Editor’s note: This op-ed is by Anya Rader Wallack, the chair of the Green Mountain Care Board; Steve Kimbell, the commissioner of the Vermont Department of Financial Regulation; and Lawrence Miller, the secretary of the Agency of Commerce and Community Development.
Eighteen months ago the Vermont General Assembly passed Act 48, sweeping health reform legislation that aimed, among other things, to rein in health care cost growth in Vermont. Act 48 created the Green Mountain Care Board (GMCB), which has broad responsibility for health care cost constraint and approves rates of growth in hospital budgets and increases in health insurer premiums.
Act 48 did not offer an instant fix for rising health care costs. Why? Because there is no instant fix. In our health care system:
• care often is poorly integrated;
• technology does not allow for adequate communication between providers;
• the payment system promotes the use of more health care services, rather than better health;
• new innovations that improve the treatment or cure of disease often are very expensive.
Creation of a new state regulatory body does not change these facts. Recent coverage of the proposed increase in health insurance rates for employees of towns and school districts suggests this may have been an expectation – create a new regulatory body, exert some state control, and cost increases will come down. We are sorry to disappoint, but the work we have to do, all of us in Vermont, to control health care cost growth is much harder than that.
In the meantime, we will continue to pay the costs of the system we have, and those costs continue to rise faster than our economy grows. As VT Digger reported on Nov. 28, the Vermont Education Health Initiative (VEHI) has notified Vermont’s school districts and local union leaders that their health insurance premiums will increase by at least 12.8 percent next July, with a 14 percent increase more likely. Whatever increase is finally allowed by state regulators, it will affect more than 42,000 Vermonters. As Blue Cross Blue Shield of Vermont (BCBSVT) reports in its plain language summary of the rate filing, more than half of the increase is due to “elimination of a subsidy made possible over the last several years because VEHI has drawn from its reserves to lower rates.” That strategy has resulted in an average increase of 7.3 percent for VEHI over the past 10 years.
Does a 7.3 percent increase sound good? Don’t kid yourself. As the chart below shows, national health care cost growth during the period 1997-2009 greatly outstripped economic growth, and Vermont was no different. That means that, with every passing year, Vermonters spent more of their income on health care and less on other goods and services like education, economic development and roads. We now spend almost 20 cents out of every dollar Vermonters earn on health care. In 2010 and 2011, health care cost increases were closer to (but still exceeded) economic growth, but experts predict that the gap between economic growth and health care cost growth will widen again in 2013 and continue for the years beyond.
The VEHI rate increase requires state review through the Department of Financial Regulation and approval through the Green Mountain Care Board and that approval has not yet been granted. However, rate increases of this magnitude can be expected if we don’t fundamentally change Vermont’s health care system. We must:
• Better integrate health care in the state to reduce duplication of services, poorly planned hand-offs between providers and unnecessary use of high-cost services that could have been avoided with better primary care;
• Make sure health care providers have good systems to review medical records electronically so they can avoid such waste and expense; and
• Change how we pay doctors, hospitals, home health providers and mental health providers, to name a few, so that we pay more for helping Vermonters stay healthy, encourage healthy behaviors and avoid having people get sick.
The Green Mountain Care Board, the Shumlin administration, and many of Vermont’s health care providers and health policy leaders are working to make real and lasting change in Vermont’s health care system. We are convinced that Vermont can have the most efficient and effective health care system in the country, resulting in a healthier population and lower cost growth. The work to accomplish these goals is complex and takes time, but the VEHI case illustrates the urgency for action.
