Editor’s note: This commentary is by Willem Post, a retired engineer. He is a founding member of the Coalition for Energy Solutions.
[N]ow that single-payer has been put on the back burner, because it would adversely affect the already fragile, near-zero-growth Vermont economy, setting up an all-payer health care system has become the fallback alternative. Maryland, population 5.929 million in 2013, has had such a system since 1977. Its hospitals received about $1 billion in 2013 in extra Medicare/Medicaid funds, which were used to reduce cost shifting, the alleged under-compensation of providers by Medicare and Medicaid, which providers recoup by charging more to other insured people, which causes their health care premiums to be higher than they would be without the cost shifting.
Maryland obtained a federal waiver and got the extra funds written into federal law, which allows Maryland to administer its own Medicare and Medicaid programs using federal funds, instead of the federal government doing the administering.
It took Maryland many years to get providers to adjust their operations, and for the state to monitor their operations to make Maryland’s multi-billion dollar all-payer program functional. Maryland was lucky to get about $1 billion in extra Medicare/Medicaid funds to make its all-payer scheme a “success,” i.e., reduce cost shifting. Vermont would not be so lucky with Republicans controlling the Congress.
Vermont’s in-state network, Green Mountain Care (GMC) would pay in-state and out-of-state providers. Today, most Vermonters have insurance coverage that provides an out-of-state network and about a third of all Vermont residents have care at Dartmouth-Hitchcock Medical Center (DHMC) in New Hampshire. GMC would contract with out-of-state providers, as necessary, to meet the needs of Vermonters. Would any services obtainable from Vermont providers not be obtainable from DHMC under all-payer, except by permissions slip from GMC? Such contracts would need to show significant savings compared to existing conditions.
It would be presumptuous for state and GMC bureaucrats to claim they could produce significant savings by managing $2.75 billion of Medicare and Medicare funds more efficiently than the federal government, which has been doing it for at least 40 years! It appears the only reason for the existence of any all-payer program would be to make it easier to implement single-payer in the future.
Vermont’s Extra Medicare/Medicaid Funds: If Vermont obtained the federal waivers and got the extra funds written into federal law, similar to Maryland, then Vermont, population 625,000, would get about $1 billion x 0.625/5.929 = $118 million/year of extra Medicare/Medicaid funds. That is not a lot of money! A significant part of that $118 million would be spent for the hundred (hundreds?) or so additional state employees and quasi-state GMC employees, all with state-level, platinum benefits, to get all providers to adjust their operations, and to monitor their operations to make Vermont’s multi-billion dollar, all-payer program functional.
The all-payer waiver would not be trivial, as it would give Vermont almost complete control over Medicare funds for about 140,000 people and Medicaid funds for about 141,000 people in 2017, totaling $2,66 billion in 2013, about $3.0 billion in 2017, about 50 percent of Vermont health care spending.
It would be very difficult for Vermont (already having recurring budget deficits) to follow Maryland, without the extra Medicare/Medicaid funds. A handful of other states, including New York and New Jersey, tried to implement similar systems in the late 1970s and early 1980s. But unlike Maryland, they did not get the extra funds written into federal law and gave up on the program. “Maryland made a very strategic, savvy move,” said McDonough, the Harvard professor. “Had they not locked in those higher reimbursements, there wouldn’t be value in the program.”
All-Payer, a Backdoor to Single-Payer: Under single-payer, there would be no change regarding Medicare; it would continued to be administered by the federal government. At least one third of all Medicare patients have care from DHMC. Under all-payer, Medicare would be administered by GMC.
Assuming Vermont gets the federal waiver and the extra Medicaid/Medicare funds written into federal law, the all-payer scheme would be politically easier to implement, because elderly people on Medicare and those on Medicaid are not well organized and more easily manipulated by politicians and bureaucrats (Jonathan Gruber, Shumlin’s health care guru: “The American people are stupid”), unlike various business organizations (not stupid), which strongly opposed single-payer.
The all-payer waiver would not be trivial, as it would give Vermont almost complete control over Medicare funds for about 140,000 people and Medicaid funds for about 141,000 people in 2017, totaling $2,66 billion in 2013, about $3.0 billion in 2017, about 50 percent of Vermont health care spending. It would amount to a major back-door move to ultimately implement single-payer. Various business organizations would be wise to oppose it now, before the Legislature enacts all-payer into law.
http://hcr.vermont.gov/sites/hcr/files/2014/GMCReport2014/GMC%20FINAL%20REPORT%20123014.pdf
Impact on Elderly, Sick People on Medicare: Currently, people on Medicare have the right to select their primary care physician. Also, they have the right to bypass that physician and go directly to a specialist of their choice. Under all-payer, it is not clear, if people could still go to a doctor of their choice, or a specialist of their choice (which Medicare allows), without approval/referral of a primary care physician, who might be constrained by state rules and regulations under the all-payer scheme.
Under all-payer, people on Medicare and Medicaid living in the Upper Valley would likely not be able to go to the nearby DHMC (about a 0.6 hour round-trip), without a GMC permission slip.
Those elderly, sick people would have to go to the Rutland Regional Medical Center (about a 2.5 hour round-trip, longer with bad weather), or another, equivalent Vermont medical center, which would have a GMC contract to provide services at certain prices.
With all-payer, I might have been dead a long time ago. About eight years ago, I was “treated” for a heart condition by a local primary care physician without much success, and, finally, on my own, I went to a cardiologist at the Dartmouth-Hitchcock Medical Center, who saw me the same day, and immediately had tests performed, which revealed two 90 percent blockages, requiring two stents. With proper drugs, I have been well ever since, and plan to live many more years.
Notes:
http://kaiserhealthnews.org/news/stateline-medicaid-enrollment-increases-by-state/
http://vtdigger.org/2014/04/03/lawmakers-briefed-marylands-payer-health-care-system/
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/25/maryland-already-sets-hospitals-prices-now-it-wants-to-cap-their-spending/
http://vtdigger.org/2014/10/01/shumlin-team-d-c-seek-federal-waivers-single-payer-health-care/
https://www.umassmed.edu/uploadedFiles/CWM_CHLE/About/Vermont%20Health%20Care%20Financing%20Plan%202017%20-%20Act%2048%20-%20FINAL%20REPORT.pdf
