Editor’s note: Robert Ronald Holland is a physician and policy analyst who lives in Irasburg. He has no political party affiliation.
The goal of health care reform is a successful and sustainable health system.
Vermont’s health policy decision makers launched OneCare Vermont Accountable Care Organization LLC without telling Vermonters critical information about the problem they are attempting to solve. How high are Vermont’s health care costs? How fast have they grown? How good is Vermont’s health? What are the magnitude of potential savings? Who defines success? What is the probability of success?
The Goal
A successful health system has three attributes: healthy people, quality care and fairness. Healthy people meaning a population that attains the highest level of health possible. Quality care meaning care that is effective, safe, timely, patient-centered, equitable and efficient. Fairness meaning that all citizens are treated the same; and the system is fair to health professionals, institutions and businesses supporting and delivering the care.
A sustainable health system has three attributes: affordability, acceptability and adaptability. It must be affordable for patients, employers and government; acceptable to patients and health professionals; and adaptable to new problems, technologies and knowledge.
The Problem
An accepted metric for the health of a population is its life expectancy. This year the United States ranks 45th in life expectancy at 79.5 years, five years behind the leader, Hong Kong. All 44 countries with superior population health have significantly lower health care costs than the U.S. For 32 of those countries with available data, the average per capita expenditure is 40 percent of the U.S. Major improvements in life expectancy and reductions in costs are possible.
A 2010 analysis by the Institute of Medicine estimated annual excess cost from systemic waste in U.S. health care at $765 billion: $210 billion in unnecessary services, $130 billion in inefficiently delivered services, $190 billion in excess administrative costs, $105 billion in excessively high prices, $55 billion in missed opportunities for disease prevention, and $75 billion in fraud. These costs amount to 30 percent of total U.S. health expenditures.
The overall poor showing of the U.S. masks substantial variation among the 50 states. In 2014, 12 states had life expectancies equal to or greater than 80 years. Among this group Vermont is tied for fifth place at 80.5 years. In this group Vermont ranks second in per capita health care costs at $10,190, behind Massachusetts at $10,559. Massachusetts has $15,000 more in per capita income from which to pay the additional $369 for health care.
In 2014, four states had per capita health care costs exceeding $10,000: Massachusetts, Vermont, Alaska and Delaware. These states and the District of Columbia are the political entities with the highest per capita health care costs on the globe. As Vermont has the lowest per capita income in this group, Vermont ranks first on the globe in the proportion of personal income consumed by health care at 18.8 percent. All states with higher life expectancy than Vermont have lower per capita health care costs averaging $1,863 lower corresponding to potential savings for Vermont of $1.17 billion (18 percent) annually. Over the interval 1991 to 2014, Vermont had the highest growth rate of health care expenses of all states.
The Proposed Solution
Beginning on Jan. 1, 120,000 Vermonters (19 percent) will be cared for under the administration of OneCare. This corporation is jointly owned by the University of Vermont Medical Center and Dartmouth-Hitchcock Medical Center. It is composed of 160 health care companies and 10 hospitals. By 2022 it aims to administer the care of 410,000 Vermonters (70 percent). In 2017 it had available $9.5 million of federal monies as startup costs.
Dr. Elliot Fisher, director of the Dartmouth Institute of Health Policy and Practice, first expressed the term “accountable care organization” (ACO) in 2006 at a meeting of health policymakers in Washington, D.C. The term is now defined as:
• a group of providers with a strong base in primary care who are accountable for both the quality and costs for all a patient’s health care;
• reimbursement linked to quality and reduced costs;
• performance metrics to assure that the drive for savings and profits has not compromised the quality of care.
The primary belief underlying ACOs is “the “fee-for-service” payment mechanism is a fundamental driver of uncontrolled health care costs and that by changing the payment mechanism to “value-based payment” costs will be controlled and quality improved.” OneCare will receive a regular fee for each patient attributed to it. Health care providers will continue to submit fee-for-service bills for the attributed patients; however, they will not be paid based on the fee-for-service bills. They will be paid by OneCare based upon a set of quality metrics. If the annual growth in health care expenses for the OneCare population is less than 3.5 percent, OneCare Vermont will retain 50-60 percent of the savings.
Performance of ACOs
There are currently nearly 1,000 ACOs operating in the U.S. After three years of operation less than 50 percent of ACOs demonstrate savings. Thirty-two percent of integrated delivery system ACOs, like OneCare Vermont, demonstrate some savings after three years of operation.
Moving Forward
Compared to the broad-based public discussion associated with the development of Vermont’s single-payer initiative, there has been little informed public discussion of the ACO (all-payer) initiative. Certainly, discussions were not informed by the reality that Vermonters:
Bear the highest proportionate financial burden for health care of any political entity on the globe;
Have experienced the highest rate of increased health care costs in the U.S.; and
Pay for waste in the range $2 billion annually ($3,000 per capita) of their money.
Only an alert and knowledgeable citizenry can compel the proper meshing of corporate and public interests to achieve the goal of a successful and sustainable health system. Ultimately the citizens of Vermont — not OneCare nor the Centers for Medicare and Medicaid Services nor the Green Mountain Care Board nor the Legislature — have the power to name success.
