A little more on Dr. Hsiao

(Continuing site policy of promoting diaries from officeholders and candidates – promoted by GMD)

On Thursday the House and Senate health care committees heard from Dr. William Hsiao, an international expert on health care system design. I found Dr. Hsiao’s testimony both interesting and encouraging, and he made it clear that we need to take the essential next step of designing a health care system. Dr. Hsiao praised Vermont’s efforts to date (Catamount, Health Information Technology, the Blueprint for Health), saying that we are the vanguard of health care reform here in Vermont.

At the same time, he pointed out that all of our efforts have been piecemeal, and what we need is a health care system to tie all the pieces together. He listed several problems Vermont is facing, including:

+despite valiant efforts, 7 1/2% remain uninsured, and 15% of insured are under-insured.

+costs are escalating and creating fiscal pressure for the programs we have

+we have a fragmented health care delivery system

Dr. Hsiao talked about how our efforts to date haven’t gotten us to the fundamental issues because we have not taken the essential step of designing the whole system.  

He talked about what a single payer system is, and how Taiwan has used this model. He described four major features of Single Payer:

1) a single insurance fund – I was interested to learn that there might be multiple ways of collecting the financing for this fund (for example, Taiwan uses employee and employer payroll taxes, as well as insurance premiums), but there is only one payer to pay the providers.

2) a centralized information system – because you have a single payer, all records (provider and patient) are available through that one payer’s database

3) a prospective global budget for the upcoming year – Dr. Hsiao explained that this forces discipline in the allocation of funds and forces providers to live within the budget. In Taiwan, the providers are still paid through a fee-for-service system, but if they go over budget in one quarter of the year, in the next quarter, the fees they are paid are reduced accordingly.

4) a standard payment rate for providers – this eliminates competition on price, and encourages competition for quality because there can be incentives or bonuses for good health outcomes

Dr. Hsiao noted that when Taiwan was designing their system, they looked at several options and then chose the one that worked best for their situation and goals. He said it is important to look at options so that you can see the costs and benefits of the choices that you are making.

For instance, he noted that Taiwan chose to have a co-payment for office visits and hospitalization because the Taiwanese tend to go the doctor for minor issues, and they wanted to discourage abuse of the system. They do cap the amount that anyone has to pay for copayments at 10% of the average income in the region – he said Vermont’s cap under this system would be about $5000. Low income people and children are exempt from co-pays in Taiwan. He also noted that many studies show that if people don’t have to pay for medicine, they don’t take it, so Taiwan chose to make people pay in part for their drugs.

When I asked Dr. Hsiao if designing a few different systems is a good idea for Vermont so we can look at our choices, he replied that any good technical consultant would give us even more than three options, so that we can see all of the ways we can choose to achieve our goals and what each choice would cost. He said that we can all usually agree on the vision, but compromises often happen when the costs are known. He said the Senate Health and Welfare committee members are realists because we need to see which options are more feasible before we can begin implementing a new system.

Overall, I was encouraged that we are on the right track in Vermont with S.88 – the Healthy Vermont bill. This bill passed out of my committee last week with a unanimous, non-partisan vote. My committee members worked hard on this bill, both in and out of committee, to reach consensus. We all listened to many advocates, citizens, and groups, and tried to incorporate the feedback and address the concerns that were raised. Senators Flanagan (Chittenden), Kittell (Franklin), Lyons (Chittenden), Mullin (Rutland) and Choate (Caledonia) all worked together with me to find a meaningful way to move forward, and I appreciate their work and dedication.

The bill creates a board to oversee one or more experts like Dr. Hsiao to design three options for the legislature (and governor) to look at in January. One of these options must be a “single payer” system. All three of the options must meet criteria outlined in the bill. I believe this is the essential next step in health care reform in Vermont – system design for fundamental change. If you agree, please sign on to the bill as a “Citizen Cosponsor” to help keep the bill moving forward.

http://dougracine.com/about/po…

I think we should invest in our future and commit the needed funds to achieve fundamental reform. Please sign on as a Citizen Cosponsor today, and if you already have, please ask your friends to sign on.

Thanks for your activism – without you, we would not have come this far.

Sincerely,

Doug Racine

12 thoughts on “A little more on Dr. Hsiao

  1. I’m all for designing a new health care system, but why the delay till 2012? The Lewin Group answered the question for Vermont back in 2001: Single payer would cover everyone and save us $118 million annually as well. Even if it covered everyone and saved us just one penny we’d be better off.

    Just to refresh everyone’s memory: http://www.lewin.com/content/p

    We’re not an isolated case. There are a dozen studies of possible state level single payer systems and they all come out this way:

    http://www.pnhp.org/facts/sing

    How about teeing up a single payer plan for January of 2011 so that the new governor can sign it some time before May 2011? Speaking personally, that would mean I’d only have to shovel another few thousand bucks down the bottomless maw of Blue Double Cross for my $10,000 deductible policy.

    Use Dr. Hsiao’s four points. We could copy the Taiwanese system exactly. We could pick any European single payer system and copy it exactly. Copy Costa Rica for a Latin flavor. Copy any of the 36 countries higher than the U.S. on the World Health Organization’s health care rankings.  We can’t end up any worse than we are now.

