BELLOWS FALLS — “We're in the 21st century. We're one of the wealthiest nations in the world. Why isn't [health care reform] happening?”
That question, asked by Vermont Workers Center organizer Kate Kanelstein at a health care forum last month in Bellows Falls, is one that has been asked by Vermonters for years.
Health care is an issue near and dear to uninsured Vermonters, whose access to coverage is better than most other states with Catamount Health and Dr. Dynasaur. Intense grassroots interest in access to health care has driven Vermont forward ahead of all the other states.
As a result, Vermont is poised to be the first in the nation to come up with a single-payer system that will set the national standard.
The Vermont Health Care Commission has begun a three-part health care systems study that is looking into single-payer and public options, and an as-yet-undetermined third approach that must be politically and practically viable.
That study came as a result of the passage of S.88, a bill that went through the Legislature this year and that Gov. James Douglas allowed to become law in May without his signature.
The thrust of every speaker at the July 31 rally in Bellows Falls was that to keep up the momentum for real changes to Vermont's health care system, individuals must keep the pressure on.
“One individual can make a difference,” said Shela Linton of Brattleboro. “One year ago, we didn't think S.88 would get as far as it did. We kept the pressure on. People wanted change. Forums were held, rallies were held and postcards were sent.”
Kanelstein agreed with that sentiment, saying that for “real health care reform to occur, it has to happen at the grassroots level in each state.”
Vermont as a model
“Vermont is being looked at by the rest of the nation as a model,” said Richard Davis, a registered nurse and the executive director for Vermont Citizens Campaign for Health. “Vermont could be the first state in the country to have collective rights to the health care system.”
Davis, who lives in Guilford, said that his group believes that “a single-payer health care system that is affordable is a human right.”
With the passage of S.88, Vermont is way ahead of the curve on health care reform.
It is so far ahead that it could face being penalized by the federal government for coming up with a viable alternative that provides health care access to all Vermonters.
U.S. Sen. Bernie Sanders pointed to language in this year's federal Affordable Health Care Act. It provides that “state innovation” proven to Congress could be a basis for a waiver for Vermont that would allow the state to create its own health care system by 2014.
Vermont is likely to beat the 2014 federal deadline, and could end up being penalized being forced to choose from pools of private insurance companies for health care coverage.
However, Davis and Sanders both say they plan to challenge this.
“We don't want to be discriminated against for doing the right thing,” Sanders said.
Davis said that the federal health care bill, which was passed in March, did not address the fundamental issues of health care coverage for all.
“Premiums rely on the market, the current insurance market system. It's based on profit, not on universal health care,” Davis said.
“Health care companies want you to pay the premium, but don't want to pay for care,” Davis continued. “Health insurance companies have created an arcane formula whereby paying out health coverage is against their interests.”
The new bill mandated an 80 percent medical loss ratio, or MLR, which is what the health insurance companies determine they lose through administrative costs, costs accrued through administration of contracts and the claim-denial process, for instance.
“Private insurance companies count the 18 to 31 percent administrative costs as loss,” Davis said.
Davis compared those costs to the 3 percent administrative costs of Medicare.
The health care bill attempts to address these inflated costs, but Davis said there is not a clear mechanism in place for making this happen.
“It's unclear how this will work,” Davis said, shaking his head.
Finding a solution
Vermont recently hired Harvard economics professor Dr. William Hsaio, renowned for his work in Taiwan setting up their health care system, through a $300,000 grant to design three options for the state's health care system that will include single payer and public options.
In his three option proposal, Hsaio and two colleagues, Steve Kappel, MPA, and Jonathan Gruber, PhD, propose to “combine... three studies to ascertain what type of universal health insurance, what methods of financing, and what type of single payer system is most likely to be politically and practically viable ...
“The first study [will involve] historical analysis to ascertain what health reforms [have been] attempted in the past such as the 1993 Vermont Universal Access Plan.
“Next, we will examine Vermont's institutions such as laws, regulations, traditions, current governance structure and political process.
“Then we plan to conduct a stakeholder and interest group analysis and ascertain their positions on universal health insurance, integrated health delivery system, and single payers.
“With the findings from these three studies, and in close consultation with Vermont Health Care Reform Commission, we will develop the third option,” Hsiao's proposal declares.
At a recent press conference, Hsiao said the state needs to develop a universal data system that creates doctor and patient profiles, as well as processes claims uniformly. Uniformity cuts down administrative costs significantly, and prevents shifting costs among providers, or between high risk patient groups or regions.
Under a universal provider, a single-payer system, costs would be minimized administratively, and provider costs would be universal no matter what group the patient falls within.
“Where you have a patchwork of providers, you have providers shifting costs, and no country can control inflation [in that instance].” Hsiao said.
