Health Care In The States

Vermont Wields New Power Over Hospital Budgets

By Bob Kinzel, Vermont Public Radio

August 2nd, 2012, 1:14 PM

Vermont’s Green Mountain Care Board, established by state law in May 2011 and given new powers last spring, is taking over responsibility for virtually every aspect of health care in the state. This month’s project for the new regulatory board: How much hospital budgets should go up on an annual basis.

The board has established a cap on spending increases of no more than 3.75 percent annually. But as a group, Vermont’s 14 hospitals are seeking increases of roughly 7 percent for the coming 12 month period.

“We know there are some legitimate reasons that hospitals might need to grow higher than the 3.75 percent, most of those having to do with circumstances beyond their control,” said Anya Rader Wallack, the chairwoman of the Green Mountain Care Board.

The board may allow some increases above 3.75 percent, if the hospitals can prove that they are using the money to make investments that will lower costs in the long run.

But Wallack says the bottom line is that hospital spending needs to be kept under control: “We have a responsibility to hold down costs. So we’ll be looking at all of these requests with an eye toward how we can stay within that target, because we don’t think Vermonters can afford more than that.”

She says reviewing hospital budgets is a critical piece of the board’s efforts to help control health care costs in the state.

“I think this is significant in two senses,” Wallack said. “One is that hospital expenditures are a very significant portion of the total health care spending in Vermont.  The other is that this is the first time that the responsibility for hospital budgets and the responsibility for insurer rates has been in the same place.”

The board will hold a public hearing on the hospital requests in the middle of August. It will issue its ruling about the proposed spending increases in September.

Vermont is in the process of becoming the first state to have a single-payer health system. Gov. Peter Shumlin, a Democrat, said he would like to see the single-payer system implemented as early as 2016, a year earlier than previous estimates.

This story is part of a collaboration that includes Vermont Public Radio, NPR and Kaiser Health News.

11 Responses to “Vermont Wields New Power Over Hospital Budgets”

  1. Drew says:

    Vermont has been working on a single payer system for almost two years, but they still haven’t figured out how it will be paid for. They are waiting until after Governor Shumlin’s re-election bid this November, before they will be releasing this information. Vermont’s single payer system will be like Canada’s system that will control costs with global budgets. Has anyone checked on how well that system is working out: http://www.montrealgazette.com/health/improve+health+services+change+hospitals+funded/6753365/story.html.

  2. Aula says:

    So, let me see if i get this right……the government tells hospitals how much money they can spend in any given year, about half of what they want to budget this year, and that will keep costs down for consumers. So, if the hospital can no longer buy the latest diagnostic equipment, durable equipment, etc., how many people will go across the various borders to get the more up to date treatment there in facilities that ARE competitive, and Vermont will still be paying for the care because it will be Vermonters, carrying Vermont insurance to those hospitals. So, eventually, Vermont outsources hospital care entirely, right? really, government has got to get out of micromanaging our lives.

  3. lucky7 says:

    Duh, “So, let me see if i get this right……”

    I’ve gotten so used to it, I’m really disappointed that we are not hearing the Chuck Grassley types shouting “Death Panels” with regard to this issue. Government has got to get out of micromanaging our lives? If government has got to get out of micromanaging our lives, why don’t we start with ending the mandate that forces hospitals to treat every person that walks into the emergency room regardless of ability to pay? You screamed to high heaven that you didn’t want the individual mandate, right? How about “NO” mandates at all? None! The Citizens United ruling says corporations are exactly the same as people, right? If that’s true, hospitals have the same rights as individuals not to be mandated in any way. The only way Tea Party Republicans in the Congress will start to admit there’s a crisis in health care and a crisis with hospital budgets is if we begin seeing bodies stacked up in front of the locked doors of hospital emergency rooms!

  4. KD says:

    I wish that the government would just call of these “reforms” what they are and just state that they are putting a single payer system in place. This going around and around is getting ridiculous. You cannot mandate a hopsital’s budget and expect that doctors will just accept the fact that their salaries eventually have to be cut and they will not have access to the newest diagnostic equipment and information. You cannot mandate implmentation of electronic health records and not take into account that cost in hospital budgets (which is estimated in the minimum of $350M range for medium sized hospitals to reach the mandates. You cannot mandate MLRs for insurance companies and then have an extremely rich benefits package that includes tons of free services which increase premiums. The government cannot keep paying low rates – Medicaid if often 80 to 85% of Medicare and not expect premiums and taxes to go up so that budgets can be supplemented to cover the benefits under these program – which in my state are richer than some commercial plans. Lastly, people cannot expect to walk through the emergency room doors, the doctor’s office doors, etc….and expect to get the best of everything that they want with most advanced tests and treatments, because the system would no longer support it. So, they can reform all they want, the backlash will come, like it did in the 80s with managed care, when people find out that this new, fabulous, “free” system is great until you get sick or can no longer get the same treatments that we have become so accustomed to in the US or are waiting to see a doctor for 3 months. My god, now, specialists can schedule out an entire year for an appt. even when you are an established patient. It is scary. In other words, you can change the system, but you cannot change people’s behavior when they are used to getting what they want, when they want it, in record time.