    Call me cynical, but the “three options by 2012” program makes me think “The appearance of a bold political move while pushing the moment of truth past the first term of the next governor.”

    Don’t just stand there like a politician – do something. By which I mean something that actually improves people’s lives, as opposed to wasting time and generating paperwork.  

  2. Hi,

    Just to clarify, S.88 calls for the design options to be presented to the legislature and the governor in January 2011. The bill also says that the option chosen will be implemented by July 2012.

    You can read the bill and see this language here

    http://dougracine.com/about/po

    See Sec. 5(a)(1)

    Thanks,

    Doug Racine

  3. whatever system is proposed or adopted will NOT be limited to a payroll tax.  If so, it will exclude all unearned income (e.g., capital gains, interest, and dividends).  Unearned income in VT is almost a quarter of all income.  If we go with payroll taxes only, those who are wealthy and retired will pay nothing.  And those who get most of their income from non-payroll sources will pay a tiny percentage of earnings.  This is unfair and makes no sense.

  4. Senator Racine:

    I was at the testimony with Dr. Hsiao.  Would it be possible to have him come to the Green Mountain State again and design a system from the disparate parts that we have here that only function to  serve, as Minor Heretic so aptly put it, “Blue Double Cross?”  He probably already has it figured out.  But, the biggest problem that I see with S.88 is the composition of the board.  Giving this governor two appointees means that he can effectively derail any move toward anything that does not directly enrich those who golf at the exclusive country clubs.  Once again, we hapless citizens will be at the mercy of “blue double cross.”  I believe that Dr. Hsiao is strong enough to effectively counter the governor, but the governor will do all in his power to keep the dollars flowing to the conservatives.

    Thanks so much again for all your efforts and those of the committee.  For once, we the people have not been entirely forgotten.  

  5. “It’s true that there is a risk that the governor could try to “derail” the process, but really, it’s up to us to make sure that doesn’t happen.”

    Senator Racine:  Many apologies for not answering your post sooner.  Was unable to get back here.   Thanks for taking time out of the inordinately busy schedule that you are on.  I know that it is up to us to make sure that the governor does not sabotage the work of the board, but we cannot always monitor the process to make sure that he does not.  

    “I don’t believe we are “hapless citizens.”

    In a way we are, as whenever we have got close to reform that makes any sense, especially in the Catamount years, the process has always been derailed and turned toward the benefit of Cigna or MVP.  I am afraid that this reform bill, though you have the best of intentions with it, stands a chance of going the same way with the composition of the board.  Now, as I write this, the affects of what happened in Washington last weekend are just sinking in and change is finally in the air on the national level as well as here.    

    “rather, we have a responsibility to make sure the mandate of the bill is carried out. Further, the original 4 appointees on the board must choose a 5th by majority, and the idea is that the 5th person will be someone everyone can agree on who will balance any competing interests of the other 4 – see section.”

    I have read your bill, but have not had time to study it.  I hope that the 5th person will be someone that can balance  the other four, especially if 2 are by the governor and the 3rd is with them. but you’re right about us having the “responsibility to make sure that the mandate of the bill is carried out.”  I could not possibly agree with you 1000% more.  This mandate must be carried out for the health of all of us.  

    “We talked briefly with Dr. Hsiao about this when he was in town, and he indicated that he could probably pull a team together. I would certainly support Dr. Hsiao’s working on the designs”

    Was Dr. Hsiao game for the idea of coming to Vermont to design a sane health care system under the mandate?  That would truely be something.  He probably already has a team he could call on.  I believe you’re right about the public transparency.  

    “Rather than focusing on the board, I think we should focus on the larger problem before us – the Senate Appropriations Committee has yet to move this bill forward and find the funding necessary to do this design work. ”

    Does the appropriations committee even want to move this bill forward with the proper funding?   Do you know why the delay?  I do agree with you that this bill has got to get moving; the tinkering can come later.  

    Again, Senator Racine, thanks so much for taking the time here.  I’m with you here on this one all the way to the finish line.  

  6. Senator Racine:

    Apologize for being so tardy in answering.  I had written back to you earlier, a much longer reply, but somehow it got lost in cyberspace and never returned.  Anyway, I feel quite uncomfortable about this governor having two appointees on the board to design three health care systems.  Having just come off another fight with Catamount MVP over a medical bill, I know what kind of a system the governor would design.  The average Vermonter will benefit far less from it than Blue Cross or MVP.  

    Anyway, be that as it may, how can we push the appropriations committee to get this out there? In light of the budget that has just passed the house $300-$400,000 to help reform a wasteful 5 billion dollar system, this should not be difficult — at least in theory.  It is essential we get it done this year.  Will the passage in DC help matters on your bill?  

    I agree with you about the transparency with Dr. Hsiao if he agrees to come to Vermont and design a system.  The public should be there every step of the way, monitoring Bischa as well, though I have a feeling from listening to Dr. Hsiao that he could get over that well enough on his own.  Thanks again for all your efforts.  Sorry to be so late in answering.  We will get there someday.  

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