Cost of health care IT projects to top $427 million over five years

An independent consulting firm says that over the next five years Vermont and the federal government will shell out more than $427 million to launch and run the state’s new health care-related information technology systems.

The Maine-based contractor BerryDunn also reports that the state will not see “quantifiable savings” within the first “five (or 10) years.”

Robin Lunge

Robin Lunge, director of health care reform for the Shumlin administration. VTD/Alan Panebaker

But Robin Lunge, director of Health Care Reform, says you can’t place a monetary value on the benefits Vermonters will get from these new systems.

“How do you do a return on investment for consumer experience?” she said. “You can’t quantify the consumer experience into dollars and cents … What we’re striving to do, you can’t put a dollar amount on that.”

Under state statute, the administration is required to “obtain an independent expert review” for IT-related activities that cost more than $500,000. BerryDunn was brought in to analyze two IT systems: the state’s new health insurance exchange and the Agency of Human Services’ “integrated eligibility” system.

The exchange, called Vermont Health Connect, will become the sole health insurance marketplace in 2014 for Vermonters buying plans individually or via businesses with 50 or fewer employees. Vermont is one of only 17 states implementing its own exchange, and it is set to open enrollment on Oct. 1. The other IT system will tie together eligibility systems for all human services programs, like 3SquaresVT food benefits, health insurance subsidies, heating assistance and other programs.

The state’s current eligibility and enrollment system for many of its human services programs is called ACCESS. BerryDunn indicates it is appropriate to replace it, writing, “The State’s ACCESS system is built on obsolete software and is not sustainable.”

BerryDunn estimates that by the end of 2018, the state and feds will spend more than $224 million on getting Vermont Health Connect up and running. During that period, the firm also projects the state and feds will spend just shy of $95 million on the new eligibility system and $123 million on staffing and operating expenses for the new systems.

BerryDunn made these calculations based on April data, before the state was awarded $42.7 million in additional federal funding for IT systems. At this point, the feds have given Vermont $168.1 million in grant funding to help launch Vermont’s exchange, and they have promised to provide a 90 percent match for many of the other associated expenses.

MarkLarson NEW SLIDER“It is a worthwhile investment to make sure that consumers accessing not just health coverage but other services provided by the state can be done in a way that is more user friendly, streamlined and more efficient,” said Mark Larson, commissioner of the Department of Vermont Health Access. “The federal government is making a substantial investment in all of these projects to make the investment by Vermonters very, very modest to achieve those important goals.”

At the beginning of 2015, the state is set to spend $18.4 million a year to run the exchange.

With the expansion of the state’s Medicaid program — from 100 percent to 133 percent of the federal poverty line, and with new federal subsidies for income earners below 400 percent of the federal poverty level — the administration expects Vermonters to bring in more than $400 million in federal dollars for health care assistance.

The state will see “significant intangible benefits,” according to the analysis, such as providing insurance to an additional 6 percent of Vermonters who are currently uninsured. Lunge says the state expects Vermont’s population to move from being 92 to 93 percent insured to 96 to 98 percent insured.

Despite major IT projects that must be completed and new guidelines from the federal government for implementing state-run exchanges, Larson said he is confident the state would be ready to open the exchange on time.

“We really do believe we’re on track for October,” he said.


Andrew Stein

Comments

  1. Jim Christiansen :

    “Robin Lunge, director of Health Care Reform, says you can’t place a monetary value on the benefits Vermonters will get from these new systems.”

    There goes the accountability piece our Governor promised us.

    Rainbows and unicorns…

  2. Mark Larson, commissioner of the Department of Vermont Health Access. “The federal government is making a substantial investment in all of these projects to make the investment by Vermonters very, very modest to achieve those important goals.”

    Hey Mark – where do those federal tax dollars come from?

    Better question: Where does money come from?

  3. Remember, Vermont was going to enjoy a $500 million savings in the first year of operation of health care reform according to Governor Shumlin.

