|
OUR PLAN | Who We Are | Why We Came Together | Today's Situation | Governor's Reaction TennCare program to lose health coverage | Governor's Veto Message to H.524 | Polls & Research
Senate Media Highlights | Commentary |
Press Releases
| Articles H.524 - Point by point response to the veto message: Gaye Symington, Speaker of the House
I. Under H.524 state government will not “run” the health care system, and Vermonters will have the same choices of providers and treatments that they have now -- if not more choice. In fact, H.524 offers health care coverage to the 35,000 Vermonters who do not currently have health care insurance or qualify for Medicaid. These Vermonters will now have a choice not currently available to them. H.524 does begin a process of public financing of health care. It increases the fairness (all pay in order for all to be covered) and predictability of revenue. How future expansions of coverage are to be paid for is the subject of careful analysis and future decisions.
II. There is no analysis on which to base the claim that H.524 “would increase premiums for Vermonters with private insurance and hurt providers.” The Commission’s work will include analysis of impact on insurance premiums. Under H.524, reimbursement levels would be subject to negotiation, but initial estimates of program costs assumed that reimbursement would be 50% above current Medicaid rates. In 2003, Vermont Medicaid physician reimbursement was 83% of Medicare 1, so reimbursement would be about 25% above Medicare. While this figure may be below commercial rates (there is no source of comparison), it would be speculative at best to assume that it would increase the cost shift or decrease provider revenue. First, to the extent that the uninsured are not paying their bills currently, H.524 would reduce, rather than increase costs shifting by reducing bad debt and free care (an issue that is not limited to hospitals). Second, it is not accurate to assume that any reimbursement below “market rates,” however that term is defined, increases cost shifting.
III. As the Governor acknowledges, under the current system, there already is rationing based on ability to pay and available benefit packages offered. Any health care system will involve rationing on some basis. Currently there are people who have no health insurance. To the extent that the uninsured get coverage under H.524 they have greater access and less rationing.
IV. The Governor claims H.524 would hurt local hospitals and reduce jobs. According to BISHCA, Vermont community hospital revenue will grow at an average annual rate of 8% per year from 1999 to 20072. During this same period, gross state product is projected to grow at an average annual rate of 4.5%. When CPI is added in, the projected effect of the cap will be a growth rate of 6.5-7.5% which will link spending with Vermont’s ability to pay, rather than to slash growth rates dramatically from where they are now.
It is unclear how the Governor calculated the 3% cap he projects. It is also unclear how the areas he predicted to be cut were selected. Finally, providing flexibility to the regulatory process does not “acknowledge some of the flaws identified above,” but instead recognized the complexity and unpredictability of the health care system.
Additionally, it is ironic that the Governor would claim that lower hospital revenue could result in job losses and salary freezes for hospital employees in the context of the recent 2006 budget debates where the legislature refused to cut Medicaid reimbursement to providers as dramatically as the administration had proposed in their budget. Clearly, the legislature is committed to the health and effectiveness of Vermont’s local hospitals.
V. There is nothing in H.524 that limits where residents can go for care. Care will be provided in a variety of locales depending on patient needs and where services are offered, just as it is currently.
VI. Current health care spending is unsustainable. Vermont’s health care costs are growing at a rate approaching $1 million per day – this is unsustainable. We cannot continue with the current system. Doing nothing, or just saying no to every proposal that the legislature puts forward is not a sustainable approach to health care reform. VII. Future success is built on past successes. H.524 is designed to build a system that will carry us into the future in a positive way. Policies of the past include covering Vermont’s children and youth and establishing a coordinated and regulated system of home health care. These are important achievements and have achieved better and more efficient care. The cost of mandates is a small fraction of health insurance premiums and contributes minimally to annual increases.
VIII. The proposed payroll tax is only on companies that are paying less than 3% of their payroll for health insurance premiums – this 3% is much lower than the cost of health insurance for these employees. These are typically companies that do not provide health insurance or that just provide health insurance for a few employees. This payroll tax will help make sure that everyone contributes to health care.
The income tax is much more progressive than health insurance premiums and H.524 will allow people to buy health insurance based on their ability to pay. For example, on a $30,000 income family, the 1% tax on income would be $300, much lower than the cost of insurance for a family of 4 which could be $5,000 to $10,000.
IX. H.524 helps smaller employers by exempting the first $25,000 of payroll from the proposed payroll tax. Additionally, while small employers are “the bulk of firms which do not offer coverage to their employees,” it does not necessarily mean that they have the majority of uninsured employees: large businesses (e.g. Wal-Mart) have more employees and may represent the bulk of uninsured employees. Further, the payroll tax in H.524 is not based on whether the employer offers insurance, but on how much the employer spends (as a percent of payroll). The payroll tax is meant to make sure that all help to pay for health insurance, including “Wal-Mart type” businesses.
Additionally, the size of a company does not determine its profitability – there are some “small businesses” that are extraordinarily profitable and some “large businesses” that have a small profit margin.
The legislature would welcome the opportunity to work with the administration on addressing the goal of taxing free-riders (e.g. Wal-Mart) and help protect homegrown businesses.
X. It is the current health care system that is jeopardizing other state services. For example the cost of health insurance for state and local government employees is escalating and is forcing changes in state and local services. H.524 will help by asking all to pay and thereby reducing the cost shift to those who currently pay.
XI. The legislature had an extraordinarily extensive process that listened to many different points of view including the administration, health care providers, individuals, employers and others. H.524 reflects proposals that were suggested by the business community and others proposed by the administration. The House set up a new committee exclusively devoted to health care. Just in preparing the original House version of the bill the House Health Care committee waded through over 283 documents and heard from over 160 witnesses. H.524 and the 2006 budget include a public engagement process for the fall to make sure that input continues to come in from all Vermonters.
