Testimony Outline for Joint Health Committee - January 22
January 22
Testimony Outline for Joint Health Committee
Who |
Theme |
Talking Points |
Handouts and References |
Con |
Introduction Review testimony agenda Why Global Budget |
·
We're just
three people, who are not compensated by the health care system (Dr. Richter
is a physician and is paid for her services as a physician) who decided some
years ago to learn as much as we could about health care. And if we can learn what we've learned,
with no staff or other support, the Legislature certainly has the capability
of learning 20 times more than we have.
·
There are 6
bills on the table...all have global budgets for hospitals included. ·
A point of
perspective that is driving these bills.
When I chaired Gov Dean's bipartisan Commission on Health Care Access
and Affordability in 2001, less than a decade ago, we were spending 2.4
billion. Today we've more than doubled
up to 5.2 billion. ·
Global
budget bills for hospitals has 74
sponsors, with some but not much overlap. ·
Hospital
spending which represents 42% of Vermont health care spending is growing at
rate faster than other components of health care, 9% - 7%. ·
We fear for the
future of health care in Vermont if costs are not brought under control ·
This is why the
time for global budgets for hospitals has come |
Appendix B Spreadsheet H100 - 18 H510 -30 Poirier H491 -5 Zuckerman H372 – 4 Fisher H512 – 1 MCFaun S181 – 1 Bartlett S88 -15 74 |
Deb |
Defining Key Terms |
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Con |
What We Predicted in 2005 |
·
When we
published our first book in 2005, a mere 5 years ago, ·
We were
spending about 3.4 billion: we predicted we would spend 5.1 billion in
2010. In fact, we are now spending 5.2
billion. ·
We also said
then that if we would control the growth of administrative expenses by a mere
1% and care costs by 2 - 3% that we would spend almost 1 billion less in
2010. ..even while covering every Vermonter for
hospital care. Over the last 5 years, we didn't try to do either. It's a
classic case of lost opportunity. |
Show Appendix B in ‘Crossroads' |
Both |
General Assessment of bills on the
table |
Several Rough and General Conclusions
when reading the bills ·
All of the
bills accept the fact that hospital cost growth CAN BE DEALT with. ·
All of the
bills are more similar than they are different in their approach to global
budgets ·
None of the
bills call for new kinds of crucial information. Such as broader based
economic analysis. More about that later. ·
All of the
bills call for, in one way or another for prospective payments, rather than
reimbursed payments. ·
Global budgets
get directly to controlling the costs that have
nothing to do with care, the transaction costs of chasing the money. ·
A couple of the
bills introduced some interesting ideas, like prohibiting advertising, and
regional population based planning. ·
Almost all of
the bills have good ideas regarding the machinery of global budgets, in other
words, how you do it. In Vermont's
case there is ‘machinery in waiting'. ·
A couple of the
bills suggest new organizations. We can do this with no new beaurocracy ·
All of the
bills have provision for using the health resource plan, budgets acting as
spending caps, some kind of Certificate of Need, provisions for providing and
paying for out of state care, ·
Most have
provision for budget amendment ·
Individual
bills have procedures for malpractice arbitration, health professional loan
payments, and transparency of negotiated fee schedules. ·
The bills are
similar enough so that many of the decisions are a matter of legislative
preference. ·
There is a
hierarchy to these bills in terms of scope and effect. And all numbers I cite are probably wrong
on preciseness, but in the right order of magnitude. ·
Working from lowest global budget impact to
highest leverage bills, and depending on gaining waivers to include Medicare
and Medicaid in the fund flow, projections of administrative savings could run
from about 70 million to about 130 million. ·
These are not
small numbers. A good start. Other
projections add as much as 50% additional savings, when admin costs are
assumed to be 15% and not 10%. As a matter of perspective, we spend 13
million a day in Vermont on health care. And this is only the hospital part
of the admin costs. ·
This brings me
to one of our biggest concerns, namely the lack of credible information and
numbers on both sides. On January 8, I
constructed a memo to the leadership and both of you regarding the need to
accelerate the construction of important information that can help this
process, and believing that the Legislature itself is the best place to develop
the information with its historically a partisan Joint Fiscal Committee of
the Ledislative Council. Following are some of the examples of
information needed to be developed. ·
A full single
payer approach would avoid about half a billion dollars a year. In my mind
(and Dr. Richter might well disagree with me) that kind of change is not in
the cards today. Dr. Richter will probably not agree with me on this point.