  5. John Spek says:

    So, what happens when…..

    Uncompensated utilization increases exceed 3.75 percent increase?

    Medicine shortages occur, and the costs for the medicine exceed 3.75 percent increase?

    Waste disposal fees and tax increases exceed 3.75 percent increase?

    Business fees, licenses and and tax increases exceed 3.75 percent increase?

    Federal, state and local payroll taxes on workers increases exceed 3.75 percent increase?

    Utility cost increases exceed 3.75 percent increase?

    Supply costs (mostly imported) duty fees increases exceed 3.75 percent increase?

    Minimum wage increases exceed 3.75 percent increase?

    Federal taxes on medical supplies from ACA increases exceed 3.75 percent increase?

    Federal taxes on medical devices and equipment from ACA increases exceed 3.75 percent increase?

    Just asking the obvious

  6. Douglas Hoffman says:

    The question is asked about what happens if (or when) some costs exceed the caps imposed by the Vermont plan. As the Vermont plan is predicated upon a free-market solution to escalating costs, the immediate answer is that the managers of the hospitals will have to make decisions about where to economise, cut costs and limit losses just as other businesses have to. In the present environment there is no incentive or requirement to economise, as all costs are passed on to the consumer through health insurance and government payment programs. The Vermont law seeks to re-establish some equilibrium in this present unbalanced marketplace in health. This approach is far preferable and more fair than having insurance companies arbitrarily deny reimbursement and needed care. In the longer term the Vermont plan will reward hospitals that are better managed, as patients will choose them for elective and non-emergency care because they are able to reduce waste while maintaining an attractive service. Unless you have a problem with free-market economics?

  7. lucky7 says:

    What happens when…?

    …when the sky falls as Chuck Grassley types predict?

    Uh, I see Chicken Little is alive and well and located on this blog.

    What’s the big deal? Why are you morons so afraid? Our health care system is already broken beyond repair. Americans pay at least twice that of any other industrialized nation in the world at 17 percent of GDP. America already ranks 37th worldwide in important criteria like infant mortality rates. Even Cuba beats us in that category! On top of that, over 50 million Americans have absolutely no health care coverage and most of those 50 million uninsured rely on the hospital emergency room as their primary source of health care. Another estimated 25 million more are believed to be seriously uninsured and do not know what their coverage is until they go to use it. Are you saying we have something to lose? Are you saying America has a health care system that is a serious contender with the rest of the world? Are you completely insane? Some will say, America has the most advanced state-of-the-art health care in the world and that everyone from around the world comes here to get treatment. That may be true. America does have the best advances in health care that money can buy. In America, money talks and BS walks!

  8. lucky7 says:

    Sorry…typo…

    “Another estimated 25 million more are believed to be seriously uninsured and do not know what their coverage is until they go to use it.”

    Should have typed…

    “Another estimated 25 million more are believed to be seriously underinsured and do not know what their coverage is until they go to use it.”

  9. lucky7 says:

    Bottom line, while the rest of us are held hostage by the most corrupt health care system in the world, Vermont has had the courage to try something different. I encourage Vermont to continue in their efforts and continue to try to build a health care system that includes “all’ stakeholders. America excludes the most important partner in the equation. The consumer! Vermont is taking steps to give consumers a equal say in how health care works in Vermont. Meanwhile, the rest of America’s health care consumers continue to take the abuse we’ve been taking for many decades. Face it folks, when push comes to shove, there’s only on fix for health care in America. Single-payer health care.

  10. DAS says:

    As global budgets squeeze Vermont hospitals to “economize”, hospitals will abolish services and access to care will worsen (as experienced in Canadian hospitals and clinics). It is likely some Vermonters will cross the borders into neighboring states to receive better care, at their own expense, similar to Canadians coming to the US for health care to avoid the long wait times and for access to more advanced services and technology. Those who can not afford to do so will wait in line for second rate care in Vermont hospitals and clinics. Vermonter’s who want better health care may find it advantageous to move to another state, particularly those Vermonters that are more heavily taxed to support the single payer health care system. Others will choose not to move to Vermont due to its second rate health care system, and, or the tax burden needed to support the single payer system. It will be interesting to see how Vermont’s single payer experiment plays out.

  11. lucky7 says:

    I’ll bet you are also pretty good at predicting the rapture too, huh? Care to borrow my all-purpose window cleaner for that clouded crystal ball you seem to always be using? By the way, that is the official “Tea Party Crystal Ball” you’re using, right?

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