Davis: Canadian system not a model for Shumlin, as McClaughry asserts

Peter Shumlin signed the historic health care reform act on the Statehouse steps on Thursday. VTD/Taylor Dobbs.

Peter Shumlin signed the historic health care reform act on the Statehouse steps on Thursday. VTD/Taylor Dobbs.

Editor’s note: This post is a column by Hamilton Davis, a former lawmaker, managing editor of the Burlington Free Press and chairman of the Vermont Hospital Data Council, the predecessor to BISHCA. Davis writes about health care for VTDigger.org.

A brief kerfuffle last week about the Canadian single-payer health care system once again illuminated the Alice-in-Wonderland quality of the web-based discussion of the Shumlin administration’s effort to develop a single payer system for Vermont. The issue arose on the conservative website, Vermont Tiger, in the form of a report from John McClaughry of the Ethan Allen Institute.

McClaughry wrote that he had asked Gov. Shumlin at a meeting in St. Johnsbury how his proposed Green Mountain Care system would differ from the single payer system in Quebec. McClaughry quoted the governor’s response: “In Quebec health care providers work for the government. They will stay private in Vermont. Vermonters will have universal access.”

McClaughry professed shock at this statement on the grounds that it is common knowledge that doctors in Quebec do not work for the government and he went on to conclude: “Shumlin’s Green Mountain Care will operate exactly like Quebec’s Medicare, right down to the controlling board, government definition of essential benefits, setting compensation rates for providers, writing the checks to pay private providers, and setting a global budget in the name of cost containment.”

Well, all in all, a blizzard of misinformation. The governor first, since he has no excuse. McClaughry is right that in the Canadian single-payer system the doctors are private — they do not work for the government. It is also not yet clear that Vermonters under a statewide single-payer system will have universal access. Green Mountain Care may come close, but there are several elements of federal law that may block that achievement, desireable though it is.

There is simply no question that Shumlin should know the basics of the Canadian system because for the last two decades it has been the model for the single-payer system in Vermont. It’s true that the governor may have been distracted by some other issues — think Vermont Yankee and Irene. But still …

It has been clear from day one that the Shumlin administration has no intention to install a Canadian-style single-payer system.”

It is also worth noting that we are relying here on the accuracy of the McClaughry report for the governor’s response. VTDigger asked the governor’s press office to confirm its accuracy, but got no response. Moreover, while McClaughry has sharp elbows — actually, extremely sharp elbows — he’s usually right about stuff like this.

His conclusions, on the other hand, are completely absurd. First, it has been clear from day one that the Shumlin administration has no intention to install a Canadian-style single-payer system. The key flaw in the Canadian system is that it created huge demand with no cost containment strategy at all. The key was the determination to maintain a fee-for-service reimbursement system: Do anything you want and send us the bill. The bills, not surprisingly, went through the roof, generating a payment shortfall at the national level of government as well in all 10 of the Canadian provinces.

Government payment shortfalls with no ability on the part of the Canadian delivery system to manage the constraints led to severe dislocations. One was the need to send many of its people to the U.S. for treatment that the Canadians couldn’t deliver themselves. Another was the development of long waiting times in Canada, even for critically needed care. The flow of patients to the U.S. has apparently abated, but as recently as the last year or so there was a scandal in Montreal where wealthy residents were bribing health professionals so they could move to the head of the line.

The Canadian system does maintain its central attraction: its universal coverage, something the commentators on Vermont Tiger never seem to mention.

McClaughry goes completely off the rails in his claim that it is clear that Green Mountain Care will be identical to Quebec Medicare. That is simply false. The whole reason for hiring analysts like Anya Rader Wallack and industrial strength bureaucrats like Steve Kimbell and impressively credentialed members of the Green Mountain Care Board is the need to dramatically increase access while controlling costs. That means moving away from fee-for-service reimbursement toward something else. If you don’t have fee-for-service, then you can’t have rate setting. Government rate setting in a fee-for-system has an unbroken record of failure to control costs in the United States.

The claim that Green Mountain will control costs with a global budget is also misguided. Somebody on the Green Mountain Care Board or in the system somewhere may think they can do that, but there is not evidence whatever that anyone knows how.

The problem with a global budget is that in financial terms, there isn’t any “globe.” There isn’t any functional connection between, say, what Fletcher Allen does and what the community hospital in Bennington does. And one of the most important players in the Vermont delivery system — Dartmouth-Hitchcock Medical Center — isn’t even in the state, and it delivers most of the specialized care east of the Green Mountains.