DEB |
The CVH advertising package. Wash
World circ = 28M; TA= 25K ? 36 page 4 color, inserted into 50M
papers, plus My est: 75M premui Tot 08 4.6 Hosp
1.6 % .35 Medicare 410 .25 Private 716 .45 Medicaid 157 .10 All 3 = 1.3 Read from Jan 8 memo. |
Deb |
A Review of the Evidence: common
threads & departures |
Rochester Denmark Other |
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Con |
Need for Legislative Leadership in
providing needed information |
Summarize the memo quickly |
The Leadership memo |
Both |
How to do it |
Robert Dredge – 2004: The following is
abridged rom the Abstract: ·
A practitioners guide to the introduction of a global budget
into a hospital setting based on real World Bank projects around the world. ·
Global Budgets are based,
where possible, on the health needs of the population served by the hospital.
·
It considers how a global budget can be
established and managed to generate local ownership and commitment to its
delivery. ·
It deals with
incentives for both efficiency and performance. Examples of different contracting regimes,
and how they fit into a global budget framework. ·
Mechanisms for the periodic revision of the
budget for issues such as inflation are given. ·
There are separate notes on how a global
budget can fit into a policy regime, how to cost services, and how to arrange
contract for individual services. ·
There are also
suggestions on how to fund special payments that may vary from year to year,
such as capital, research and development and Training and Education. ·
We haven't
reviewed the paper in detail, but it is an example of information and
resources out there than can help. |
World Bank handout, hard copy and
flash drive |
Both |
What is a Realistic expected impact |
·
If mandates are
used, the evidence tells us that it is unlikely to control cost. ·
We can get some
clues from some work done about 4 years ago on a bill similar to the current
‘McFaun' bill.
We learned: -
State employees
& retirees, 40% reduction in premiums = (40m) -
VT teachers
(52Mil) -
Municipal
employees (23M) -
Workers comp
(84 M) -
Hospital
workers (43M) -
Equals 243M put
into play Deb does financing section |
Deb covers financing |
Con |
Reminder: If we do nothing |
It's pretty basic arithmetic. Health care spending from 2005 to 2010, a
mere 5 years, increased by 1.8 billion dollars. If continued to be uncontrolled, in 5
years, by 2015 we are looking at another 53% increase in total spending to an
astounding 8 billion dollars; and average family premiums for Vermont will
increase from $13,000 per year to $18,000 per year., which is rising at 3 ½
times wage growth. And to be fair, we
are doing better on that front than all of the other New England states, with
Massachusetts rising at 6 ½ times wage growth, to the most expensive percapita health care cost in the world. At that level, I think we can all safely
say that the system as we know it will have collapsed. And what do you think the human and fiscal
consequences of that might be? We must get on with doing something
about this. |
3.4 in 2005 5.2 in 2010 1.8 +53% in 5 yrs 8 billion by 2015. |
Deb |
Human Resources Available to Help in
this process |
Deb has list. |
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Both |
Wrap Up |
Con: ·
There is a
direct connection between controlling health care costs and solving our awful
budgetary problems. Health care represents about 25% of the State's budget; ·
There is a
business competitive and growth case for this kind of cost control. But the Legislature has side stepped this
kind of analysis for years. ·
The last time
the idea of global budget got this kind of attention was in 1982, when then
Gov. Richard Snelling proposed his ‘maxi-cap' on hospital budgets, only to
see it pass the House, and then scuttled by the Hospital Assoc in the Senate.
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Deb: ·
All this
depends on the ability of the State to shift financing from premiums to broad
based taxes, but that is a separate discussion |
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