Can Reform Succeed in Vermont Without Political Leadership? - Part 2

by Hamilton E. Davis

   One of the most dispiriting things about the recent course of health care reform in Vermont has been the loss of political leadership for the project. The technical aspects of reform are in excellent shape, but considerable opposition lurks out in the delivery system and in the political arena, and the most effective way to manage that is to talk about the issues candidly. That is not happening now, which is a threat.
  On the surface, the reform machinery continues to chug along. The Green Mountain Care Board is now analyzing the Fiscal Year 2018 hospital budgets that begin Oct. 1; and those budgets are in better shape than they have ever been. The state’s Medicaid agency is negotiating with OneCare Vermont, the big Accountable Care Organization, to extend five fold the number of Medicaid recipients covered under fixed price contracts. The federal government, meanwhile, is preparing to move a piece of the Medicare population to OneCare on the same fixed price basis. Vermont leads the country in the campaign to wrestle health care inflation to a sustainable level.
   Yet, that progress is mostly the result of momentum from the earlier stages of the project when the architecture for the project was being designed and put into place. Now, we are entering the very difficult execution phase of the project and we are doing so with an entirely different team on the field. We have a new governor and executive branch health care team; we have new leadership in both chambers of the Legislature. And the Green Mountain Care Board has turned over its membership almost completely.
   One result, it seems to me, is that we have lost the ability to communicate about health care in any effective way. The new governor, Phil Scott, a Republican, has had basically nothing to say about the health reform project he inherited from his predecessor Peter Shumlin. On the key issue involved—the shift in reimbursement from fee-for-service to capitation—Scott said shortly after taking office that the first step then underway in the northwest quadrant of the state was just an experiment and that we could dump it in the fall if it didn’t seem to work.
   In that early statement, Scott didn’t mention that the state, the Green Mountain Care Board, and federal Medicare and Medicaid officials had already signed an agreement in the fall of 2016 to extend capitated reimbursement to a portion of Medicare population as of Jan. 1, 2018; an implicit part of that agreement was that the Vermont Medicaid agency planned to increase the Medicaid population under a capitation contract in 2017 significantly in 2018.
   There have been some indications recently that he will sign on more fully to an expansion of the project in 2018, but he has never made it clear to the public where he stands on it. In the political world, no person is more important than the Governor and no policy initiative, particularly one as vital as health care, can do well if he isn’t prepared to assure the public that it is a good thing. One of the most common and effective defenses for falling short in the health reform project is failing to understand it. That excuse is not available to Scott. He almost certainly has but a shaky grasp of reform complexity, but he has three of the best policy experts sitting in the upper reaches of his administration—Al Gobeille, who lead the Green Mountain Care Board for the last few years and is now Scott’s Secretary of Agency of Human Services; Cory Gustafson, who managed reform in the state house for Blue Cross; and Michael Costa, the financial wizard who handled the financial dimensions of reform for the Shumlin administration…Scott could take a solid position on reform, but nothing he has done or said so far has anything to do with leadership.
   The Green Mountain Care Board is doing its basic job, but it doesn’t actually say much of anything about the difficult issues of refashioning the delivery system. That is understandable because two of the five members—the chair, former state senator Kevin Mullin, and Maureen Usifer—have been in place only since mid May. My impression is that Mullin is both tough and smart and he is coming up to speed very rapidly. But there is no way to tell yet whether he will choose to take a politically active role in explaining the complexities of reform to the public, the Legislature and the press.
   For its part, the legislature has basically split on health care reform. The House has not played a decisive role in the issue, content to try to keep up with developments but not trying to affect the course of reform in anyway.
   The main legislative activity has taken place in the Senate, which has been very active in trying to affect the course of reform. Unfortunately, that effort has headed in precisely the wrong direction to the point where the Senate at this point should be considered a potential barrier to reform. That’s just my view, of course, but it is noteworthy that none of the major players have anything to say about it. That shortfall is exacerbated by the nature of the press coverage, or more accurately, lack of coverage. (That will be the subject of Part 3 of the series)
   The effect of that is to open the way for reform opponents within the doctor-hospital community, and within the Legislature, to frame the issues so as to support their positions. The central pillar of that position is the claim that we ought to stick to fee-for-service financing and oppose the kind of system integration necessary to enable capitated financing.
   There is no medical merit to those claims, but they are certainly understandable, given that the kind of shifts necessary to effectuate reform will have a powerful effects on the financial flows through the system, as well as the culture in which medical care is delivered. The health policy community, as well as the federal government, know the change has to be made, but that doesn’t mean the doctors and hospitals involved have to like it. And many of them don’t.
   I’ll go into the opposition from some doctors and hospitals in a future post. For today, I am going to focus on the Senate, because its opposition has no policy justification and no real political rationale either.
  It has become obvious over the last couple of years that when the reform legislation passed in 2011, nobody, or almost nobody, in the 180 member Legislature really understood what he or she was voting for. That’s very often true in legislatures, particularly those like Vermont, which have part time office holders with no individual staffs. Moreover, the health reform legislation was incredibly complicated to the point where I would assert that even the architects of reform, like Wallack and Kimbell, never fully grasped how gnarly it would be to go all the way to a sustainable system.
  Still, even on complex matters, there is usually a handful, maybe a small handful, of members of the Legislature who make an important issue their own, who work at it very hard, and for the most part, “get it.” When I was in the Vermont House in the early 1990s, one of those was Paul Harrington, now the executive vice president of the Vermont State Medical Society. Harrington was a Republican, but he was the only one that Ralph Wright, the powerful Democratic Speaker of the House, trusted to handle nasty, complex little devils like, say, an insurance bill. Harrington would be working by five a.m. every day to master the bill, and when he said it was ok to pass, everybody voted for it. Most never read it. I know I didn’t.
   Another example: when the Vermont Supreme Court dumped school financing reform into the Legislature, two Democratic members of House Ways and Means, Paul Cillo and John Freiden, made the issue their own, and they designed and managed the reform bill to passage. They knew every nuance and number possible—“Paul, what will be the effect on the property tax rate in Brownington?” A legislator didn’t need the executive branch. He or she could get anything needed by asking John or Paul in the cafeteria line…
   Nothing like that has happened with Health Care reform. Which isn’t because the issue was ignored. The House set up a committee just to deal with health care reform. The Senate dealt with the bill in Senate Health and Welfare and Senate Finance. The two chambers also established a joint committee called the Health Reform Oversight Committee (HROC)—dubbed H-Rock in the state house. H-Rock consisted of the chairs of the two policy committees—House Health Care and Senate Health and Welfare—and the four “money” committees--House Ways and Means, House Appropriations, Senate Appropriations and Senate Finance, six in all.
   I have sat through interminable meetings of the H-Rock group over the last two years and I have yet to hear so much as a syllable indicating the members understood health care reform at all. The House committee and the House as a body have basically had no effect that I can see on the trajectory of the reform effort. The chair of the House committee over that time has been Bill Lippert, a Democrat from Hinesberg. Lippert made his bones as an effective chair of House Judiciary, but he clearly struggled when then-Speaker Shap Smith gave him the health reform committee. He appears to be coming up to speed now, but his committee hasn’t weighed in on the problems of the execution phase of reform…
   About a year and a half ago, I called the members of the H-Rock to solicit their views on how reform was going. The result was troubling—they didn’t have any. Mitzi Johnson, then chair of House Appropriations (now Speaker), brusque and candid. “I leave that to the policy committees,” she said. Bill Lippert didn’t call me back, but in the H-Rock meetings he made no secret of the fact that he was trying to “get his arms” around the subject. Jane Kitchell, chair of Senate Appropriations, a veteran legislator, was working hard at it, and her questions to the bureaucrats were often far more pointed than anyone else’s, but she didn’t have a real grasp of the subject. (She also didn’t get much help from the bureaucrats, but that’s another story.) Janet Ancel, chair of House Ways and Means, was also working at it, but her knowledge only went a couple of questions deep. I gave up before reaching Sen. Claire Ayer, chair of Senate Health and Welfare. I sat through some hearings of her committee though, and her grasp seemed superficial.
   That left Sen. Tim Ashe, the Democrat from Chittenden County, who was chair of Senate Finance and is the new President Pro Tem of the Senate. As far as I can tell, Ashe is the only member of the Legislature who is really trying to play an active role in how reform actually goes forward. The problem is that what he is doing makes no sense at all. In fact, Ashe represents one of the two or three most dangerous threats to reform as we move into the execution phase. Here’s why:

