The logistics of health care reform

Vermont tackles reform

Health-care law’s impact not clear yet

By Jesse Roman

Published:

Thursday, April 8, 2010 12:10 PM EDT

Well before President Obama signed the long-anticipated federal health-care law last month, hospitals, doctors, government agencies, insurance companies, consultants, lobbyists, regulators, patients and state politicians were digging through all 2,700 pages of it, trying to decipher what it all means for Vermont.

As you might expect, it’s not yet clear. Not even to the experts.

The hardest part will be “learning and understanding what the different components of the legislation actually means,” said Paulette Thabault, commissioner of the Vermont Department of Banking, Insurance, Securities & Health Care Administration, in an interview.

Gov. Jim Douglas has asked his health-care cabinet — comprised of various department heads — to study the new law to see “if there’s anything we need to do in the Legislature right now to comply with the law,” he said Monday in an interview in Morrisville.

One key member of the Douglas team is Susan Belio, Vermont’s director of health-care reform. Belio, also the head of the Office for Vermont Health Access, was appointed by Douglas to coordinate and facilitate the state’s own broad health-care reform efforts in 2006. That was a lot of work, but nothing compared to leading the state’s efforts on the new federal reform.

The federal legislation is “much bigger than in 2006,” and in many cases leaves her to guess about the how and the what.

“In this (federal) document, the majority of areas don’t have specific detail, and not a lot of federal guidance has come out on what it means or how to implement it,” she said Tuesday in an interview. “We’re having to do our best guess at this point what some things mean. …

“At least (in 2006), I could go to the Legislature, the ones who wrote it, and ask, ‘What did you mean by this?’”

Not only must the federal law be read, digested, understood and implemented, the work must be done in a race against time.

The Legislature has largely firmed up the budget for the fiscal year that starts July 1, and any money that may be needed for the new health-care program, or laws changed to comply with federal statute, must be accomplished before the Legislature adjourns in May.

The federal law offers grants and other resources to help states, “but no detail about how to access them. We’re in wait-and-see mode,” Besio said.

The health-care law is huge and sweeping, “but states were not given legislative resources to deal with it,” said Douglas, who is chairman of the National Governors’ Association. He said he has spoken with U.S. House Speaker Nancy Pelosi about providing money and assistance to help states put the health-care law into action.

“This is very significant for states,” he said. “It will take some financial effort. We’ll have to continue to work with states closely.”

“There is a lot of planning that has to happen,” Thabault said. “2010 are the immediate things, then we have to anticipate the second round of changes in 2011, then the really big changes happen in 2014. So between now and 2014, a lot of planning needs to be done.”

Ups and downs

“This bill is a real paradigm shift, and one we will continue to move from,” says Marie Beatrice Grause, president and CEO of the Vermont Association of Hospitals and Health Systems. “In a way, it’s really a new beginning and it will be a big challenge for hospitals, patients, insurance companies and doctors to start looking differently at how health care is financed: How doctors are paid, how consumers pay and how providers administer health care.”

There are so many moving parts and vagaries that hospital administrators, doctors and other health-care leaders are still in the process of figuring out what the new law means to them.

The consensus among health-care providers is that more access to health-insurance coverage is good.

“There is nothing worse than having patients who lack adequate insurance, who don’t see a physician unless it’s an emergency,” says Paul Harrington, executive vice president of the Vermont Medical Society.

The health-care bill will extend coverage to 10,000 uninsured Vermonters and improve existing coverage for 381,000 more, says U.S. Rep. Peter Welch, D-Vt. Nobody argues the merits of that.

What has been debated is the mandate that everyone buy health insurance.

“Conceptually, I think it’s a great idea,” said Judy Tarr, president and CEO of Central Vermont Medical Center in Berlin. “After all, you need insurance to drive a car. It’s not unreasonable to ask people to be concerned with their health.”

Vermont hospitals had to eat more than $57 million worth of bad debt or unpaid bills last year, for care provided to people unable or unwilling to pay, according to a BISHCA report.

That will be slashed by $46 million — or 80 percent — because more people will have insurance, Welch said.

Most hospitals, doctors and others also applaud the end of certain insurance practices, such as denying coverage to people with pre-existing conditions — which Vermont already does — and dropping patients’ insurance once they get sick.

But hospitals, doctors and state officials also have their worries.