Regarding the provision mandating hospitals to charge uninsured Vermonters the average discount rate: Currently hospitals often charge uninsured Vermonters a very high rate that no insured people pay as insurance companies negotiate lower prices for their beneficiaries. H.524 gives the uninsured the benefit of the same discounts as the insured. Several other states have established similar policies to benefit their uninsured.
XII. Some of H.524’s implementation dates and administrative functions were, in fact, changed in response to the administration’s concerns. However, at some point if we are going to deal with our health care crisis, the executive branch will have to make some changes. The legislature would be open to working with the administration to develop timetables that are more acceptable and also allow change to occur.
XIII. With respect to constitutionally required separation of powers, the actions the Governor complains of are fundamentally legislative in character; they are designed and intended to provide the Legislature with the information it deems it will need in order to legislate intelligently to provide access to health care. This is in accord with the Constitution’s grant to the Legislature of the “powers necessary for the legislature of a free and sovereign state.” (Ch II, §6). The Governor’s criticism, that these actions exceed “traditional” separation of powers, even if true, is not restrictive. The Vermont Supreme Court has recognized that “there must be a certain amount of overlapping or blending of the powers exercised by the different departments … and that we must construe the constitutional command (separation of powers) consistent with the efficient and effective governmental structures that are able to respond to the complex problems and challenges faced by today’s state government.” (Hunter v. Kitchel, 2004)
XIV. The role of the Executive branch in health care reform, as in any public policy-making, is to inform the debate and to implement the policy selected. The role of the Legislative branch is to be the forum for the debate and to determine the policy. In the 2005 Legislative Session both branches fulfilled their respective roles, and must continue to do so through the 2005 interim and the 2006 session. In order to foster collaboration and communication, the Legislature added two gubernatorial appointees to its Legislative Commission on Health Care Reform. Although it is not unprecedented, it is unusual for a legislative committee to contain members other than legislators. Legislative leadership is hopeful that the legislature and executive branch will develop an increasingly cooperative process in the year ahead.
XV. While administrative savings in H.524 do not approach what might be possible under a single payer system, we believe some savings will be achieved and we hope further work will identify new opportunities for efficiencies.
XVI. Recipients of Green Mountain Health would be entitled to appeal administrative decisions to the seven-member Human Services Board in the same manner and under the same standards and procedures as other individuals who are aggrieved by decisions or policies of the various departments and programs throughout the Agency of Human Services.
XVII. A better definition of “Uninsured”, “Resident” and other terms is needed, and that is why the Legislature has established long range time lines and will commission and conduct several comprehensive studies to, among other things, refine and revise terminology.
XVIII. There are valid concerns with the section concerning negotiated payments and the Legislature would welcome the opportunity to work with the administration on improving it.
XIX. It is true the payroll tax is susceptible to an ERISA challenge. It was drafted, however, with the parameters of ERISA case law in mind. In large measure, the legality of the proposed tax depends on whether it is viewed as a mandate upon employers to offer coverage or, at most, a mere incentive. Because the proposed tax is relatively modest, a legally sound argument can be made that it will not function as a legal mandate on employers and therefore would not be held to be in violation of ERISA. Either way, it should be observed that this is a very unsettled area of law and that the threat of litigation alone should not be a reason to dismiss this financing option.
XX. The legislature chose to make a conservative estimate of revenue from the payroll tax in order to make sure the revenue would cover spending. As more information is available, the legislature will revisit its estimates.
XXI. Like any estimate, it is possible that the estimate of revenue from the income tax surcharge is overstated. However there may also be factors that would moderate the potential overstatement of possible revenue, such as the actual growth of the number of uninsured in Vermont.
The suggestions in items XX and XXI that additional analysis would be beneficial are good ones, and we welcome the administration’s cooperation.
XXII. Monitoring the effect of any new program is a critical role for state government. Health care is no different. The legislature would welcome the opportunity to work with BISHCA to give more specific guidance as to how this monitoring can be done effectively.
XXIII. The administration raised concerns about the pharmaceutical provisions of the bill. H.524 creates a state-wide preferred drug list because pharmaceuticals are the fastest growing sector in health care and will continue to be a critical part of health care spending. As such, we need to work together to help manage these costs.
Regarding drug company rebates, a recent opinion issued by the United States Supreme Court, PhRMA v. Walsh, 538 U.S. 644 (2003) (lifting injunction on Maine Rx), indicates that using Medicaid leverage to extend drug rebates to beneficiaries of other publicly funded programs may not be preempted under the federal Medicaid law, especially if the rebates are being offered to low and moderate income level individuals who do not qualify for Medicaid coverage. Moreover, Maine began implementing Maine Rx Plus in January 2004 and since then, drug companies have voluntarily agreed to participate in the program by offering rebates to additional Maine residents, even though the state has stated its intent not to use its leverage under Medicaid, making the legal preemption challenge moot.
Regarding the PBM section, it is true this section was modeled after the Maine legislation which is the subject of a federal lawsuit. However, on April 13, 2005, a federal district court judge held that the Maine law did not violate ERISA’s preemption provision. -------------------------------------------------------------------------------- 1: Zuckerman S, “Changes in Medicaid Physician Fees, 1998-2003, Implications for Physician Participation” Health Affairs, June, 2004.
2: “Technical Documentation to the Vermont Health Care Expenditure Analysis Forecast: 2003-2007”, December 2004. JFO calculation. Vermont Initiative for Universal Health Access EMAIL: wsavt@wsavt.com All rights reserved |
|