Security and Choice in Health Reform

In this column I will describe a plan for achieving our health reform goals of universal coverage, quality, and cost containment. This plan will provide security and choice for Vermonters in obtaining both health insurance and health care. It involves the intensification and expansion of programs and policies that have already proven to be successful, without major disruption in our insurance or tax systems. The additional cost will be modest and sustainable, and there are suggestions about how to pay for it.

This plan is based on where we are now: after the federal Affordable Care Act but with great uncertainty about the proposed state run health insurance program called Green Mountain Care. There is reason to believe that after the implementation of Vermont Health Connect, however imperfect that process was, the numbers of uninsured and underinsured Vermonters have decreased. It is already possible to separate employment and insurance, taking the burden of health insurance off of businesses, since individuals can purchase in VHC if their employment does not offer insurance. Insurance companies must now provide certain levels of coverage and must cover pre-existing conditions. Our two major insurance companies are both nonprofits, with relatively low administrative costs. Our Blueprint for Health program for reducing costs and improving quality of care for the most seriously ill Vermonters are showing useful and promising results.

We do not yet know the benefits package for the proposed state run publicly finance GMC insurance program, nor do we know the costs. We do not have the financing plan. We do not know whether necessary Federal waivers would be forthcoming, which compromises Vermont's policy independence. Until and unless those unknowns are resolved, there is no single payer GMC plan to evaluate or to adopt.

In the face of such uncertainty, I believe that many Vermonters may prefer a reliable and rewarding path something like what is presented here over an undefined, disruptive, and impractical ideological proposal. The plan described here could therefore be called Vermont Preferred. It was developed by a bipartisan group of lawmakers with assistance from the Joint Fiscal Office and the legislative health policy consultant Ken Thorpe.


*** Maintain the private insurance market with voluntary participation in Vermont Health Connect for individuals and businesses and greater variety of insurance plans. This would mean that there would be maximum choice allowed by the ACA concerning whether to go through the exchange or not. It could mean more variety in types of plans, including basic coverage plans or more high deductible/health savings accounts plans that many previously found useful.

*** Expand Cost-sharing Subsidies for individuals up to 400% of the

Federal Poverty Level for individuals who purchase through the VHC exchange and maintain state-sponsored premium tax credits. This would enhance affordability for about 9,500 low to middle income Vermonters, so that a total of about 26,000 receive cost sharing assistance, aside from the many on Medicaid with complete financial support.

*** Extend small business health care tax credits with state financing for two more years when the federal tax credits expire. It would be good to make the application forms easier.

*** Encourage universal coverage to what is expected to be the last 3% or 4% of Vermonters through intensive outreach for enrollment in Medicaid and coverage through VHC.

*** Encourage enrollment by requiring proof of health insurance when renewing driver's licenses.

*** Ensure recruitment and retention of our high quality medical workforce through investing up to $5 million per year in our medical education loan repayment program for providers who commit to working in Vermont. We need to be sure that providers will be available to care for Vermonters. (Also counts for quality below.)


*** Expand and intensify the successful Blueprint for Health programs to improve quality while reducing costs through better coordination and delivery of health care. This is probably the most important program for both quality and cost containment since it assists those Vermonters who have serious chronic conditions that require a great deal of care.

*** Continue deployment of Electronic Medical Records through the state to insure quality care delivered in a timely way, while reducing duplication and errors.

*** Ensure recruitment and retention of our high quality medical workforce through investing up to $5 million per year in our medical education loan repayment program for providers who commit to working in Vermont. (Also helps with access and affordability.)


*** Reduce the Medicaid cost-shift by significantly increasing Medicaid reimbursement to health care providers. This will support the health care provider system, relieve upward pressure on private health insurance premiums, and ensure that government pays more of the true costs of its programs. It will also help to ensure that Medicaid patients can actually get access to a doctor.

*** Encourage implementation of global budgets to contain costs and reduce uncertainty for hospitals and the communities they serve when and where this is appropriate.

*** Integrate lessons learned from the unfolding State Innovation Model (SIM) grant pilot projects on payment reform (moving away from fee for service). Caution must be used here to ensure that incentives to reduce costs do not compromise patient care.

*** Expand and intensify the successful Blueprint for Health programs to improve quality while reducing costs through better coordination and delivery of health care. (Also goes for quality.)

*** Wellness programs and incentives -- create a working group to develop better ways to encourage programs that support healthy behavior by Vermonters in order to prevent or mitigate diabetes, heart disease, and other conditions related to life style choices.


*** Altogether these initiatives might cost between $30 million and $43 million a year. This modest cost makes funding much easier and much more sustainable across time than the $2 BILLION cost of GMC.

The funding for Vermont Preferred could be obtained through relatively modest changes in the income tax, perhaps based on recommendations for tax reform from the Blue Ribbon Tax Structure Commission Report of several years ago.

*** One possibility would be to raise the funds through a premium benefits tax on the value of employer sponsored health benefits received by Vermonters. This recommendation for tax reform was contained in the Blue Ribbon Tax Structure Commission Report of several years ago, and it is a longstanding proposal to increase the equity of our health insurance system. This is because the employer paid premium can be seen as a form of compensation that is not taxed. To maintain progressivity, the tax could apply only to those above a certain income level, and it could have tiered rates. To illustrate what this means, suppose that a company pays $4,000 per year to cover health insurance premiums for an employee who pays $2,000 towards the cost. The employee receives the $4,000 premium subsidy as part of their overall compensation, but does not pay a tax on it. A small premium tax on this value of perhaps 2.7% would mean an additional tax payment of $108. This would only apply to taxpayers above a certain level of Adjusted Gross Income, and only to those receiving this form of benefits compensation. Compared to the massive tax changes probably involved in shifting from premiums to tax financing that will be required by the state run GMC program, with new payroll taxes and income taxes along with a kind of public premium tax likely, this is indeed a modest change. But it could finance the expansion and intensification of effective policies described above.

The Vermont Preferred Plan is similar to the approach taken by the Netherlands and Switzerland. There is a regulated health insurance market with private insurance carriers, and individuals who qualify for financial assistance get public premium subsidies. Such a system can ensure that all have access to insurance and to health care.

Patients, providers, the insurance companies, the state, and the federal government all share risk and responsibility and all provide resources to the system.

Compared to the GMC proposal, Vermont Preferred is a moderate plan. But that is actually an advantage. Why not take effective and reliable steps to improve coverage, quality, and cost containment now? Why continue to spend time and resources on the development of a complex and difficult proposal that requires uncertain Federal waivers and political acceptance of massive changes in the tax system, and that may never actually go into effect? I ask for open minded consideration of this approach to health reform through security and choice.

Cynthia Browning represents the towns of Arlington, Manchester, Sunderland and Sandgate in the state legislature.


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