    Ouch, talk about no savings! Instead we’re looking at an expected cost of $427 million of tax payer money to simply launch and run the new system. So the Gov was off by about a trillion dollars and still counting.

    It gets worse!!!!! No quantifiable savings for 5 to 10 years.

    And we’re supposed to believe what we hear from Montpelier?

  4. David Usher :

    But Robin Lunge, director of Health Care Reform, says you can’t place a monetary value on the benefits Vermonters will get from these new systems.

    “How do you do a return on investment for consumer experience?” she said. “You can’t quantify the consumer experience into dollars and cents … What we’re striving to do, you can’t put a dollar amount on that.”

    Absurdity reigns! Using ‘Lunge logic,’ government can spend anything it wants to please people or on what she and this Administration thinks is good for us. Sorry, I’m not buying it; unfortunately I’m paying the cost for this twisted thinking.

  5. Dylan Gifford :

    I urge everyone to attempt to read the Independent review available above. It is simply amazing. I find that it angers and scares me.

    What I can glean from it, is that we are spending nearly a BILLION dollars on a system that in the best case will only support 30,000 VT citizens (6%) who are now uninsured, but will choose to go and buy health insurance now. (Because it will be an easy process with a nice website)

    That’s the good part as far as I can tell.

    Now the disturbing part for me is the list of expenses.
    I can not understand why it costs 160 Million dollars to make a website and a database that controls private data and allows for competitive bidding between insurers. So I ask the question:

    Why did we have to hire HBE? Why did we have to hire Oracle?
    Why did we have to spend millions on management consultants? Why didn’t we take this money and hire our own software engineers, here in Vermont? Why couldn’t we own our own website instead of sending hundreds of thousands of dollars per year to HBE in Canada, forever, for the maintenance of this system we bought? This money could be used for healthcare, for electronic health records, for training doctors, but no. We must comply immediately with the affordable care act in order to qualify for 90% federal fund matching and that means buying something now on the market and implementing it now.

    I fear that we are spending nearly a Billion dollars in 10 years on a vortex of bureaucracy designed to suck up taxpayers money and make it disappear. All of the corporations and consultants and “Independent third party auditors” make large and frequent contributions to political parties. Am I wrong?

  6. Craig Powers :

    Can I send my Exchange paperwork directly to Robin for processing in October, when this system is not working as promised?

    Imagine how much health care $427 million could have purchased for those who need it instead of giving us a better “shopping” experience online with ONE or TWO health carriers. Typical bureaucratic thinking, which leads to redundancy and waste!

  7. The $500 million in projected savings that had been mentioned in the past, only referred to Green Mountain Care single payer plan that can’t begin until 2017 and will include all Vermonters. not the Vermont Health Connect exchanges. Vermont Health Care Connect A.C.A. exchange plans have an obscene IT price tag and is just another Insurance program that will only cover a portion of Vermonters!
    Also the consultant BerryDunn mentioned 2018 concerning VT Health Connect projections. Is BerryDunn aware of Act 48 when Green Mountain Care is supposed to replace the exchange plans in 2017?

    Remember Medicare, the only Single Payer we have, became operational for the entire country with a minimum IT input 50 years ago in about 6 months. Today the IT tail is wagging the Health Care dog. The IT vendors seem to be the main winners.

  8. rosemarie jackowski :

    It would be difficult to design a plan that is more devoid of any common sense and empathy. How disconnected from the little people must the planners be?

    Right now, there are Vermonters who are suffering because of lack of access to health/dental/long term care. That is where the money should be going. A million dollars in IT planning will not cure one toothache in a State where access to dental care is a real problem… or comfort one elderly/disabled person isolated in a nursing home with questionable care.

    How did things get this bad? Help me understand…I’m thinking the voters have some responsibility here. The D/R Party will never get us to real Single Payer Health care. Their loyalty is to insurance companies.

  9. Jerry, do you believe that we will see the $500 million in first year savings in 2017?

    The point is that Shumlin made a $500 million saving promise that he had no way of delivering on in order to sell his health care reform vision. Now that vision is obscured by a blizzard of taxpayer money flowing into the project and being used for who knows what. All this money being spent with no indication that we will see a penny of savings in the end or any measurable improvement in customer service according to Ms. Lunge.

