Editor’s note: This commentary is by Patrick Flood, the former commissioner of the Department of Mental Health, the Department of Disabilities, Aging and Independent Living and former deputy secretary of the Agency of Human Services. He recently retired from Northern Counties Health Care.
The Green Mountain Care Board is getting ready to approve the budget for the single accountable care organization OneCare Vermont, which over the next five years will assume responsibility for managing the health care for 70 percent of Vermonters. Roughly, that translates into approximately 70 percent of Vermont health care expenditures, which will be more than $3 billion. Yet very few Vermonters are even aware of, never mind understand, this dramatic change in our system of health care. There are several serious concerns about this plan.
It is being described and sold as health care reform, but in reality, it is mostly just a change in how providers are paid. This plan is not designed to do one thing to advance universal health care, nor provide more coverage to uninsured people. Nor will it address the real reasons why health care costs are so high and continuing to grow.
OneCare is a for-profit business. When this for-profit entity controls 70 percent of Vermont health care it will be a virtual monopoly. If the ACO manages to save any money, the savings belong to the ACO, not to Vermonters. The ACO will decide, not Vermonters or the Legislature, how to use any savings. The ACO could choose to raise already incredibly high administrator salaries, pay bonuses to administrators or invest in new computer systems. When this monopoly controls 70 percent of health care funding, it will be a classic example of “too big to fail.” The ACO will dictate the terms of health care policy and funding, not the state.
Vermont policymakers are pushing this change, even though the ACO has not yet demonstrated the ability to reduce expenditures. Over the past three years, when OneCare was participating in what are called “shared savings programs” for Medicare, Medicaid and commercial insurance, it was over budget except in 2014 for one payer, Medicaid. The rest of the time, its expenditures came in over budget for Medicaid, Medicare and commercial insurance, sometimes substantially. For example, in 2015, One Care overspent its Medicare target by $26.9 million. In 2016, it overspent its Medicare target by $18.5 million. Despite this performance, the state and GMCB are doubling down on the ACO model, claiming it will reduce costs and stay within a 3.5 percent growth target. There has been little to no discussion of this problem, although the actuaries who reviewed the One Care budget asked what One Care planned to do to address its failure so far to lower costs.
Under the current plan the ACO, and the hospitals, are guaranteed a growth rate of 3.5 percent. No other service provider is guaranteed 3.5 percent growth. This is extremely important because the very agencies that could actually save money in health care through prevention and early intervention, like the home health agencies, mental health agencies and community action agencies, are not guaranteed such an increase. Funding for their services has been and is likely to continue to be level funded or reduced. It appears from the plan that any new money they receive will come through the ACO.
To have any hope of lowering health care and social service costs, we need to address the underlying causes. We need to address the effects of trauma on those living with it, and do everything we can to prevent it in children. This means we need to address poverty, homelessness, hunger, child abuse and other forms of trauma.
Instead, the administration and the Green Mountain Care Board are ready to approve a plan for a single ACO to manage our health care system, and allow that ACO to spend more than $12.5 million on new administrative costs for administrators, case managers and computers.
With projected deficits in the state budget, any money, never mind $12.5 million, for prevention, mental health and primary care, will be hard to come by in the coming year. The state is already facing over a $50 million deficit in the education fund and a growing deficit in the general fund. That makes it even harder to understand why we are willing to spend more on another unnecessary and high cost layer of medical bureaucracy.
The reality is that there is plenty of money in our health care system, but we are not spending it wisely or in the right places. The current plan is an example. We are not spending nearly enough on prevention, early intervention and the basic care that keeps people healthy. Instead we are growing the most expensive part of our system, where administrators get salaries in the hundreds of thousands, four and five times what the governor is paid. Unless we reverse that dynamic, we will never achieve real health reform and reduce health care costs.
There are other models that could be tried, that would be cheaper and build on our current system of care. For example, the state of Washington is pursuing a statewide model of change, that includes changes in payment methods, but is also based on much more focus on community-based integration of health and community services, and spurring community innovation. One such community based effort has been underway in the St. Johnsbury area for over two years, but the state has refused to support it. It is called an “accountable health community” and includes many community organizations from the hospital to the school system to the community action agency. We could also apply to the federal government to participate in the Primary Care Plus program, which focuses on growing and improving primary care, with different payment methodology, not fee for service.
Instead, Vermont is focused on a centralized model with no history of success, that will cost more money, add another layer of bureaucracy and create a monopoly and will do nothing to create universal coverage. We are doing this in a time of incredible uncertainty about what the federal government will do regarding health care. Vermont should pause and reconsider this flawed plan.
