Editor’s note: This op-ed is by Republican Lt. Governor Phil Scott, a Republican.
Over the past couple of months, I’ve had the opportunity to speak to a number of business groups — from trade associations to regional chambers of commerce — and at each of these events, not surprisingly, the single-payer health care proposal has dominated the discussion.
I’m a business owner myself; I’ve been the co-owner of DuBois Construction in Middlesex for the last 25 years. So I can relate to much of what I’ve heard from the business community about the single-payer plan. I’m also a consumer.
Like most other business owners across the state, when I first heard about the single-payer idea, I was interested, and I awaited the release of Dr. Hsiao’s report with an open mind. If someone has a way to control my rising health care costs, I am absolutely willing to listen. I’ve always been in favor of efficiencies, and I believe we need to reform our health care system.
But as the details of the Hsiao report were analyzed, and as Dr. Hsiao’s recommendations evolved into the Administration’s proposal — and further evolved into the bill that passed the House Health Care Committee on March 17 — I’ve come to have some serious concerns about the single-payer plan.
For starters, the bill makes no mention of how much this new system will cost, and I’m not comfortable agreeing to “buy” something without knowing the price. I’ve often used the analogy of buying a car. No matter how dissatisfied I might be with the vehicle I have, I wouldn’t order a replacement without first knowing the price tag and how I’m going to pay for it. With the health care bill as proposed, I feel as though we’re ordering a new car without knowing whether it’s a Yugo or a Rolls Royce, whether we can actually afford it, or whether we’ll even get what we need.
There’s also been a lot of talk about the validity of the assumptions in the Hsiao Report, upon which the legislative proposal was based. Through his economic modeling, Dr. Hsiao estimated that Vermont could save $590 million in the first year alone by moving to a single-payer model. Most of this $590 million would come from administrative savings, chiefly because, with a single payment pipeline and a single process for submitting claims, we’d need far fewer people to process all that paperwork.
I have to question whether those estimates are realistic. For example, Hsiao projects that hospitals and physicians’ offices could reduce their administrative costs by as much as one-half under a single-payer system. But the report also points out that some 70% of Vermont’s health care providers are small practices, made up of 3 or fewer physicians. Offices of this size probably have just 1 or 2 support staff, who also answer phones, handle payroll, and make appointments in addition to handling insurance claims. If that’s the case, these offices wouldn’t be able to lay off half of those people, even under a single-payer system.
Finally, here’s another comment that I’ve heard from many in the business community: “Although I wish it cost less money, I actually like my current health care plan.” We’ve certainly heard that comment from the state’s large, self-insured employers; IBM likes the simplicity of being able to guarantee the same health care coverage to an employee in Essex Junction, VT as they can to an employee in Fishkill, NY. But even some small businesses, including my own, are nervous about losing the freedom to choose a plan that works for them.
Many companies (such as ours) throughout Vermont have had some degree of success with Health Savings Account plans. After employers deposit money into employees’ accounts to cover their annual deductibles, it’s then up to each individual employee to manage his or her account responsibly. This often includes decisions such as, “Instead of going to the ER for this cough right now, I can wait until tomorrow and make a less-costly office appointment,” and “Maybe if I exercised and ate healthier, I could control my cholesterol without these expensive prescriptions.” There is a certain amount of self-responsibility built into the plan.
As a strong advocate of personal responsibility, that’s another thing that makes me uneasy about the single-payer bill: it proposes to have a board of 5 people in Montpelier designing benefits, approving prices, and, in short, making all the decisions for us.
If Dr. Hsiao and the authors of H.202 could convince me, without a doubt, that giving up some of those individual freedoms would be sure to save the state $590 million and result in economic growth, then I’d be willing to endorse the plan. There are, in fact, many recommendations in Dr. Hsiao’s report that I do endorse – such as making a serious effort to reform our medical malpractice regulations and to reduce obvious waste, fraud and abuse within our existing system. (Unfortunately, none of these recommendations made it into the bill in any substantive way; instead, H.202 proposes further study of these issues.)
As it stands, the single-payer proposal leaves too many questions unanswered. Under such a cloud of uncertainty, I can’t support this proposal at this point in time. Passing this bill, with all its unknowns, risks the solvency of a health care industry that represents 20% of our state’s economy – and that’s a gamble I can’t stand behind.
We know something must be done to bend the health care cost curve. We know what ails us. But in crafting this single-payer remedy, are we prescribing the right treatment? Rushing into passing this bill just to say “we did something” could leave us worse off than we were before.
When presented with this dilemma in the medical world, a doctor’s guiding principle is to “do no harm,” proceeding cautiously and gathering more facts before ordering treatment. When it comes to reforming our health care system, I think the best solution for Vermont is to do the same.
