Facts matter in fixing health care system

By Paul Cillo, Burlington Free Press, July 4, 2012

Last year, some of Vermont’s largest employers spent 10 percent of payroll or more on health insurance for their employees. A large majority (95 percent) of these businesses provided coverage equivalent to “gold” or “platinum” plans—that is, plans in which the insurer covers a minimum of 80 percent (gold) or 90 percent (platinum) of the average policyholder’s annual health care costs. Few of their employees were in high deductible plans.

These facts come from a new survey of the health insurance coverage and costs offered by members of the Vermont Business Roundtable (VBR), which includes some of the largest and well-known employers in the state.  The report—prepared for VBR by Public Assets Institute—was released in February. It is available on the VBR website (http://vtroundtable.org/library/).

Beyond what it tells us about how Vermont’s current health care finance system is functioning (or not) at some workplaces, the VBR survey sends another important message about the health care reform debate: Facts matter.

The public debate on health care has no shortage of opinion, rumor, and emotion—about whether the new federally mandated health care exchange is good or bad for business, whether a single-payer system will save or bankrupt the state’s economy, or whether health care services would get better or worse with reform. What’s been sorely missing are facts—facts that let Vermonters think for themselves about how to correct the big flaws in how we pay for health care.

Some of the facts are clear: Vermont’s health care expenditures are growing at an unsustainable rate and badly need to be stabilized. We need a new system for reimbursing doctors and hospitals for their services, and we need a better way to raise the money to run the health care system.

Vermont spent $5 billion for health care services in 2010—over $8,000 for every child, woman, and man. If we do nothing, that number is expected to double by the end of this decade.  Health care expenditures have been growing at a much faster rate than the state’s economy. That means these expenses are eating up a bigger and bigger share of the state budget, employers’ profits, and workers’ incomes.

Pretty much anyone who can shift costs onto others as a way to manage their own costs is doing so. That may provide temporary relief to the ones doing the shifting—but it doesn’t reduce the cost of hospitals, doctors, nurses, or prescription drugs. When the state cuts Medicaid payments to hospitals, the hospitals’ costs fall on employers and others purchasing private insurance.  When insurance premiums rise and employers require employees or retirees to pay a larger share to cover some of the increase, the buying power of families is squeezed, which slows the economy.  The squeeze gets tighter when insurers raise co-pays and deductibles.

It’s no wonder that Census figures from 2010 show more than 50,000 Vermonters have no health insurance.

To make sure that everyone can access quality health care services, reformers must bring health care cost growth more in line with the state’s economic growth, and figure out how to share those costs more rationally and fairly.  That means solving a gigantic, complex puzzle.

Reliable, understandable facts like those the Vermont Business Roundtable put out this winter begin to sort the puzzle pieces and fill some of the empty spaces. We need lots more data we can count on.

But if we are to fix Vermont’s health care financing system, employers, workers—and all Vermonters—need to examine the available information with more in mind than how reform might affect their own bottom lines or family budgets. After all, this problem is bigger than any one of us, any one workplace or CEO or family.  We need to be bringing our best data and our best thinking together to ensure the future health of Vermont’s economy and, most important, of its people.

Paul A. Cillo is President of Public Assets Institute (www.publicassets.org), a nonpartisan nonprofit in Montpelier that promotes sound budget and tax policies that benefit all Vermonters. He lives in Hardwick.