Vermont’s health care costs continue to soar, and state regulators haven’t done enough to curb them, according to Auditor Doug Hoffer.
The average Vermonter now pays more than $9,000 a year for health care. That expense that skyrocketed 167% between 2000 and 2018, according to a report released by Hoffer’s office Tuesday. Housing and utility rates, by comparison, went up 104% over the same period.
The U.S. average health care spend is $7,191 per capita. Vermont has the second highest expenditure level in New England, just behind Massachusetts.
The report criticizes the state’s health care reform efforts, which have failed to slow the growth in costs. “You got to say, ‘boy, who’s at the wheel?’” Hoffer said in an interview. “Does anybody have the political will to stand up and say ‘no, this is not right?’ We can do better.’”
Green Mountain Care Board executive director Susan Barrett contended that the board had done what it could to lower costs, given its limitations. The board oversees hospital budgets and insurance rates, but has no control over drug costs or workforce issues.
“We agree health care is too expensive, here in Vermont and throughout the country. Period,“ Barrett said. “To say that we haven’t been using the levers we’ve been given just isn’t true.”
In 1997, Vermonters spent an average of 12% of their income on health care services. Two decades later, it has risen to nearly 17%.
If Vermont’s health care costs had mirrored the national trend, the state would have spent $1 billion less in 2018, the auditor reports.
In his analysis, Hoffer attributed the rising costs to hospital consolidation at the University of Vermont Health Network, which accounted for 51% of all new patient revenue growth.
Over the past decade, UVM Health Network has expanded, affiliating with Central Vermont Medical Center in Berlin, Porter Medical Center in Middlebury and three New York hospitals. That consolidation increases prices and limits competition, VTDigger reported in January. It also gives the network more leverage when negotiating with insurance companies, driving up costs for patients, Hoffer said.
The growth in spending over that period went to the institutions, Hoffer said. Between 2011 and 2017, 55 cents of every new dollar spent on health care went to hospitals and the practices they acquired over the period.
The report says the percentage of physicians who work for hospitals went from 53% in 2000 to 82% in 2018. Hospital acquisition of independent practices helped to drive up health care spending, Hoffer wrote. Meanwhile, practices that remained independent lost money over the 18-year period, the auditor says.
“Health care services are now concentrated in the hands of fewer providers who hold greater sway over the amounts Vermonters pay for health care,” he said in the report.
The extra cash didn’t go to workers; most health care providers in Vermont have lower wages on average than those in surrounding states.
Last week, the Green Mountain Care Board approved rate increases to insurance companies, in the face of pressure to keep costs flat during a pandemic.
“Really the takeaway for me is that the Green Mountain Care Board should devote more energy and resources to answering these questions — that’s their job,” Hoffer told VTDigger.
It’s not the first time Hoffer has taken state health care regulators to task; last month, he criticized their oversight of the state’s accountable care organization, OneCare, and their unwillingness to hold health care providers accountable. Vermont’s all-payer system, which was created in 2016 to lower cost, hasn’t been effective so far, and requires more regulation, he said.
In a response letter to Hoffer, Green Mountain Care Board chair Kevin Mullin defended the board’s efforts, saying they had successfully slowed the growth of hospital revenues over time.
“While we appreciate your interest in teaching out these important issues and share concerns about the cost of health care in Vermont, your readers may make inferences from the report which are not analytically sound given the current analysis,” Mullin wrote.
Even though health care costs are high, many of the state’s small health care facilities have reported losses year after year.
Mullin also disputed the methodology of the report and said it could lead to incorrect conclusions. For instance, the auditor did not separate consolidation from other factors, such as the rural nature of Vermont, Mullin said. He also argued that other factors such as an aging population and a low uninsured rate could impact per capita spending.
Vermont is the healthiest state and provides quality health care, Barrett added — which could increase the cost and complicate Hoffer’s conclusions.
Geoff Battista, a former investigator for the State Auditor’s Office who now works for the Green Mountain Care Board, criticized the report on Twitter, calling it “the mangled scraps of my last product.”
“It’s not fit to print: just a collage of lit, data, and statutes with no useable conclusions. Hides the lack of rigor with a cover letter and appendices. Peer review needed,” he tweeted. Battista declined to comment further, but he noted that the opinion was his own, as a former member of the project.
Hoffer insists lawmakers should address the questions the report raises for the benefit of struggling Vermonters.
Even for middle class families, “what ends up happening is perfectly good working hard working people end up putting off procedures because they can’t afford their deductible,” Hoffer said. “It’s unacceptable.”