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There is another important question that should be answered by our legislature about H 202. H 202 lays out some parameters around the setup of the state exchange as required by federal reform. H 202 makes it clear that it will require most employers and individuals in the State to purchase coverage through the state run exchange and not allow off exchange options (barring the private market from offering options to employers and individuals). The exchange will of course offer only a couple options and likely only invite one insurer to play. Taking away the ability of employers and individuals to choose from options off the exchange through the private market is irresponsible and dangerous on several fronts. 1) Federal Health care reform envisioned the exchanges existing as an alternative to the private market, much like the US postal system provides alternatives to companies like Federal Express and UPS. In fact that analogy was used by supporters of Fed reform. 2) Many employers have been innovative with their plans by adopting consumerism and wellness elements and integrating them with creative designs. With these plans they have improved employee health (financial and physical), productivity and employee satisfaction rates.These employers view their approach to benefits as an important investment in their Human capital. It is clear that the exchange can’t/ won’t be able to replicate these designs. Not allowing employers the freedom to decide for themselves if the exchange is best for their business is, well, simply bad business. 3) Details around cost, design and financing of the State run exchange are lacking. This has been a hang up for many proponents of the bill. Allowing for off the exchange options would mitigate that concern as a “safety net” would be in place should the exchange not “get it right”.Think of it from this perspective , if a company were making a major computer system change you would not destroy the old system until you new the new system was functioning as planned. You would run parallel systems. It’s a matter of common sense. 4) The proposed set up of the exchange in H202 essentially creates a monopoly situation which is dangerous, the absence of off the exchange options will stifle innovation and accountability for the few powerful folks running the exchange will not be as strong as it would otherwise be. This is not a comment calling for the killing of H202, rather is is a plea to modify it to reduce the risks H202 poses to our economy.
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The Association does not oppose the fee bill (H.436). As you know, the fee bill contains, among other things, the hospital provider tax. The House Ways and Means committee supported the Administration’s recommendation to increase the hospital provider tax to the greatest extent possible. The $17.4 million proposed tax increase for SFY 2012 brings the total tax paid by hospitals to $111.5 million. These tax revenues, when matched with federal Medicaid funds, generate more than $230 million – $48 million more than the state eventually pays hospitals and employed physicians to care for Medicaid patients.
I’m no expert on Medicaid and health care funding, but let me be sure I have this right. Hospitals will be taxed more to help balance Vermont’s FY2012 budget. This will mean that additional Federal Medicaid dollars will flow into the state to help pay hospitals for services to Medicaid patients. Meanwhile, our Federal government now borrows about 42 cents of every dollar it spends, including Medicaid dollars flowing to the states.
So, if all states do what seems to be a cool deal to get more Federal dollars from Medicaid, the Feds are required to borrow more to pay for the additional Medicaid support. It seems to me this tactic will drive up Federal Medicaid spending and more deficit spending/borrowing, some of which apparently will flow back to hospitals, at least in Vermont.
This seems to me a scheme to ‘rob Peter (Federal budget in dire deficit mode) to pay Paul (Vermont’s hospitals)’ and exemplifies one of the problems with our present U.S. health care system. I remain unconvinced that ObamaCare or ShummyCare will solve this problem.
Granted, this is fundamentally a national issue that requires deep restructuring of entitlement programs. But Congress seems to have little stomach for that. Despite the rhetoric, we have yet to see any real action from Republicans or Democrats to reduce deficits.
Meanwhile, states will continue to milk ‘the system’ for their own benefit. In Vermont’s case, the budget will be balanced partially via increased federal deficit spending, not unlike the use of ARRA funds in the previous two budgets.
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One question: Do you know the cost of health insurance in 2014? No one does. We do know that if nothing is done it will go up. No one knows how much. But you will buy it. If you self insure you will have even less certainty about the cost. But you will buy it. Likewise we will fuel state vehicles without knowing the cost of fuel. We will provide corrections, law enforcement, fire protection, disaster relief, road maintenence, etc. without knowing the exact costs. Let us reform the healthcare funding system with changes that are known to control costs as well as some unknowns.
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Lt. Governor Scott,
I agree with almost all the points you make, but it’s unfortunate that you suggest you’d be fine with giving up the freedom to make your own healthcare decisions if you’d be guaranteed the state would save money and achieve economic growth. The core mechanism by which single-payer will save money will be by rationing care; the five-member panel will decide what’s covered and what’s not. And this panel will be *purposely* insulated from the desires of the people who will have to live with their decisions, because they won’t be elected positions.
If it’s the case that freedom of individual choice can be sold, as you suggest in your column, then I would suggest that the price exacted by single-payer is far too high.