Vermont’s health care system is broken, but it’s not beyond repair, according to Dr. William Hsiao, who has been hired by the Legislature to design three medical care reform plans for Vermont.
Fully integrating reforms, however, could take as long as 12 years, Hsiao told an audience of about 100 people at the Statehouse Tuesday.
Hsiao made the remarks at a hearing before the Vermont Health Care Committee. He and his team gave the committee a status update on their research for the full report Hsiao will deliver to lawmakers on Jan. 19, which will be followed by a two-week public comment period and then a two-week period for Hsiao and his group to make changes to the three plans. The final report will be presented on Feb. 17.
Hsiao, a Harvard economist and architect of Taiwan’s single-payer system, is charged with fulfilling the criteria set out in Act 128 for the design of three health care models that provide universal access and high quality care to Vermonters. The approaches to health care – single payer, public option and a third option to be determined by Hsiao and his staff – will be considered by the Legislature in the next session.
A “pure” single-payer system that offers universal coverage and comprehensive coverage for every Vermonter could be costly, Hsiao said. A public option approach would create a government-administered insurance plan that would compete with other insurers and potentially offer lower premium rates because of the government’s bargaining power with hospitals and doctors. Universal coverage in that scenario would not be possible, Hsiao said.
The last option, Hsiao’s choice, will be “what we think is viable and practical.”
“When you look at your dreams and you want your dreams to come true, in that process the rubber meets the road,” Hsiao said. “I’m confident our report won’t please everyone. I hope it will please most people.”
Sen. Jane Kitchel, chair of the committee, said panel members recognize the obstacles ahead, but they also understand the need to move forward.
“Working harder in a flawed system won’t get you where you need to be,” she said.
Before Hsiao’s team makes recommendations, it is completing a detailed analysis of Vermont’s current situation. He said the state’s health care system will continue to erode unless fundamental changes are made.
“The cost is rising very fast in Vermont,” Hsiao said. “Also, the number of uninsured, in spite of Catamount Health and other efforts, remains at the 7.5 percent level.”
Vermont already has a high coverage rate compared with other states. On average, insurers pay about 87 percent of health care costs incurred by Vermonters they cover.
Hsiao noted indicators that show fundamental flaws in the current medical system. Rural health care facilities are losing primary care doctors, Hsiao said, while the number of specialists is increasing. Community hospitals are weakening, he said.
“Your current system isn’t doing what you want it to do,” Hsiao said.
He said the Blueprint for Health initiative is a good positive step, “but it’s a little step, and it’s not going to save you.”
His team divided the “stakeholders,” or groups that would be affected by reform, into eight groups, and they interviewed more than 80 individuals as part of the research process.
What they found will help to guide their design, Hsiao said.
Some stakeholders want to maintain the status quo, he said.
Businesses, for example, are worried about any additional cost. “They are firm,” Hsiao said. “Whatever is proposed shouldn’t cost more money.”
The question, Hsiao said, is how do you pay for universal access while keeping insurance costs in check? The money has to come from cost savings, he said.
Administrative savings could be worth several hundred million dollars a year if a single-payer health care plan, or some version of that kind of system, is implemented, he said.
He recommended that the state move to an integrated delivery system in which payments to doctors and health care facilities are based on a per-capita rate that includes “risk adjustments.”
In order to ensure that whoever is paying the bill – whether it’s the state, employers or workers – “you want to pay for performance. You want to make sure you get the value.”
Measuring that value is difficult. That’s why he recommends that performance-based criteria be developed. At the top of the list? “Did your patient get well?” Hsiao said. (Rwanda has the most advanced medical performance measures for medical personnel, Hsiao said.)
His team is preparing to offer quantitative modeling for premium prices.
He said they will calculate the effect on household budgets, employer premiums, state health care spending, Medicaid and the new federal Affordable Care Act. Policy analysts Tom Kavet and Nick Rockler will analyze the impact of the three designs on the gross state product, or overall level of economic activity in the state.
“You’re going to have quite a lot to digest,” Hsiao said.
As part of its research, his team has considered tort reform, lowering administrative costs and creating uniform prices for all procedures (currently the price varies widely depending on a patient’s insurance coverage).
Not all of the stakeholders who will be responsible for implementing reform will be happy with the final report from his team, Hsiao predicted.
Contact Anne Galloway at vtdigger@gmail.com with questions, corrections and tips.
Correction: It was previously stated that 87 percent of Vermonters have insurance. This was incorrect. On average, insurers pay about 87 percent of health care costs incurred by Vermonters they cover.
