe, a Chittenden County Democrat. For the last two years or more, Ashe has run a campaign to focus health care reform on the fortunes of independent doctors. Ashe argues that the indie docs get paid less for a unit of care than doctors in a hospital, especially the UVM networks main facility, the Medical Center Hospital of Vermont. If the Legislature and the Green Mountain Care don’t repair this deficit, Ashe contends, then the system will be badly damaged, and costs will continue to grow unabated.
   A corollary theme is that the fault for the dysfunction in the first place lies with the UVM system. UVM has been “gobbling up” the little guys, buying them out so that the big guy won’t have any competition. And when a patient’s doctor moves from independent status to hospital staff, the patient’s co-payments and deductibles go up.
   All of this sounds perfectly reasonable, as long as you have no idea how health care actually works. Let’s count the ways:

1.     The first problem is that the number of independent doctors in the state is very small. There are somewhere between 1800 and 2,000 doctors in the state. I’ve never seen a credible number for total number of independents, but HealthFirst’s own membership runs to about 140 doctors, divided pretty evenly between primary care doctors and specialists.  The most important thing to know about HealthFirst, however, is that its members represent a tiny percentage of the total acute health  (excluding things like nursing homes and visiting nurses) spending of roughly $2.4 to 2.5 billion. Given that the vast bulk of health care spending is by hospitals, the HealthFirst share is minuscule, low single digits at most. These numbers demonstrate that Ashe’s claim that the independent doctors can force down system costs significantly is simply a fantasy. You can’t solve the problem of health cost inflation that has run out of control for more than 40 years by focusing on two percent of the budget and ignoring the other 98 percent.

2.     The most important problem with the Ashe campaign is that support for independent docs requires fee-for-service reimbursement, whereas the heart of the health care reform effort in Vermont is the shift to block financing, also known as capitation. With capitation, the co-payments and deductibles go away, as does the facilities fees charged by hospitals. In such a system, the whole medical structure is at risk for hitting its financial targets. The federal government has made Vermont the lead state in the country in this effort. And it’s nothing new: it was the core of Act 48, what passed in 2011. I have never heard a word come out of Ashe’s mouth to indicate he understands that, which is why I have labeled him “anti-reform.”

3.     The third problem with the Ashe campaign is that his effort to make the UVM system the villain is wrongheaded. UVM is, by orders of magnitude, the centerpiece of the Vermont delivery system; and its leadership is supplying the most important underpinning for the reform effort in the state. It is not gobbling up the small players; it is taking them in when they apply to come in. As for costs, the UVM system is one of the most cost efficient tertiary centers in the United States. And within Vermont, UVM delivers the cheapest care on a per capita, total cost of care basis. UVM has its problems, they’re just not the ones that Ashe and his compatriots claim. Its main problem is access—in other words, the UVM system is not too big, it’s too small.

      Ashe is the anti-reform leader in the Senate, and he has been single most important anti-reform force in the Legislature—the House has been a pretty passive player there--but that is not the only anti-reform element at work. In fact, it is not the most important player in that regard.
   The single biggest barrier to reform is the non-hospital-based primary care doctor community in the state. Acting on their behalf are two organizations—HealthFirst, which has roughly 70 primary care doctors, along with an equal number of specialists; and CHAC (Community Health Accountable Care) a consortium of FQHCs (Federally Qualified Health Centers) which comprise somewhere between 250 and 300 primary care physicians.
   I’ll begin with HealthFirst, because, although it is small, it is closely allied with the anti-reform elements of the Senate, and because of that tie have become a major player in the closing days of the Legislative session. In fact, the Ashe/HealthFirst campaign crested in the last couple of weeks when Sen. Michael Sirotkin, another Chittenden County Democrat, pushed end-of-the session legislation aimed at showing that UVM was responsible for health cost problems and attempting to crimp any further growth in its network.
    That effort apparently died when the House Health Care Committee finally caught on to the fact that the Sirotkin was using bogus numbers he got from HealthFirst as the basis for the whole effort.
   I will continue with that aspect of the situation in my next post, same time, same location. I will follow that up with an assessment of where CHAC stands today, how well the Green Mountain Care Board is performing; and finally, where OneCare Vermont stands in its effort to deliver capitated care to Vermont. At the conclusion, I’ll have some comments on the role of press coverage in the health care reform saga.