Mark Larson, commissioner of the Department of Vermont Health Access
Last month, the Department of Vermont Health Access sent letters to roughly 2,100 state employees encouraging them to drop their kids from the state’s family insurance plan and enroll them in Dr. Dynasaur.
Prior to March 2010, state employees across the United States were barred from enrolling their kids in the federally subsidized Children’s Health Insurance Programs, or CHIP. When Congress established CHIP in 1997, the feds were concerned cash-strapped states would try to take advantage of the program by shifting state employee health care costs to the federal government, as Kaiser Health News and the Washington Post reported. Although federal employees who met income eligibility markers were able to benefit from these programs, state staffers were not.
But Congress threw out that prohibition on state employees when it drew up the Affordable Care Act, and the state of Vermont and some of its employees are now looking to capitalize. The issue, said some regulators and critics, is that this measure doesn’t reduce overall costs — it simply shifts them.
Dr. Dynasaur is Vermont’s CHIP program. Only children (younger than 18) of families under 300 percent of the federal poverty line are eligible. For a family of four, that’s an annual household income threshold of almost $70,000 a year (income eligibility link).
“It’s more affordable coverage for families and for the state,” said Mark Larson, commissioner of the Department of Vermont Health Access (DVHA). “The public plan is cheaper than (the state’s Cigna) private insurance (plan), and we’re splitting the costs between state and federal governments.”
The feds pay about 55 percent of a given Dr. Dynasaur plan and the state pays 45 percent. State plans for one or two adults are also cheaper than family plans are.
A DVHA cost-savings analysis shows that the state would net almost $10,000 a year in savings for a parent with two children who put their kids on Dr. Dynasaur, and a two-parent family with two kids would save the state $3,460 annually. A parent with two children would save a bit more than $2,000 a year, and a two-parent, two-child family would net almost $500 in annual savings.
While Larson wasn’t sure what the state’s total savings would be, Kaiser and the Washington Post reported in November 2011 that Kentucky had saved $2 million from similar measures and Texas expected to save $16 million over two years.
Asked if these state savings are true savings or simple cost shifts, state health regulators were unequivocal: They are not true savings.
“Enrolling children in Dr. D will not reduce overall health spending,” said Larson.
Al Gobeille, who sits on the states’ Green Mountain Care Board, which is charged with adopting policy to reduce overall health care costs in Vermont, said that this policy could come back to bite some Vermonters.
“A person that doesn’t have children will pay more so that (state employees’) children will go on Dr. Dynasaur at Medicaid rates,” he said. “Ultimately, the doctors are going to try to get that money out of the commercial payers.”
Anya Rader Wallack, chair of the board, added to Gobeille’s statement: “If they don’t (get that money), their income will drop, and it’s conceivable that some (doctors) could go out of practice.”
Fletcher Allen Health Care spokesman Mike Noble said that Dr. Dynasaur doesn’t even cover the cost of care. Private insurance companies, like Cigna, the state’s health insurer, pay extra to patch such revenue holes for providers.
“Dr. Dynasaur pays at Medicaid rates and so those rates are substantially lower than the cost of providing care — way lower than our cost and others of providing care,” he said. “Commercial payers pay providers at negotiated rates and they are higher than the rates of Dr. Dynasaur.”
Jeffrey Wennberg, who runs the 501(c)(4) anti-single-payer Vermonters for Health Care Freedom, is concerned that Vermonters will perceive this cost shift as actual savings. He cautioned that he is not accusing the Shumlin administration of acting hypocritically, but rather, he is worried that if all private employers encouraged their employees to take advantage of such opportunities, it would present a severe fiscal drain on the state.
“The state as an employer can definitely realize savings from convincing Dr. Dynasaur employees to drop a family plan,” he said. “But there’s also a cost because that savings is not due to Dr. Dynasaur operating much better than Cigna — the difference is that the federal government picks up a (large percentage). It’s shifting the cost to federal taxpayers from the state’s budget, and that makes sense for the state.”
Larson responded to such warnings by laying out the state’s position.
“We either pay 100 percent for private insurance plans for the whole family or we pay for coverage that is more affordable to both the state and the families,” he said. “If people feel that ideologically we should eliminate this option even though it’s cheaper, that’s certainly a position someone can take.”
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Here’s what’s coming with “free” health care…
Welch Allyn — a manufacturer of medical diagnostic equipment in central New York — which says it will cut 275 employees, about 10 percent of its workforce, over the next three years.
Dana Holding Corp. — a global auto parts manufacturing company — which warned of layoffs due to “$24 million over the next six years in additional U.S. healthcare expenses.’’
Stryker — a medical device manufacturer — which plans to close its facility in Orchard Park, N.Y., eliminating 96 jobs in December. They also say they’ll slash 5 percent of their global workforce, about 1,170 positions.
Boston Scientific — a medical device manufacturer — said it plans to cut between 1,200 and 1,400 jobs, while shifting investments and workers overseas to China.
Medtronic — a medical device maker — which cut 500 positions over the summer, with 500 more set to be eliminated by the end of 2013.
Other companies promising job cuts include: Smith & Nephew — 770 layoffs; Abbott Labs — 700 layoffs; Covidien — 595 layoffs; Kinetic Concepts — 427 layoffs; St. Jude Medical — 300 layoffs; and Hill Rom — 200 layoffs.
