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The Facts About Vermont's Health Care Reform



Op Ed - The Facts About Vermont's Health Care Reform
Published xx/xx/xx

Containing Cost

Last July the Administration produced a well written "Overview of Vermont's Health Care Reform". Included in the document were the three goals of the current 'reform', namely, to: increase access; improve quality; and contain costs. This piece will concentrate on the promise to contain costs. The three strategies outlined to contain costs are to: increase access to coverage and care, leading to a decrease in uncompensated care leading to lower premium costs; simplify administration by employing common claims and procedures and uniform provider credentialing; and to decrease the cost shift by increasing Medicaid provider rates, creating a 'cost shift task force', creating 'standardized policy for hospitals, (lessening) uncompensated care and bad debt, and instituting hospital cost shift reporting reforms.

All that sounds like a lot, and one would think, when added up, could go a long way toward the goal of containing cost.

But let's take a closer look at the size and shape of each of these initiatives, add them up, and devide them by the total cost of health care in Vermont to see what the maximum cost containment might be.

Objective: increase access to coverage and care, leading to a decrease in uncompensated care leading to lower premium costs:
There is no doubt that Catamount will add people that have coverage. However, there are probably at least as many people leaving coverage who simply cannot pay for it. At the end of the day, in spite of the ..million dollars appropriated to market the program by the administration and others who have a strong interest in maintaining the current system (their organizations benefit greatly from the current system) the net effect on the per cent of Vermonters with health care coverage will be minimal if any. If for example, Catamount enrolls 4000 new people over the next two years, and over that same period 2000 people forgo health care coverage, the net increase of 2000 equals an increase of the percentage of Vermonters with health care by 4/10 of 1%, a negligible This negligible number will not have any noticeable effect in the cost of uncompensated care and will not have any impact toward lowering premium costs which are increasing in the order of magnitude of 10% to 12% each and every year.

Objective: simplify administration by employing common claims and procedures and uniform provider credentialing:
Employing common claims and procedures have been talked about and studies since the ill fated reform efforts in the early 90's, and nothing has come of it. There is no doubt that some progress will finally be made, and could have some impact on lessening the gross overhead that hospitals and doctor's offices have had to incur to determine eligibility for service and collect monies from the insurance companies due them. There may be some value to this work. But knowing that various studies put the cost of administration and paperwork in the order of 25% to 30%, if a point or two were shaved from these costs the impact on health care costs would be negligible. Here is the arithmetic. Total health care costs are now 4 billion dollars in Vermont. Assume 25% of that is administration and overhead, or 1 billion dollars. If the streamlining underway resulted in a 2% savings in admin the total health care bill would be 80 million dollars less. Sounds like big money. But this would represent a savings of $20,000,000 over the course of a year, yielding a mere 1/2 of 1%, again a negligible number when compared to health care increases roaring along a about 8% a year. In fact, no one would notice this level of savings.

Objective: to decrease the cost shift by increasing Medicaid provider rates, creating a 'cost shift task force', creating 'standardized policy for hospitals, (lessening) uncompensated care and bad debt, and instituting hospital cost shift reporting reforms.
The cost shift has been bemoaned now for decades. The current budget calls for an increase in Medicaid rates of about 8 million dollars. The total cost shift is ..and growing at ..million a year. 8 million dollars represents less than one day's spending for health care in Vermont. Once again, the rhetoric of containing cost by implementing the great 'reform' falls very short of reality. Bureaucratic changes such as creating another task force, creating standardized policies for hospitals and instituting reporting changes won't do it either.

The Vermont health care reform, is not reform in any sense of that grand word. Each of these are incremental changes that will have an impact so small as to be almost (and in some cases will be) undetectable. To be clear, none of these efforts to contain costs should not be done, but the people of Vermont should not be told that these efforts will contain the costs of health care here in any measurable way.

Until our policy makers get serious about controlling cost, which is the key to providing universal access and higher quality, we will remain on the incremental treadmill to nowhere. In the meantime, our health care costs will double again over the next 4 years.

Some of us wish that the Legislature and Administration would spend the gross amount of time and money that is being spent on the current 'reform' doing something that could make a difference. But that is fodder for another piece.

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