Getting to a system sufficiently integrated to enable some sort of capitated reimbursement model may be possible, but no one has seen one yet.

These kind of challenges will be extremely difficult for the Shumlin administration to surmount. But surmounting them will be necessary if a single-payer system is to work in Vermont.

The goals, however, are absolutely vital. Universal access to health care at a sustainable cost is as important to the state as any initiative it has ever taken. Well thought out opposition actually contributes to that goal. What we’re seeing so far is not even close.

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  • Ellen Oxfeld

    Yes, it’s true that Canada’s physicians are on a fee for service, but Canada’s health care costs per capita are much lower than ours. Their doctors only bill one insurer and don’t have the mountains of paperwork that our physicians have.

    Also, Canada’s hospitals and hospitals are financed through global budgets and these HAVE kept costs down because they don’t have to bill for every single procedure. In fact, global budgets are the international norm in the developed world for hosptials.

    Canada and most of the rest of the developed world are able to get equal or even better health care outcomes that the United States for much lower costs because of some of these efficiencies. Taking out the private insurance company middleman and global budgets for hospitals can really help. And to top it all off, they have universal access.

    No doubt, ALL system must confront cost control issues. But these other systems have done so much more successfully than we have by cutting the insurance company middlemen out of the equation, reducing paperwork by so doing and also providing universal access throughout life rather than starting over every time your income level changes or you swtich your job.

  • walter carpenter

    “Universal access to health care at a sustainable cost is as important to the state as any initiative it has ever taken. ”

    It is also not just about cost. It is about fairness and morality. Why should some Vermonters have access to health care while others are priced out of it? Why are their “income eligibility” limits that act as barriers to obtaining insurance, the gateway to our health care system, and deductibles of thousands of dollars for some Vermonters that prevent them from getting care, while other Vermonters have none of these? Why is health insurance tied to employment and a loss of a job through lay-offs because the capitalist system fails, tantamount to losing health insurance?

    It is also about fairness.

  • Actually it sounds to me that Shumlin’s claim that we’re going to a Canadian style medical care delivery system is quite accurate – Shumlin just muffed on answer.

    Shumlin has always described a private delivery system that is answerable to a single payer and a global budget.

    That is the Canadian system.

  • George Coppenrath

    “It is also worth noting that we are relying here on the accuracy of the McClaughry report for the governor’s response. “ I was in attendance at that morning meeting and McCLaughry’s account is exactly as it occurred. It was Governor Shumlin who went to some lengths describing his meeting in Quebec and touted how great the Canadian system was for economic development, attracting businesses to Quebec from Maine, NH & VT based on their health care system. McClaughry asked one question, a logical follow up to the Governor’s praise for the Canadian system, asking the Governor how would Green Mountain Care differ from that system? The Governor, who has been the prime mover behind this single payer system was presented with the opportunity to explain some of the differences of design, objectives and operation could think of only one major difference. He stated very clearly that the difference between the Canadian system and Green Mountain Care was that the health care providers in Canada were government employees and in Vermont we would rely on the private sector to deliver health care.
    To think that the Governor, one of the strongest advocates of single payer, could think of only one difference (and an incorrect one at that) was shocking to me. Since the early 90’s when Vermont threw out the free market as it relates to health insurance and the numbers of uninsured increased (due to the unavailability of affordable plans) our State Legislature has continued to increase government’s role in the health care system. That approach is not working. We have a very free market approach to auto, home and business insurance in Vermont and our residents enjoy some of the lowest premiums and best coverages in the U.S. As the spokesperson for single payer, it would seem that the Governor could have presented at least an accurate example of one difference!

  • Al Salzman

    I want to thank the preceding commentators for exposing the odorous cowflop heaped on the Canadian single-payer system by the likes of radical right-wingers like John McClaughry and, regretably, people who should know better like Hamilton Davis, who talks about the lack of cost containment in the Canadian system. Cost containment is inherent in the rationality and bureaucratic simplicity of the system in Canada which spends almost half, per capita, with better results (infant mortality, life expectancy) than the U.S. As for long waiting periods for care – that is another propagandistic trope repeated ad nauseum by those invested in the status quo in the U.S. If Mr. Davis would cite documentation he would have more credibility. My own admittedly anecdotal sources are many dear friends in Toronto and Montreal, one of whom has serious cardio-vascular problems. It is true there can be long waiting periods for elective treatments but serious problems are dealt with expediently. My Montreal friend with the heart condition, must take out ad hoc insurance when he comes across the border to visit, because it would bankrupt him if he had to be treated for a heart attack in Vermont. I grow weary of reporters, pundits, think tankers and others who promulgate half-baked ideas as gospel, calculated to muddy the facts.

