Implementing a single payer health care program presents immense political and technical challenges, says Sen. Tim Ashe, D/P-Chittenden, and he doesn’t want the enormity of that task to eclipse the goal of making sure everyone in Vermont has health coverage.
But Ashe, chairman of the Senate Finance Committee, said Monday that he does not have an alternate plan for health reform.
Ashe detailed some of the challenges facing single payer in a recent Vermont Public Radio report, and suggested the state could insure all its residents without creating a massive new program.
Ashe said he disagrees with the assertion in the VPR report that he suggested lawmakers should focus on universal coverage before considering single payer. He just doesn’t want one to eclipse the other, he said.
Single payer could create greater equity in how health care services are paid for, but it won’t necessarily achieve universal coverage, Ashe said, and it certainly won’t in the short-term.
“I have always said publicly that single payer is a vehicle, not the goal, and that the goals are my motivation, not the vehicle,” Ashe wrote in a follow-up email. “My belief continues to be that no matter what happens with the financing proposal, we need to cover everyone and lower costs.”
Single payer “as currently envisioned” would levy an employer payroll tax that would overburden small businesses that don’t currently offer health insurance to employees, he said. That could put many out of business and cause serious economic dislocation, he added. That’s just one of the myriad hurdles a single payer program would have to navigate, he said.
In contrast to single-payer, which would replace roughly $2 billion in premium costs with $2 billion in new state revenue, covering Vermont’s uninsured could happen without raising a penny, he told VPR.
But the outline Ashe sketched for VPR of how that could be achieved was just one possible option, and it’s not a proposal he plans to introduce as legislation or make a push for at the start of the session, he said.
Ashe did not intend to get out ahead of his colleagues, adding that he will take his cue from the Senate Democratic Caucus on what aspects of health reform to prioritize, he said.
“The key statement in what I said (to VPR) is that the Senate has to figure out how it wants to proceed. I don’t set policy for the Senate, and our caucus hasn’t had a chance to receive the governor’s plan, let alone react to it,” Ashe said.
Gov. Peter Shumlin will unveil his proposal at the end of the month.
Ashe’s nonproposal idea
Vermont could attempt to use money that is already being spent on health care services for the uninsured to buy them health insurance, Ashe said. But that alone won’t be enough to cover Vermont’s estimated 47,000 uninsured residents, he said.
Ashe thinks Vermont’s 14 hospitals, which account for roughly 44 percent of health care spending — or $2.3 billion — could cover the additional expense. The money could come through savings gleaned by reducing hospitals’ administrative costs, he said.
The Green Mountain Care Board could cap hospitals’ administrative costs as part of its regulatory authority over hospital spending, without micromanaging how those savings are achieved, he said.
Ashe in his interview with VPR predicted that “there will be no layoffs as a result of such an action, no one will even notice the difference. It will just force the savings.”
The latest available data from 2012 shows Vermont’s health care system spent $27.3 million on free or discounted medical care for the uninsured.
The problem with Ashe’s strategy is that there’s no “charity care fund,” according to Bea Grause, director of the Vermont Association of Hospitals and Health Systems.
“It’s an expense. So if more people got insured, it’s an expense hospitals wouldn’t incur as they do now, but there wouldn’t be any actual dollars out there to change hands,” Grause said in a statement.
Joe Woodin, CEO of Gifford Medical Center, is also skeptical of using charity care money to cover the uninsured.
“It’s kind of interesting to think if we move that money from one bucket to another we’re going to save money,” Woodin said.
For example, if $10 million currently spent on free or discounted medical care was diverted to pay for more people to have insurance, the insurance companies or government insurance programs, such as Medicaid, would absorb part of that $10 million to cover their own administrative costs.
Woodin was more supportive of looking for additional money to expand coverage through administrative savings, he said.
“I love the thought of introducing consistency and efficiency across the board so administrative costs can be reduced,” Woodin said.
There are undoubtedly opportunities for those savings, Woodin said, but in order quantify them, policymakers would need a definition of administrative costs.
Administrative costs are essentially any expense that doesn’t go directly toward medical services, including medical records, coding and billing for medical services and paying the salaries of managers and executives.
Mike Davis of the Green Mountain Care Board has been involved in hospital budgets as a regulator for close to three decades. He said there is no definition of hospitals’ administrative costs.
The board will eventually have to create one, because part of its charge in vetting a single payer program is determining whether it is likely to generate administrative savings, Davis said.
But that’s not an exercise the board has begun, he said.
Woodin said that if Vermont decides to rein in hospital’s administrative costs — whether or not the savings are used to expand coverage — he would like to see the state take a hands-on approach.
“I will tell you that we need state government to be prescriptive with those initiatives because we have not been able to achieve that as individual hospitals or even as a system,” he said.
If the state were to demand consistency in the way hospitals manage billing practices for the different payers, insurance companies and government programs, the savings would be significant, Woodin said.
