Dr. William Hsiao
A state panel unanimously recommended a health care design study proposal from Dr. William Hsiao today.
The recommendation will be taken up today by the Joint Fiscal Committee, which will authorize state approval of one of three proposals.
The committee is expected to endorse the selection made by the Vermont Health Care Reform Commission.
The study, required under Act 128 (formerly known as S.88), authorized the state to hire a firm to create implementation plans for three different design options for a new statewide health care system that would provide coverage for all Vermonters.
Hsiao is a professor of economics at the Harvard University School of Public Health. He is world-renowned expert on the design of health care systems, and he most recently created a universal plan for Taiwan. He submitted a proposal for reforming Vermont’s system with two other well-respected consultants: Dr. Johnathon Gruber, a health care economist from MIT who was the key architect of the Massachusetts reform effort, and Steven Kappel, an independent health care analyst based in Montpelier.
Members of the commission cited Hsaio’s expertise, communication skills and international track record. The senators, representatives and two non-legislative members of the commission – Jim Leddy and Con Hogan – were in complete agreement.
Sen. Ann Cummings, D-Washington, said Hsiao is the best fit for Vermont.
She cited a quote from the professor that summed up his pragmatic approach: “A noble vision alone doesn’t produce a viable and effective plan.”
“We need a system we can afford,” Sen. Ann Cummings, D-Washington, said.
Hsiao’s “diagnostic approach” appealed to Sen. Jane Kitchel, D-Caledonia. “He’ll be able to use the data to form a design and cost-control strategy, and that is very important.” His familiarity with Vermont health care data is “advantageous,” Kitchel said.
The universal coverage options the consultant must consider under the law include single-payer, a state-run health care payment system similar to Medicare; and a public option, in which Vermonters could choose between a government-run system and private health insurance. A third design would be determined by the consultant.
Details of the Hsiao’s proposal won’t be available until the contract is finalized in a few weeks, Kitchel said.
The state has allocated up to $300,000 for the study. Hsaio has offered his services gratis to the state of Vermont; the other two members of the team would be paid.
Sen. Doug Racine, a candidate for governor who sponsored the study legislation, said Hsiao understands that “we’re trying to do groundbreaking reform in Vermont.”
Former state Sen. Jim Leddy, a member of the commission, described Hsiao and Gruber as the pre-eminent health care economists in the world.
Former state senator Jim Leddy
“We’ve got two top people who are committed to making a difference in Vermont,” Leddy said, adding that they wouldn’t have taken on the project if they didn’t think they could create a model in Vermont that could be applied in other parts of the country.
Leddy said Hsaio’s selection will move Vermont forward in “quantum leaps.” He thinks the professor will uniquely adapt the federal health reform law to Vermont’s needs.
“He’s dealt with issues bigger than this,” Leddy said. “To have someone who has been there before can be reassuring.”
Leddy, who was instrumental in advancing the 2006 Vermont health care reform efforts, recently came under criticism from advocates for his ties to AARP, which receives royalties from United Health Group, an insurer that utilizes the organization’s name to sell policies to seniors. Vermont Health Care for All, a single-payer advocacy group, said the appointment of Leddy, who is president of the state chapter of the AARP, violated a state statute regarding conflict of interest. Dr. Deb Richter filed a complaint on behalf of Vermont Health Care for All with the Vermont Attorney General’s office, which ruled against the group.
Richter has touted Hsaio as the top choice for the Health Care Reform Design study. “It’s very reassuring the process is working,” she said.
Of the three candidates who submitted proposals, Hsaio, she said, is the only one who had experience designing a functioning universal health care system. There’s a huge distinction, Richter said, between consultants that may have expanded coverage to discreet populations, such as the uninsured or pregnant teenagers, and a firm that has created a health care system for an entire population that costs less than the existing paradigm.
Hsaio has developed a large-scale simulation model to analyze different kinds of national health insurance plans, according to the School of Public Policy Web site.
The model uses a number of variables “to predict utilization rates and prices of health services,” and it predicts total health expenditures from supply and demand variables, giving special attention to supply variables, such as physician and hospital beds per capita, availability of primary care physicians, and new technologies.
Hsiao, according to the site, “applies political and economic theories to develop a structural framework of essential elements of health systems.”
He has used his systemic framework to assist Taiwan, Cyprus, Mexico, Colombia, China and Sweden in their health systems reforms.
Read a Q and A interview with Hsiao by The New York Times.
Two other proposals were submitted from The Lewin Group in Falls Church, Va. and Mathematica Policy Research, Inc., in Washington, D.C.
The Lewin Group, according to a July 23, 2009 article in the Washington Post, is owned by Ingenix, a subsidiary of UnitedHealth Group, one of the nation’s largest insurers.
Ingenix was accused by the New York attorney general and the American Medical Association “of helping insurers shift medical expenses to consumers by distributing skewed data,” reporter David S. Hilzenrath wrote in the Post. In 2009, UnitedHealth paid $50 million to the New York attorney general and $350 million to the American Medical Association in separate settlements, Hilzenrath reported.
Read the Vermont Health Care Commission’s request for proposal and other documents.
Read Howard Dean’s June 4 critique of the national health care reform bill. He told the Globe and Mail: “We didn’t pass reform. All we did was pass putting more money into what we already have.”
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