  • Ellen Oxfeld

    And as has been said, the single payer model we hope to get to in Vermont IS private delivery and public financing. That IS the Canadian system. The other key ingredient is global budgets for hospitals. The evidence is in and it shows that works much better than bundled payments, and a bunch of the other tricks that have been tried and yet have not shown savings or even gotten off the ground anywhere else. Single payer and global hospital budgets are tried and true, and the evidence shows they work!

  • John McClaughry

    Thanks, George, for corroborating my report of Shumlin’s fatuous statement at the St. J legislative breakfast Jan. 30. If Ham Davis still has doubts, the Caledonain Record reported it the next day, and Channel 7 at LSC videotaped it.
    Of course Canada has a health care cost containment system. It’s called single payer global budgeting, and it was graphically portrayed in the left wing indy movie Barbarian Invasion a few years ago. Ever since Ham and I first encountered single payer, c1988, its advocates have celebrated the wondrous global budget as an infallible technique for its merits for containing costs.
    Now Shumlin thinks he can contain costs by scrapping fee for service, which admittedly drives up costs. How will he do that? By having the single payer – the state – pay medical groups for state approved outcomes, and avoiding state disapproved procedures.
    Even Crazy Al Salzman, in between his stock venom, has figured this out, although he calls it something “inherent in the rationality and simplicity” of the single payer system. What could be more simple and rational than the government saying “NO.That’s all the money you’re going to get from your government, and it’s illegal for you to get it from anybody else”?
    Until I see a better argument from the single payer people, starting with the Governor, I conclude that there is no material difference between Quebec single payer and Shumlin single payer. Having the government pay one large fee for multiple services to the provider, and letting the provider divvy it up among its various participants until it’s gone, is not in my view a material difference.

    • Townsend Peters

      Why should anyone care what you “conclude” or don’t conclude?

  • Dan McCauliffe

    Act 48 calls for global budgets, bundled payments and capitation as the payment mechanisms to control costs. Unfortunately this places the financial risk on the hospitals and providers. This creates the perverse incentive for hospitals and providers to do less and this will result in poorer access for patients to providers and other health care services. This is what happened in the days of the capitated HMOs. This is what happens in countries that heavily rely on global budgets and single payer systems to control costs. Canada and the UK are good examples of this.

    When I first moved back to Vermont about eleven years ago Canadians were coming to the Rutland Regional Medical Center for radiation cancer treatment because the waiting time was too long in Canada. Canada had outlawed private health care insurance, but because of the access problem have now allowed it. The UK has had even worse access problems and this might help explain why there is currently a bill in the British parliament to extensively reform their health care system to be more like the US, with privatization of services.

    I don’t disagree that the US spends too much on health care, and needs to streamline the process of getting health care to all its citizens, but I don’t think relying on global budgets/single payer will lead to improvement in our health care system. It may lead to lower cost, but will sacrifice access and quality in doing so.

    The countries with higher quality health care and less rationing are those that have multiple payers, both public and private and include private health insurance. Patients cost share the expense (with subsides for the poor) to help control health care costs by having “skin in the game”. Most countries include both salaried and fee-for service payments to physicians, that include publicly employed physicians and ones in private practice. These countries also have both public and private hospitals.

    Countries like the UK and Greece, where the government controls most of the health care system have some of the worst health care access problems in Western Europe. In Greece it is common for patients to bribe physicians with the “fakelaki” so they don’t have to wait so long for care. Does this sound familiar…… as Davis said in this opinion piece: “there was a scandal in Montreal where wealthy residents were bribing health professionals so they could move to the head of the line.”

    I agree that Canada is not the best model for Green Mountain Care. I think we can do better by looking at other countries health care systems that have sensible government regulatory oversight but far less government control of the health care system.

  • walter carpenter

    “Until I see a better argument from the single payer people, starting with the Governor, I conclude that there is no material difference between Quebec single payer and Shumlin single payer.”

    What exactly is wrong with the Quebec system, or the Canadian system of which it is a part? Or the British or french systems for that matter? They cover all of their citizens at half, if not more, the cost of what we in vermont do with over 40,000 of our citizens uninsured and tens of thousands so underinsured that they all but uninsured. No health care system is absolute perfection, and they are always evolving through various tensions, but say what you will about quebec all of their citizens have access to medical care through a unified system. Vermont cannot now make that same boast. With luck, with Shumlin, it soon will.

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