    One has to wonder if anyone in Montpelier has any idea of what they doing when it comes to health care.

    • Dylan Gifford :

      The worst part is when you head to appendix B in the Report to see the line items of where money is being spent, it’s unreadable! You have to set zoom to max THEN use your browser to zoom in more in an attempt to actually read the items. Now all the words are fuzzy…

      • rosemarie jackowski :

        Obfuscation is a favorite tool of the ‘paper churners’. It allows them to maintain their money stream longer.

  10. Bob Zeliff :

    While I am skeptical of this this report, I too am concerned that Vermont is spending so much money on IT. Does any one really understand it?

    It has been my experience that contractors, any contractor, will find a way to expand the scope of the job to use all the money available. It is a law of business/capitalism! Who is watching this hen house for abuse? Would we know it if we saw it??

    I have also seen that both IT managers and IT contractors have a hard time resisting “customization”.
    The IT manager believes his version of the solution is by far the best (something about egos) and demands or at least fully embraces the need to make his system “custom”.
    The IT contractors LOVE customization! They get paid more to do it..$$$ and it locks the customer to their business for ALL future upgrades..$$$$$.
    Who wants a mass produced Ford, when we can have a custom Rolls royce? Maybe the tax payers.

    Again…who is watching these contracts? How many times is the word customized…or it’s synonyms….being used? a big RED FLAG.

  11. Peter, what you and I believe is moot. For what its worth, the Lewin Report of 2001, the Thorpe report of 2006, the Hsiao Report of 2011,and the BISCHA (Dep. of Finance) Report of 2011 all stated the most effective way to contain health care costs was to have “single payer.”
    If Obama had stuck to his guns, and congress stood up to insurance company lobbying, we could of had a real comparison of “single payer”(The Public Option”) vs. the so-called market controlled health insurance plans.(That would be a real choice that many conservatives are always talking about!) As it stands now, Medicare is the only universal plan to compare and whose administrative costs run many times less that the health insurance industry average.
    Compared to the rest of the industrialized world we spend about 18% of GDP vs. 9%, with worse results, and still leave millions without any coverage.

  12. Jim Mulligan :

    Burlington Free Press January 20, 2011

    SAVINGS: The savings from multiple insurance plans to a single-payer system would result in significant administrative savings and opportunity for greater vigilance. Savings in the first year are estimated at $590 million.

    Now some 30 months later can anyone properly quantify what it is going cost to reach the “first year” and the dollar qualify of the heretofore $590 million savings? As offered previously I have been of a contrary mind regarding Single Payer since ’93 and why Medicare was not use as the genesis for Affordable Care Coverage is a mystery beyond my imagination having offered in the T/A in Jan. ’10

    Affordable Care Act

    “Amidst all the clamoring and posturing in terms of the particulars of these gargantuan Hippo-Politico Rubik Cubes, I am astonished that we are never afforded any hard numbers in terms of the final tab. We have a House bill of 1,990 pages and a Senate bill of 2,074 pages both of which require the beholder to possess a magic divining rod to even make their way through the tables of content. It brings to mind Churchill’s — ‘an enigma in a mystery wrapped in a riddle’.”

    I repeatedly see the term “uninsured” used and I am not sure what it entails? Who is uninsured – [denied care]? Does anyone even glance at the Federal P&L when speaking of future largesse? I hear nary a word nor see a single syllable about GASB-45 which I have mentioned previously. The magnitude of the personal responsibility that accompanies all this I find overwhelming.

    http://www.pewstates.org/research/state-fact-sheets/the-widening-gap-update-vermont-85899399341

  13. dave bellini :

    “You can’t quantify the consumer experience into dollars and cents …”

    “I don’t care too much for money, money can’t buy me love!”

    Maybe you guys can hire Yoko Ono as public relations chief.

