Medical Society members explore 'Vermont option'

Sunday November 7, 2010

MANCHESTER -- Tasked by the Vermont General Assembly to create three proposed solutions for universal access to health care in the state, Dr. William Hsiao presented his preliminary findings and the difficulties moving forward to members of the Vermont Medical Society at their 197th annual meeting Saturday at the Equinox Resort in Manchester.

Laying out the goals and principles of Act 128, legislation enacted earlier this year which seeks potential routes toward universal heath care coverage in Vermont, Hsiao acknowledged his audience's role in deciding the future of health care in the state and appealed for their input as he moves toward developing the final proposals, due Jan. 1.

"What Act 128 asks the consultant to do has certain implications for physicians," Hsiao said. "What's the change to the organizational medical practice?"

Pay for performance

Hsiao said that the single-payer option, one of the required proposals under Act 128, would change the way physicians are paid. Instead of a flat fee for service, he said that a new system would likely couple pay with performance, along the lines of other industrialized nations.

"Holding physicians and hospitals [accountable] for their performance -- that's going to have an impact on your lives. Are you willing to accept that?" Hsiao said that it was not politically feasible to cut payments to physicians wholesale because they would then organize in opposition. "Particularly in Vermont, you all have access to your representative or senator -- or even governor. You can exert political pressure, you can block legislation."

Steven Kappel, a health care policy analyst from Montpelier and part of Hsiao's consultant team, outlined the historical import of health care reform in the state. "Basically," he said, "Vermont has better care [compared to the nationwide average], we have lower utilization, but similar spending and faster growth on the dollar sign -- so we're paying for all the good in our health care system."

Kappel cited what he called an "interesting pattern" in Vermont over the years, of the state attempting large-scale reform, not always successfully, before implementing smaller, albeit more successful, reform measures. He cited the creation of the Vermont Health Access Program, or VHAP, which currently covers 25,000, and Catamount Health, currently covering some 10,000 Vermonters.

"Act 128 started as another attempt at comprehensive reform," Kappel said, but evolved over time to become a statement of goals and principles. "The legislature stepped away from saying, ‘We know how it should be done,' to asking for help on how it should be done."

The resulting legislation commissioned a consultant to determine three paths toward universal coverage. It explicitly asks for a "single-payer" option and a "public option" through an insurance exchange, in addition to a third option up to the consultant's discretion. The goals, as outlined in Act 128, are to provide universal health insurance, improve the quality and efficiency of the health care system, and affordability and sustainability.

Difficulties of Act 128

Hsiao said that his team did not have a "free hand" in developing the proposals. One requirement of Act 128 is to maximize the amount of federal aid that Vermont receives. A major part of federal health care reform, the Patient Protection and Affordable Care Act of 2010, or PPACA, involves federal subsidies to low income individuals.

The federal government also currently subsidizes group insurance through income tax credits, which must be protected under any future state-level reform according to Hsiao. Medicaid payments by the federal government also need to be protected and maximized, he said.

In addition to economic considerations, federal statutes also provide hurdles. The Employee Retirement Income Security Act, or ERISA, according to Hsiao, "forbids states to establish any law or program that interferes with self-insured health insurance plans. Twenty percent of people in Vermont are self-insured. Many large companies that offer insurance are self-insured ERISA forbids acts or laws that interfere with that. How do you establish single-payer then?"

The "public option" scenario Hsiao was charged with investigating received plenty of attention during the debate last year over the PPACA law. But the "public option" was dropped from the final bill, with provisions instead adopted to restrict only private insurance companies from offering plans in the state insurance exchanges. "So the second option is out," Hsiao concluded.

With federal law apparently stymieing two of the three options Act 128 seeks to lay out before Vermont lawmakers, Hsiao apologized on Saturday for only just beginning the development phase of the project, where the team crafts the proposals.

He said that they would be looking at successful models around the globe, while taking into consideration economic and institutional constraints.

The initial proposals are due Jan. 1, after which a period of public comment will follow before the final design options are heard by the general assembly Feb. 1.

Hsiao left the audience with one positive effect to them of any proposed single-payer system -- less time spent on administrative paperwork.

"One major reason to push for single-payer care is to reduce the administrative hassle in your lives. If you only have one major insurance plan, and you only have one channel paying for your services, then you only have to deal with one payer, one set of rules -- one form ... That is why many nations move toward single-payer, to leave physicians to do what they're trained to do -- which is clinical work, not paperwork."

Still, he acknowledged, other things needed to change. Hsiao asked his audience whether they were willing to make the necessary trade-offs. After his prepared talk, Hsiao took questions and concerns from the audience.

Following that discussion, outgoing Gov. Jim Douglas appeared and was honored by the VMS with their Founders Award, for his support of reforms over his eight year tenure including the Catamount Health and Blueprint for Health programs, which have contributed to Vermont's ranking as one of the healthiest states in the nation.


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