By Hamilton E. Davis
After a two-year hiatus, VTDigger has reverted to its long campaign to take down the University of Vermont’s health network and the general cause of health care reform in the state. Exhibit A is the report by Katie Jickling on Sunday to the effect that OneCare Vermont is seeking a 33 percent increase in its budget to $1.36 billion, a gigantic number for a small, private company on the third floor of a faceless office building on Water Tower Hill in Colchester. And up 33 percent? In one year. Wow.
In the Digger report, it only gets worse. The company is losing money; it’s demanding that the state cough up $13 million to keep it afloat; the OneCare administrative costs are layered onto the administrative costs of Medicare, Medicaid and commercial insurers; the number of Medicaid recipients in the program using primary care is dropping; OneCare hides its financial data — all-in-all, Vermont’s only Accountable Care Organization is a basket case, a sinkhole for taxpayers’ money and a risk to their health care.
My tiny corps of brilliant readers can buy that kind of stuff if they see fit, but I think they shouldn’t. I have been committing journalism in one way or another for 57 years, and this is one of the worst pieces of journalism I have ever seen. Let’s count the ways:
First is the stuff about the OneCare Vermont “budget.” The $1.36 billion is contained in the budget filing, but it is nothing like a normal budget. The actual money that the OneCare umbrella organization would spend would be $19 million, assuming the Green Mountain Care Board approves that amount. That’s about one 75th of the budget in the Digger headline. The rest of the money is simply passed through to Vermont’s 14 hospitals for care delivered through the 2020 calendar year. The hospital budgets have already been approved by the Green Mountain Care Board. As for the proposition that those costs are going up by a full third compared to the spending in 2019, that is a perfectly slimy little trick that would be laughed out of any serious journalism organization. The reader is led to believe that the cost of the health care is going up by 33 percent, manipulated by the evil OneCare. The reality is that all but about four percent of the increase is driven by the growth in the number of Vermonters covered. Consider: there are about 550,000 Vermonters in the reform universe. The approved hospital budgets for 2020 come to just over $2.7 billion. A portion of that money runs through OneCare, and the remainder flows directly to hospitals. As the number of lives attributed to OneCare go up year over year—from 31,000 in 2017, to 112,000 in 2018, to 172,000 in 2019 — the OneCare portion goes up and the direct portion goes down. The total, however, remains the same, except for the three to four percent needed to cover inflation. Of course, the reason for this process has completely eluded Digger: we need OneCare so that payers can sign fixed price contracts with providers. And as for the Digger claim that reform hasn’t accomplished anything, the fact is that the average eight percent annual increase in hospital budgets that obtained during the period 2000 to 2009 has dropped in half in the reform era (2013-2020). Reducing the growth in spending from eight percent to four percent is a savings of $86 million in a single year.
The Worst of the Rest
The rest of the Digger piece illustrates the quality of the work, really poor, and more importantly, the motivation, which is incomparably worse. That distinction is critical, about which more in a moment. Meanwhile, let’s look at the rest of the article:
“OneCare is supposed to create savings in the health care system by focusing on preventative primary care.” That statement is not completely wrong, but it is highly misleading. Primary care spending amounts to about five percent of the total regulated by the Green Mountain Care Board, about $130 million out of the $2.65 billion spent on acute care. The real place to save is the 95 percent of the money going into hospitals. It will take a decade or more to see material savings from preventive care. If we can’t wrestle hospital spending into some sustainable form in the next two or three years, then the system will probably just collapse. In the meantime, it will be necessary to put more money into primary care. Which OneCare is actually doing although you didn’t read about it in the Digger piece.
“But the company is losing money.” It isn’t. OneCare, or more accurately its component hospitals, are taking risk. Which means that they may pay out on the Medicaid contract, but come out plus on the Medicare side. It is like an insurance company whose payouts do a sine wave around an actual real number. In a system that is highly variable, sometimes you’re plus sometimes minus. Digger said that in 2018 OneCare “lost $1.5 million on its Medicaid contract.” True, but Digger didn’t see fit to report that OneCare came out ahead by $7.6 million on their Medicare contract. Medicaid plus Medicare, net gain $6.1 million. By the way, the Digger piece says that OneCare “pools” the money paid out to hospitals. It doesn’t. The various payers have separate contracts with OneCare, and they are all different.
“But two and a half years into the all-payer system experiment, lawmakers worry that OneCare is not delivering on its mission. The number of Medicaid patients using primary care has dropped, for example.” A serious problem here: these judgments violate the ancient precept that in order to be valid, comparisons have to be made on an apples-to-apples basis. Digger has ignored this precept. The 2017 OneCare contract with Medicaid covered just four counties and four hospitals — Burlington, St. Albans, Middlebury and Berlin/Montpelier. In 2018 that number had increased to 10 counties. So, you have a completely different set of patients as well as providers. 2017 is apples; 2018 is tomatoes.
Well, there’s more, but to sum up: OneCare isn’t taking the cost of health care up; it is not losing money, it is not hiding its budget, every dime of which has to be approved by the Green Mountain Care Board; it is not dunning the State for money so that it can “stay afloat.” It could certainly use more money from Medicaid in order to invest in the reform system. None of this is to say that OneCare does not face huge challenges; it does. But you can’t see them in this Digger piece. And a perfectly fair question is, Why not?
I’ll get to that in my next post.