[W]hen Vermont hospitals generate unexpected revenue, the state should take at least half of that money to support a universal primary care initiative, a key senator said Tuesday.
Sen. Claire Ayer, D-Addison, chairwoman of the Senate Health and Welfare Committee, introduced the idea of a hospital “reinvestment contribution” as one possible funding mechanism for a proposed system of publicly financed primary care.
Ayer acknowledged that larger — and still unidentified — funding sources will be needed to operate such a system. But she said redirecting excess hospital revenue was a legitimate way to cover some related expenses.
“I am aware that lots of people think there’s a pot of money sitting around. There isn’t,” Ayer said. “So we’ll have further discussion on this.”
Advocates for universal primary care say it will improve Vermonters’ health and, eventually, lower health care costs. That’s in part because “better access to primary care reduces the need for emergency room visits and hospital admissions,” according to S.53, a bill in Ayer’s committee.
A Statehouse hearing last month attracted a large crowd in favor of universal primary care.
But the details of the proposed program have yet to be worked out. Kicking off discussion of S.53 in her committee Tuesday, Ayer acknowledged that “this doesn’t really address financing yet, because we’re still setting it up.”
The bill sets up a universal primary care fund that would be supported partly by Medicaid money “if authorized by waivers from federal law.” The fund would also consist of unspecified general fund transfers authorized by the Legislature, as well as “revenue from any taxes established for the purpose of funding universal primary care in Vermont.”
Ayer isn’t shying away from new tax proposals, despite Gov. Phil Scott’s pledge not to impose any new fees or taxes.
“If we’re going to take on primary care, we’re going to have to raise taxes,” she said. “There’s no way it’s going to be free, and there’s no way it’s going to pay for itself in the first few years.”
But Ayer also proposed new language that would tap into hospitals’ coffers to help fund the primary care program. The initiative would calculate excess revenue by factoring in a hospital’s actual expenses as well as its budget as approved by the Green Mountain Care Board.
Each year, the care board would certify a hospital’s surplus revenue and “notify the hospital in writing of the amount of its reinvestment contribution, which shall be not less than 50 percent of the amount of the excess revenue,” Ayer’s proposal says.
That reinvestment would go into the universal primary care fund. A hospital that fails to pay the Green Mountain Care Board on time would face a $5,000 penalty, and the care board also could take a missed payment into account when reviewing a hospital’s future budget proposals.
Hospitals would have the right to appeal the board’s determinations of excess revenue or reinvestment.
It’s unclear how big of a role hospital “reinvestment” would play in universal primary care. Lawmakers didn’t specify a funding target, and the amount of excess hospital revenue could vary widely from year to year.
According to a Green Mountain Care Board document, Vermont hospitals in fiscal year 2016 generated an “operating surplus” of $27.8 million over budgeted levels when both revenues and expenses were figured in.
Ayer said hospital reinvestment might serve as a secondary funding source “to get us started. A primary source has to be a dependable, predictable source.”
Still, Ayer anticipates some opposition to her idea. “We know there are a lot of considerations, and I expect we’ll have testimony on this,” she said.
Devon Green, vice president of government relations for the Vermont Association of Hospitals and Health Systems, attended Tuesday’s hearing but said she could not yet comment on Ayer’s proposal.
Senate Health and Welfare is scheduled to take more testimony this week on S.53.
Even if the bill passes this session, it could be quite some time before a universal primary care system begins operating. Legislative language submitted by Ayer on Tuesday calls for “all stakeholders” interested in universal primary care to “prepare preliminary plans of operation” by Dec. 1, 2018.
In January 2019, the state’s human resources department and the Department of Vermont Health Access would offer their assessments of those plans as well as “recommendations for implementation of the universal primary care system.”
