House Speaker Shap Smith, D-Morristown, says his top health care priority for the new legislative session is increasing Medicaid payments to health care providers.
The government’s low-income health care program underpays doctors and hospitals in the aggregate by between 37 percent and 51 percent, depending on how it’s calculated, according to the Green Mountain Care Board.
Providers make up the losses incurred treating Medicaid patients by negotiating higher payments from commercial insurers who, in turn, pass those costs on to their customers in higher premiums and out-of-pocket costs — a cycle known as the cost shift.
Vermont has tried to address the problem in “fits and starts,” but it must take substantive action, or the problem will persist, Smith said. Doing so would “likely” require new revenue, he added.
The Democrats’ health care agenda is starting to gel in the wake of Gov. Peter Shumlin pulling the plug on single payer, as he, too, identified raising Medicaid payments as a top legislative priority.
Smith said he does not want lawmakers to spend time reviewing the governor’s single payer proposal to determine whether public financing could work.
Instead, he hopes to move forward in a new direction that achieves some of the same goals as a single payer program, such as ensuring access to affordable care, without the “baggage” of the past four years, Smith said.
Supporters of publicly financed universal health care say they will rally at the Statehouse on Thursday with hundreds of people from across the state to urge lawmakers to hold public hearings on Shumlin’s single payer report.
The rally is meant to coincide with the legislative vote for governor and the State of the State address.
Increasing Medicaid payments likely to be a challenge
Shumlin’s budget, assuming he’s re-elected by the legislature Thursday, will outline how, and to what extent, he plans to increase Medicaid payments. Shumlin wouldn’t say if he plans to use new revenue, telling reporters at a news conference this week to “stay tuned.”
Shumlin pledged to raise Medicaid rates by 3 percent for three years in 2012. He was able to do so in 2013, but in the following year he proposed a 2 percent increase that lawmakers reduced and later scrapped as part of budget cuts over the summer.
The Vermont Association of Hospitals and Health Systems has long raised concerns about underpayments for Medicaid.
“We are very pleased to hear that the administration and the speaker are committed to addressing the cost shift,” said Bea Grause, the hospital association’s president.
“Doing so will likely present challenges in this budget environment, but it is essential to health care reform,” she said.
Shumlin and lawmakers face a roughly $100 million budget gap, which will make it difficult to find money for a substantial increase without new revenue.
Trinka Kerr, lead attorney for Legal Aid’s Health Care Advocate project, said she’s worried the fervor to raise Medicaid payments could lead the governor and his budget writers to limit the services the program covers.
There are federal requirements for services the program must cover, but Vermont has expanded those greatly. Most significantly is Vermont Medicaid’s coverage of prescription drugs.
Smith said past increases to the Medicaid reimbursement rates were done in “too small increments” for them to have a noticeable impact on the premiums of people with commercial insurance.
Previous efforts were hampered because the connection between low Medicaid payments and rising commercial premiums was not made compellingly, he said.
Lawmakers need to tell Vermonters how the cost shift “hits” their premiums and show that an investment in Medicaid will save them money, he said.
Medicaid cost shift by the numbers
The Medicaid cost shift was valued at $151.8 million in 2012, the last year data is available. That figure predates the Affordable Care Act’s expansion of the program.
Vermont’s Medicaid rolls have increased by 3.3 percent from 2012 to 2014 and is now at 21.2 percent of the state’s population or 132,830 people.
An additional $8 million in temporary federal Medicaid payments included in the ACA ended in 2015.
For every dollar Vermont puts toward Medicaid, the feds contribute $1.17. The 1.6 percent increase to Medicaid rates cut over the summer was worth $7.4 million to the program, and saved Vermont $3.4 million.
Making Vermont Health Connect more affordable a priority, too
Smith said he also wants to look for ways to reduce the out-of-pocket costs for people receiving subsidized health insurance through the state’s exchange.
Advocates say Vermont Health Connect plans even with subsidies, are too expensive for many who must purchase them or pay a federal penalty.
Rep. Bill Lippert, D-Hinesburg, the newly appointed chair of the House Health Care Committee, said he supports increasing Medicaid payments, but would also like to address affordability in health care.
His committee will take a look at “true access” to health care services, and focus less on whether “people technically have coverage,” Lippert said.
At the helm of a rebooted House Health Care Committee
After two decades on the House Judiciary Committee, and nearly a decade as its chair, Smith tapped Lippert to run the Health Care Committee.
Lippert said he’s meeting many of the members of his new committee for the first time, but he was pleased to see the group that was assembled.
It’s a committee that lost its previous chair, Rep. Mike Fisher, D-Lincoln, in the November election and has five new faces. There are now seven Democrats, three Republicans and one Progressive on the panel.
Among the new members is Rep. Anne Donahue, R-Northfield, the ranking member, and a longtime advocate for people with mental illness.
Freshman Rep. Tim Briglin, D-Thetford Center, joins the committee after spending the past year on Shumlin’s Business Advisory Council on Health Care Financing.
That experience gave him solid background in Vermont’s health care challenges and a good working relationship with Shumlin’s health care team, he said.
Rep. Chris Pearson, P-Burlington, is now vice chair, replacing Sarah Copeland-Hanzas, D-Bradford, who was elected majority leader and now serves on the Government Operations Committee.
For a full list of House committee assignments click here.
Correction: An earlier version had an incorrect year that Shumlin was able to raise Medicaid rates by 3 percent. He proposed the raise in 2012 and rates were raised in 2013, but in the following year he proposed a 2 percent increase that lawmakers reduced and later scrapped as part of budget cuts over the summer.