Taiwan saw an 8 percent reduction in costs the first year of the implementation of their health care system, Hsaio iterated. Because of oversight provided by the new system, provider abuses and fraud were rooted out, and performance and fees were standardized. Hsaio said that 6 to 8 percent of providers abuse the system. Focusing on these providers and “leaving the good performers alone” was the approach they took.
Former diplomat, author and Windham County senate candidate Peter Galbraith of Townshend said he agreed with Hsaio's remarks and plans to introduce a Vermont public option insurance plan if elected.
With the passage of the Affordable Health Care Act, the federal government has mandated oversight of key issues in health care.
Under the legislation, health care cannot be denied because of a preexisting condition or “rescission.”
Premiums cannot be raised because you are a high risk patient, or live in a high risk area. Customers must be offered the same rate as everyone else in a high risk group or area. The rate is also capped.
Industry standards are being developed to curb industry abuses, such as denying doctor ordered treatments and tests.
Most importantly for Vermont, the AHCA extends Medicaid, treating all states equally. Vermont cannot be penalized for any reason, compared to some other state.
“The Act gives flexibility to States to adopt innovative strategies to improve care and the coordination of services for Medicare and Medicaid beneficiaries,” according to the U.S. Department of Health and Human Services website.
Many Vermonters do not seek health care at all, or go to the emergency room for care when it becomes an acute issue.
“Forty-five hundred people are dying this year, because they do not have health care in our state,” Sanders said.
“Emergency room costs are the most expensive from the point of view of health care,” Sanders added. “We can save money by keeping people out of the ER. There is evidence that prevention is cost effective.”
The AHCA recognized this by providing incentives to health care professionals to improve rural access to health care, avoid unnecessary errors in diagnosis and treatment, and improving the quality of care for seniors.
Vermonters have access “to a good single payer system in Medicare,” Sanders said. “Dr. Dynasaur is a good system for children, and we've got the Veterans' Administration which is a good socialized health care system.”
“We've expanded from 41 [delivery] locations in Vermont, to 50 to 55 locations,” Sanders added. “But we still need a better delivery system.”
Catamount Health, a state-subsidized health insurance program available to qualified Vermonters, has been somewhat successful, but it is faced with dwindling state funding and rising premiums that threaten the program's future viability.
“But we need a single payer system for all people,” Sanders said. “People need to be able to go to a doctor when they are sick. We need to forgive [medical] debts in underserved areas.”
Sanders said that Vermont has an opportunity to set a standard that goes beyond what the federal government mandates.
Sanders pledged that when the Hsaio health care systems study is completed and Vermont signs a health care plan into law, hopefully in February 2011, he will go to President Obama personally and ask him to move the 2017 implementation date up to 2014.
This, he said, will keep Vermont from falling into the no-man's land of insurance exchanges.
Exchanges are a pool of insurance companies and programs determined by the federal government from which states may choose their providers. With the [Section 1321(c)] provision, states would not be allowed to come up with a better system that is more cost effective such as the single payer system.
Sanders referred to a provision he supports that would allow “a waiver from the Exchanges for states to innovate with health coverage such as a state-based Medicare for All-like system that was included in the new law.”
He said that although the effective date for the Exchange waiver was pushed back to 2017 by the Congressional Budget Office to avoid driving up the estimated cost of the bill, “the waiver's presence sent a clear message: if a state thinks it can do better, Congress wants to see it.”
A big obstacle
Sanders recently told the group Physicians for a National Healthcare System, “If the Senate bill is enacted, the only opportunity for states to move toward a single payer system is found in Section 1332.”
“[The provision] would allow a state with a plan that meets certain coverage and affordability requirements to waive out of the requirement to set up an Exchange for private insurance companies. Only with such a waiver could a state move in the direction of a single payer system.”
Sanders further explained the process: “Before submitting a plan, the state must go through a thorough notice and comment process to ensure that its citizens supported the plan, and its legislature would have to pass a law authorizing the plan.”
However, if Vermont comes up with an acceptable health care system as a result of the Hsaio study, there is a major sticking point which has been addressed by Senator Sanders and other Senate members.
Section 1321(c) is a federal law that preempts state law. Sanders and Sen. Ron Wyden of Oregon proposed a provision via Section 1332 that allows states a waiver in 2014 if they can prove to Congress that they've come up with a better system.
Under Section 1332, states could receive waivers if HHS finds that under the state's alternative plan at least as many state residents would get health insurance coverage, and if the coverage would be at least as comprehensive and affordable as the federal Essential Health Benefits plan.
This is the heart of the waiver Exchange issue. Sanders and others do not want Vermont or any other states to be forced to use the Exchanges if they can come up with a workable and innovative alternative by the 2014 federally mandated deadline.
With a $100 million state budget deficit forecast for the 2012 fiscal year, controlling health care costs is of primary concern. Hsaio demonstrated his proficiency at doing just that by designing and setting up the universal health care system he designed and set up in one year in Taiwan.
“Vermont's health care study is on the cutting edge,” said Davis. “Many states are looking to us to see what the study says.”