For instance, the law includes $148.6 billion in Medicare cuts over the next decade, which hospitals and doctors say will increase the widening gap between what health care actually costs, and the amount that Medicare will pay. Medicare is the federal insurance program for older Americans. The Medicare rate drop will affect six of the state’s 14 hospitals — the other eight are critical access hospitals, which have a different funding structure, Grause said.

Just last week, because Congress failed to adjust the reimbursement formula, Medicare rates paid to doctors and hospitals fell a dramatic 21.3 percent, Harrington said.

“This is a well-recognized problem and Congress failed to address it,” he said. The laws are making it difficult for doctors to afford to see Medicare patients, he said. In many cases, patients covered by Medicare and Medicaid — the federal-state health-insurance program for the poor — account for half their business.

Every hospital, including critical access hospitals, such as Copley in Morrisville, will be affected by a provision in the bill that reduces the amount federal money hospitals receive to help pay for uninsured and low-income patients. The federal government theorized that the reduction in Medicare and Medicaid reimbursements would be more than made up by increased revenue from the boost in the number of insured.

But in Vermont, where 93 percent of the population is already insured, that effect will be negligible, Grause said.

“The good news is, that isn’t happening immediately; it will take awhile,” she said. “In the world I live in, that’s 10 political lifetimes, and we’ll have a chance to take another bite at the apple.”

Hospitals and doctors also criticized the lack of any medical-malpractice reform in the law. Frivolous lawsuits lead to defensive medicine and higher costs, Tarr says.

“If you fear being sued, you may change how you practice and order more tests and be that much more careful, which really drives up costs,” Tarr says.

Malpractice insurance can run upward of $70,000 per year, depending on what type of practice a physician has, Harrington said.

Another issue is staffing. As more and more Vermonters have access to health care, more doctors will be needed.

“It’s all well and good to have more people insured, but if they don’t have access to physicians, it’s kind of a broken promise,” Harrington says. “There is already a shortage of primary-care physicians in Vermont. These workforce issues have not been adequately addressed.”

Gov. Douglas says requiring everyone to be insured will also cost Vermonters money, at least in the short term, as a result of what he called the “woodwork effect.”

About 7 percent of Vermonters are uninsured, and many of them are eligible for Medicaid or other programs but haven’t yet applied, he said. The mandates will bring them out of the woodwork and add more people to the state and federal programs, Douglas predicts.

“There will be added pressure on the budget, because of the mandates,” he said. “But I think it will affect Vermont a lot less than other states because we have such an expansive Medicare system already. … We are leaders and cited nationally for our innovative approach to care.”

For now, everyone is waiting to see what’s going to happen and hoping the state and federal governments will make the transition as smooth as possible.

“I wouldn’t mind having the Vermont Legislature support us in implementing this bill,” Tarr said.

•••

Timeline of health reform

Effective Immediately

Small-business tax credits for offering employees insurance.

Federal grants for a state health care “ombudsman” to assist consumers with complaints and questions.

Effective within 90 days

Indoor tanning services tax.

A Web site through which Vermont residents can identify affordable health-insurance coverage options in the state.

Effective within six months

Elimination of pre-existing condition limitations for children.

Children can stay on parents’ health insurance plan until age 27.

Elimination of lifetime limits on benefits.

Free preventive benefits. No cost-sharing (such as co-pays or deductibles) for preventive health care.

Prohibits rescissions: companies cannot cancel coverage.

Effective January 2011

Employers must report the value of health benefits on employees’ W-2 tax forms.

New voluntary government-operated long-term insurance plan financed by payroll deductions.

2012

Hospital payment must be linked to health outcomes, as defined by U.S. Secretary of Health and Human Services.

2013

Hospital tax (0.9 percent to 3.8 percent of income) on high-income wage earners ($200,000 individuals, $250,000 couples).

New Medicare tax on capital gains, dividends, interest and other unearned income.

Insurance carriers must adopt standard administrative rules and procedures.

2014

Creation of state health-insurance exchanges.

Income-based individual premium subsidies.

Limits all group deductibles to $2,000 for individuals and $4,000 for families.

Limits eligibility waiting periods to 90 days.

Limits maximum out-of-pocket health-care expense based on income as it relates to the federal poverty line.

Guaranteed health care, no pre-existing condition limitation, community rating (two exact plans must cost the same; premiums can vary only according to age, geography, family size and tobacco use).

Elimination of all limits on benefits.

2018

Excise tax on high-cost plans

— Source: Benefit Group of New England

http://www.stowetoday.com/articles/2010/04/08/stowe_reporter/news/local_news/doc4bbdcc882416f208105252.txt