  • Keeping fee-for-service payments to independent doctors would simply retain the system that has been place since World War II. For more than half a century, that system has generated huge increases in health care costs, from roughly six percent of the Vermont state product to 20 percent today. The whole point of reform is to cut that rate of inflation.
  • The essence of the strategy adopted by Legislature was to assign the Green Mountain Care Board the task of overseeing a reorganization of the doctor-hospital system so as to permit the shift from fee-for-service to capitation, or block financing. The mechanism for reorganization is the formation of an Accountable Care Oganization, OneCare Vermont, which signed its first capitation with the State Medicaid agency for the current year, and which is on track to expand significantly as of Jan. 1, 2018. Under reorganization, “fees” begin to go away altogether.
  • Even if we were going to retain fee-for-service as the reimbursement structure for the Vermont system, there wouldn’t be anywhere near enough independent physicians to make a difference in overall spending. On this point it is necessary to distinguish primary care doctors from specialists. There are a significant number of independent primary care doctors, but we have to pay them more, not less—so no savings there. There are some specialists outside of hospitals, but not enough to deflect the roughly $2.5 billion hospital spending juggernaut.
  • The cause of independent physicians is appealing, especially in small-community, but the reality is that American medicine is rapidly moving away from that model. Medical students now lean more toward working for organizations, and the potential benefits from integration in both cost and quality simply can’t be ignored much longer.

   It is not clear what ultimate effect the Ashe campaign will have on the course of reform. It is clear that he can get what he thinks he needs from the Senate. He demonstrated that in the last legislative session when the Senate pursued a bill to force payers to change the way they pay independent physicians compared with how they pay hospital-based doctors.
   The bill in question, the Pay-Party proposal, ultimately failed because they ran out of time. It also didn’t help that the Senate bill was based on bogus Blue Cross numbers…that is a longer story in itself...

   What is clear is that none of the policy players--the governor, the Green Mountain Care Board, or the House--challenged the Ashe position that the main issue  facing the Vermont system is bolstering the position of independent physicians. That is simply absurd, but it is what Vermonters heard, if they heard anything, during the legislative debate. 

   A potential counter to that could be solid press coverage, but we don't have that in Vermont, owing primarily to the collapse of the newspaper business model in Vermont, as in the rest of the country. That fact is difficult enough, but the situation in Vermont is even worse, because we are seeing biased journalism.

   I'll get into that in Part 3 of this series.