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Introduced by   Representatives Green of Berlin, French of Randolph, Martin of Springfield and McFaun of Barre Town

Referred to Committee on


Subject:  Health; health care spending; administrative costs; study

Statement of purpose:  This bill proposes to authorize a study of administrative costs in both the public and private sectors of Vermont’s health care system.


It is hereby enacted by the General Assembly of the State of Vermont:


(a)  The department of banking, insurance, securities, and health care administration, the department of taxes, and the office of Vermont health access shall study and compare the administrative costs in Vermont’s private health care sector with the administrative costs in public health care programs, such as Medicaid, VHAP, VSCRIPT, and Medicare.  

(b)  The study shall include an analysis of the current information available to any state or federal agency regarding the administrative costs spent by health care facilities, providers, insurers, pharmacy benefit managers, or any other entity doing business in Vermont as determined by the departments and office and shall determine what additional information must be disclosed in order to calculate accurately administrative costs in the health care sector.  The study also shall examine the estimated costs of administration in a single payer health care system by examining international health care systems and include a comparison of the costs in the current Vermont system to the estimated costs and to the actual costs of single payer health care systems in other countries.

(c)  “Administrative costs” means:

(1)  a breakout of personnel costs as a subcategory;

(2)  current tax financing of health care, including tax benefits received by employers and individuals;

(3)  transaction-related costs, including claims processing, billing, and the admission of patients into a health care facility or nursing home;

(4)  benefits management costs, including quality assistance, benefit plan design, management, information systems, and internal analyses or statistics;

(5)  selling and marketing costs, including underwriting of insurance plans, strategic planning, and advertising;

(6)  regulatory and compliance costs, including discharge planning from health care facilities and nursing homes, licensing requirements, and certificate of need compliance; and

(7)  review of the costs of insurers, health care providers, pharmacy benefit management companies, and state government.

(d)  On or before December 1, 2005, the departments and office shall present a report to the health access oversight committee and the general assembly with its findings and recommendations.  The recommendations shall include any statutory or regulatory changes necessary to report routinely on administrative costs, including how the information can be presented regularly to the general assembly in an understandable and accessible format.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont