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By Senator Matt Dunne
My recent report on this year’s health care legislation generated a lot of e-mail from friends and activists who were concerned that I sounded enthusiastic about this bill, or that I thought it was the best we could do. Those who know my position on healthcare reform know that I am disappointed with the legislation, but I thought I should clarify my position for other readers.
The biggest concern I have with this legislation is that it will not achieve the cost containment goals set out by the architects. As a member of the Appropriations Committee and as someone who works closely with the business community, I have seen firsthand the devastating effects of dramatically rising healthcare costs. On the public side, it is no longer simply a problem of keeping up with the costs of Medicaid. Over the past year, the teacher retirement fund hit a critical point: it now pays out more in healthcare premiums than it does in standard retirement income. A couple of years ago, those same two lines crossed as our public institutions of higher education began paying out more in healthcare benefits than in salaries to their faculty.
This leaves us with a very scary scenario for our state budget. Traditionally, we have budget deficits because our revenues fall during hard economic times. We bridge those deficits by temporarily raising taxes or dipping into rainy day funds. Once the economy rebounds, we reduce those taxes and refill our reserves.
This time it is different. With no increase in beneficiaries or benefits but yet higher healthcare costs, we now have a state budget deficit even though our revenues are up. As a result, we are forced to make awful decisions in our annual state budgets. Even though I am not afraid to raise revenue to ensure good services to people, I feel we must resist such proposals since the heath care costs will simply eat up those gains in the next year, leaving us taxed higher and yet back in a deficit position.
Businesses and the self-employed are feeling the same pinch. Although average Vermont incomes may be up 3%-5%, healthcare premiums rising 10%-15% put people and organizations at a net loss. The bottom line is that the state, public and private, simply cannot sustain the current increase of healthcare costs, currently estimated to be about $1 million per day in Vermont alone.
My fear is that the current healthcare legislation will do very little to address this problem and contain costs. While I believe cost shifts contribute to the cost of healthcare by hiding the true costs of our broken system, it is not the only driver. Although covering more uninsured Vermonters through a state subsidized plan like Catamount does take us closer to universal coverage, I’m fearful that the overall cost of the newly insured will very quickly become unaffordable for either the state or the subscribers, or both. Without cost containment measures in place, the plan will potentially increase in cost for the state over time or, if we freeze the subsidy for Catamount premiums, the plan will become unaffordable for subscribers in a matter of a couple of years.
While the chronic care initiative included in the bill provides some hope for tackling a major driver of health care costs, the most optimistic estimates suggest that we might see the benefit of this approach in five years. With the healthcare cost crisis here today, I don’t know how we can wait that long to see if it will work.
There are no easy solutions to this enormous and complicated problem, but there are some good ideas not currently on the table. Early in the session I advocated for a global budget for hospital costs. The idea is to get our arms around how we spend our resources at hospitals, create a cap with an annual cost-of-living adjustment, and empower the Commissioner of Banking and Insurance to adjust the budget as reasonable and unforeseeable circumstances demand.
The global budget concept was not embraced in the Senate Health and Welfare Committee, and my floor amendment last week was rejected. I’m sure the Governor’s opposition, and the laudable desire to get something passed this year, contributed to the resistance.
There was some hope that came out of this amendment effort, as it was embraced by an unlikely coalition of supporters. The original idea was developed in the House by Republican Rep. Topper McFaun. When my amendment appeared in the Senate calendar, I received two congratulatory comments for pushing the idea forward. One came from Dr. Deb Richter, a leading universal healthcare advocate, and the other from Duane Marsh, Executive Director of the Vermont Chamber of Commerce. These are not your usual collaborators and yet their support suggests that the time for this kind of change has come.
As I mentioned in my last post, I do not share the view that the legislation as passed by the Senate does net harm. If made law, time will quickly tell how sustainable the proposal really is, or if the expected cost-shift savings will actually bend the healthcare cost curve. Although I agree with the bill’s supporters that changing the way we cover and manage chronic care is essential, this proposal produces few immediate cost savings.
While I am skeptical about the overall effectiveness of this bill, the current proposal is the only train leaving the station. I supported it as a small step toward fixing our system that also hopefully helps a group of uninsured Vermonters in the near term. Until we have leadership in the corner office ready to take on the difficult issues of true cost containment, substantial simplification of reimbursements, and the central idea of universal healthcare, the healthcare crisis will continue to be with us in the years to come.
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