HOUSE ACTION

Health Care Reform Progress

House Committee on Health Care

February 25, 2005

The Problem

Health care costs too much and too many people don’t have insurance. In Vermont, there are 63,000 people with no coverage; an additional 40,000 have no coverage for prescription drugs. Health care costs are rising 9-10% per year, more than double the rate of inflation. Even people fortunate to have coverage understand the problems – every year they pay more and get less for their health care dollar.

What We Have Done So Far

The Vermont Legislature has dedicated the current biennium to finding solutions to the health care crisis. Speaker Symington reshuffled the House committee structure and created a new panel – called the Health Care Committee – to focus exclusively on health care reform. An important first step was the recently passed law that will allow Vermonters to purchase safe affordable prescription drugs from Canada and the United Kingdom. Other steps will follow.

We are learning from the effort in the early 90s to reform health care – what was tried and why it didn’t work. Although opinions vary, there are at least three reasons why the 90s reforms failed:

There was not at that time a consensus that we had reached a crisis in health care.
Some key stakeholders (principally providers and small business) were not sufficiently involved in crafting the reform plan.
The costs and benefits of the reformed system were not clearly presented to the public.

The Health Care Committee has also been learning about reform ideas from other states.

For example, the Oregon Health Plan has been heralded as a major innovation in health policy. Oregon established a transparent system of priorities, ranking services based on public opinion, cost benefit analysis and clinical outcomes. In reality, there has been no widespread rationing. Excluded services are minimal, and many people receive them despite their exclusion. The expansion of Medicaid in Oregon was not accomplished based on savings from the rationing of services, but instead from increased revenues and savings from managed care.

The Committee has heard about different international health care systems. Most other countries view heath care as a public good rather than as a consumer good. They guarantee health care, pay for it primarily with taxes and spend much less than we do in the U.S. The care is provided in varying mixtures of public and private facilities and the health outcomes are often better than ours. For example, in both Canada and the United Kingdom, the financing is public. In the U.K., the delivery system is public while in Canada, the delivery system is predominately private, as it is in this country. As you might expect, each system has very different attributes in terms of access, equity, cost control, efficiency, choice and innovation.

Medicaid’s projected shortfall of over $70 Million dollars in FY2006 has aroused much attention in the legislature. Any real health care reform must address the cost drivers that affect our whole healthcare delivery system. General health care reform must interact seamlessly with any changes in the Medicaid system.

Where We Expect to Go

One thing we know is that comprehensive health care reform will not be easy; if it were, we would have done it by now. Health care is a $3.2 billion industry in Vermont – three times the total amount of the state’s general fund budget.

The Health Care Committee has reviewed the three general proposals for health care reform:

H. 30 would establish the Vermont Health Care Plan; the plan is universal, comprehensive and available to all Vermonters. The plan is publicly administered and funded. A Vermont Health Care Board would propose the specifics of the plan and a special committee will determine funding.
H.102 would work within the current system to provide insurance to previously uninsured Vermonters by offering premium and deductible assistance to the uninsured and tax credits to small businesses that insure them. H.102 would also create a reinsurance program to support the nongroup health insurance market and has provisions to promote healthy choices and informed consumers. Funding for these proposals comes from insurance premium taxes and the general fund.
H. 216 would create a Vermont Freedom and Unity health plan that would initially provide preventive health services for all Vermonters. H. 216 lays out a process for expanding over time the services provided. Plan administration would be put out to bid and it would be funded by a combination payroll and income tax.

Efforts to enact meaningful reform will need to proceed carefully, with significant input from many people -- consumers and providers, doctors and hospitals, businesses and employees, just to name a few. It seems clear, though, that health care reform will likely include proposals to:

· Make primary and preventive care more available to more people and, eventually, to everyone

· Provide incentives for people to live healthier lifestyles

· Work with hospitals to maintain quality care, but keep costs under control

· Reduce paperwork, claims hassles, and administrative overhead

· Address the availability and costs of long-term and end-of-life care

· Encourage more effective care for people with chronic illnesses like diabetes and heart disease

· Improve the delivery of care by reducing medical errors and stressing evidence-based medicine

· Lower the costs of health care insurance premiums

A public hearing will be held on Thursday, March 10^th, 7 p.m. at the Statehouse (see attached details). It is likely that the first pieces of a comprehensive plan will emerge by May. Extended conversations with Vermonters over the summer and fall will fill in the details and provide a sense of whether people believe the proposals are heading in the right directions.