Among the reasons for the layoffs: increased costs for health insurance and, in the case of medical manufacturing companies, a new medical-device tax.
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Is this really a good idea?
Isn’t one of the primary reasons that the public programs are cheaper because the public programs underpay doctors and hospitals? If so, this simply shifts costs to private insurance and increases premiums for business that insure their workers.
We are federal taxpayers as well as Vermont taxpayers, and the federal government is broke. When we pull shenanigans like this, don’t expect any sympathy when Congress and the President start making spending cuts that affect the states.
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Really not a good idea. The state insurance benefit is a good one and those with children would be wise to stick where they are at. More and more providers are moving away from accepting patients on medicaid and its probable that the federal government will continue to cut reimbursement rates for providers. This does not bode well for those with children, especially those with special needs. That the administration is attempting to bamboozle employes in order to shift, or should I say pawn off, their obligations to the feds is dishonest and disgusting. I would hope that the State Employees Union would fight this tooth and nail. Its a bad deal for employees and its a bad deal for Vermont!
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The administration didn’t even tell the union they were doing this, VSEA had to read about it in the news.
What’s more, State employees are self-insured. Encouraging 2,100 people to leave the plan could seriously undermine the health of the plan causing steep rate increases. Since the State and employees share the premium 80/20 the administration’s plan will backfire and actually cost the State even more.
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More good reasons to go with single payer health care. When insurance company and executive profits are eliminated, administrative costs are reduced, expenses are fairly divided across society, and everyone is covered, the overall cost per person of health care goes down. Businesses will not have to pay for their workers’ health care. All other advanced countries have discovered this and saved money, and one day the US will join the rest of the modern world.
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If I understand the single payer plan it is to select one insurance company to administer the program. Insurance company and executive profits would not be eliminated, and it is questionable if administrative costs would be reduced. I am sure the state and Feds would come up with plenty of reporting requirements.
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Lester…Not necessarily. Single Payer can be anything we want it to be – BUT the term “Single Payer” usually means a universal, comprehensive system that covers ALL medically necessary procedures – including dental, vision, and long term care.
Single Payer saves money because it eliminates insurance companies. They should be totally out of the loop. There should be caps on hospital CEO salaries. The price of pharmaceuticals should be controlled.
A government agency can handle billing, but should have no say in the doctor/patient relationship. This is a win-win plan. Everybody wins.. the patients, the taxpayers, and the 45,000 in the US who would not die because of lack of access to health care.
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“A government agency can handle billing” Rosemarie – Could you please name one thing that a government agency does more efficiently than a private sector business?
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If your definition of single payer has the State of Vermont administering the program,imagine dealing with DMV for your healthcare. Ruth, paying doctors less using an incompetent administrator doesn’t mean healthcare costs go down. It means we pay doctors less and make patients call “DMV” with questions about their insurance. Doctors paid less are more likely to leave the state. Ask someone on Medicaid what happens when doctors get paid less. They don’t take new patients and they can’t see you for months. Is that your idea of fairness?
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Is not the State of Vermont Medical INSC. a Negotiated Benefit brought about by the “Bargaining Process” and agreed to between the State of Vermont and the VSEA( Vermont State Employees Association) who represents the many Vermont State Employees who are members of their Bargaining Units. Shame on the Administration for trying to undercut the bargaining process!!
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People seem to be getting very exercised because the State is suggesting that its employees do what private sector employers suggest that their workers do–sign up for public programs.
Walmart is famous for this ploy. Only in Walmart’s case the cost savings inure to the private benefit of the Walton family instead of the public.
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Ask someone on Medicaid what happens when doctors get paid less. They don’t take new patients and they can’t see you for months. Is that your idea of fairness?”
Ask someone without insurance or with one of these beloved high deductible policies about fairness. And who says that under single-payer, Vt. doctors will get paid the medicaid rates?
“Could you please name one thing that a government agency does more efficiently than a private sector business?”"
Health care. Public programs — Medicare, Medicaid, VA — serve way more people than private enterprise at less cost and greater efficiency overall than private does. They would be much better if our corporate-government establishment was not constantly trying to prove that they did not work and they do work in spite of this effort.
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“And who says that under single-payer, Vt. doctors will get paid the medicaid rates?”
So is the state currently able to pay better than medicaid rates for Dr. Dynasaur and refusing to do so to the detriment of the doctors serving our citizens, or are they going to magically cook up some new formula that will let them pay higher rates – a formula that they haven’t bothered to pursue to this point?
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“Health care. Public programs — Medicare, Medicaid, VA” –
Right those are certainly up there as models of customer service. Right along with Amtrak, US Postal Service, TSA, DMV….
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While Medicaid and Medicare have a previous history of less efficient service and less broad medical service coverage than private insurers, that is so longer the case. Times change. For many years now, my frustrations have been more with the private insurance administrators than with Medicare and Medicaid. Universal health care is needed so we can consider ours a moral society. Single payer healthcare is needed to improve the economics of providing health care. While I opposed it in the past, the change we have seen in the private health insurance industry has made me and many, and I suspect most, of my fellow physicians in primary care, a supporters of single payer health care.