  14. Jerry, I absolutely agree with your comment: “what you and I believe is moot”.

    I do agree that we have a huge problem with the spiraling cost of health care and something has to be done. I’m not opposed to a single payer system, I just don’t understand how it will dramatically change the health care cost dynamics.

    Here is Vermont, insurance company administrative cost equal about 10% of insurance premiums. Even if insurance companies are totally eliminated, a good part of their costs will be required to fund the single-payer organization. So any savings achieved will be modest and the medical providers, the real drivers of costs will not have even been addressed.

    Here in Vermont alone, we’re looking a $427 million to launch the exchange. The cost of this start doesn’t give me much confidence that government can do much to effectively bend costs downward.

    Read the attached BerryDunn report and see if you feel the State has a good grip on what is going on and has the capacity to tame costs. I don’t see it.

  15. Walter Carpenter :

    “As offered previously I have been of a contrary mind regarding Single Payer since ’93 and why Medicare was not use as the genesis for Affordable Care Coverage is a mystery beyond my imagination.”

    Jim, during the struggle over what became the ACA the health insurance companies spent a million or so dollars of our premium money a day to defeat health reform. As Jerry said, since money does the governing down in DC, that is why we could not get a public option. This was all we could get. I do agree very much with your point about why Medicare was not used as the genesis for the affordable care act. It would have been much simpler and made health care actually affordable and accessible to all citizens — which, I guess, is a bad thing in this country.

  16. Sharon Toborg :

    That is a lot to spend on IT. But think of how much time and effort it will save the NSA when all our personal health information is collected in one convenient place for them (and others) to access.

  17. Just remember – this is the health insurance plan brought to you by the Republicans and Surrender Monkey Democrats in DC (and bought for you by the insurance companies).

  18. The face-slapping irony in all of this is that a Shumlin plan, designed and touted to bend the “cost curve”, simply inflates the curve massively by spending half a billion on digital infrastructure which will be enormously difficult to quantify in terms of providing, what was it again…oh yeah. Health care.

    This spending is just a way to set up ways to *access health care*. It is not spending on a new hospital, doctors, rubber gloves, or liability insurance. We have increased costs with no (I would argue less) corresponding increase in health care that’s actually provided.

    You can’t bend costs with legislation. Cement has a cost. Salaries have a cost. Electricity. Needles. Medicine. Food. We can’t demand the best possible health care every time we pop into a hospital, covered by insurance or not, and then say “Hey, your costs are too high”. No one complains about costs when they get an MRI to determine if they’re in real medical trouble or not.

    There’s a reason why Canadians cross the border to receive these kinds of treatments, because in “bending” their costs, they’ve reduced the availability of care. So by mandating certain levels of care for everyone, they’ve actually created worse care for everyone.

    It’s an older argument, but it’s still valid: You will always have a pool of uninsured. The uninsured still receive care when they go to the hospital. If you want to make sure those costs are covered, block grant Medicare to the states, and let them drive their own bus with the funds. VHAP (which is going away) has served roughly 6% of the VT population (pg 41 in the below budget doc). $150MM per year to serve the health requirements of low-income Vermonters, and not just low-income, but those with other short or long-term needs based on individual status.

    So: To implement the new health care “system” we could fund 3 years of VHAP. That would be about 100,000 cases served, just for the price of the system we and the USG are shelling out half a billion dollars for.

    And these are the people who tell us they understand how to fix the problem they keep telling us we have? I don’t think the problem is costs. I think the problem is politicians.

    http://dvha.vermont.gov/budget-legislative/leg-web-version-2-1-2013.pdf

  19. Dylan Gifford :

    Republicans are Red, Democrats are Blue
    Neither one of them, gives a F*** about you.

    Follow the money.

  20. rosemarie jackowski :

    Lots of voters’ remorse going on here. Just a reminder…you didn’t have to vote for D/Rs. Next time remember that. One thing we still have in Vermont is the ‘write-in option.

Comments

*

Comment policy Privacy policy
Thanks for reporting an error with the story, "Cost of health care IT projects to top $427 million over five years"