McClaughry: It’s time to rethink failing health care policies

By John McClaughry

Dr. Paul Jarris, one of the best commissioners of public health (2003-2006) that Vermont has ever had, often said forthrightly that “about 40 percent of what Vermont spends on health care is simply wasted.”

Since then Vermont has gone through Catamount Health, Green Mountain Care, and all-payer. Have we gained much ground toward achieving our goals for a healthy and affordable Vermont?

John McClaughry

John McClaughry is vice president of the Ethan Allen Institute.

OneCare is the Accountable Care Organization created when Gov. Shumlin’s single-payer plan fizzled out in 2014 and was succeeded by all-payer. OneCare controls the flow of health care money from commercial insurers, Medicare and Medicaid. Its purpose is to force the providers to meet the health care needs of a defined group of patients at a contracted price, rather than add up “fee for service” billings that are a major factor in health care cost inflation.

The Green Mountain Care Board is charged with restraining the growth of health care spending, which it attempts to do by haggling over allowed percentage increases of provider spending. This year the hospitals have asked that the GMCB budget approval process be scrapped altogether, due to COVID-19 disruptions.

Former Lt. Gov. David Zuckerman, speaking from the Progressive left last October, accused OneCare of gobbling up $20 million in bureaucratic costs without delivering patient benefits. The single-payer left never approved of a non-governmental body (OneCare) controlling hospitals and spending, and it’s eager to resurrect its dream of a full blown government takeover.

Next year the all-payer system is not likely to meet the five-year federal performance targets, notably a 3.5% per capita growth cap in costs with 70% of all Vermonters under OneCare’s control. Richard Slusky, who directed “payment reform” at the GMCB for six years, bemoans the lack of progress the state is making in getting all-payer to work.

In a major report last January, State Auditor Doug Hoffer found that “if [our] health care spending had increased at the same rate as the U.S. average, we would have spent roughly $1 billion less in 2018.” Per capita health expenditures were $9,076, 26% above the U.S. average. His report described this as “economically unsustainable.”

Meanwhile, medical provider concentration proceeds apace. Eighty-two percent of physicians and surgeons are now (2018) employed by hospitals, which can add “facility fees” to billings for their services to produce more income.

Auditor Hoffer was alarmed that “dominant firms — those that have significantly more market share than their next largest rival — can exploit their market power to charge higher prices, earn more revenue and capture economic surplus that would pass on to consumers in a more competitive marketplace.”

It’s perfectly clear that he is looking at the UVM Health Network, which is not only by far the biggest health care provider, but also effectively controls OneCare to protect itself against any efficiency initiatives that might threaten its patient revenue stream.

Last October Katie Jickling, VTDigger’s health care reporter, cited four avenues of “reform” under discussion. One is to institute universal “free” primary care — often proposed, but always found unaffordable. The second is to authorize GMCB to set hospital “global budgets,” leaving each hospital free to use the allowed revenues to provide care to the aligned patients.

The third is to merge the UVM Health Network with Blue Cross Blue Shield of Vermont, creating an integrated provider/insurer with no serious competition. The fourth is to patch up all-payer by somehow promoting more collaboration among the providers in deciding who does what and who gets how much money.

Here’s the key insight: every proposal since 2011, and every “reform” being debated by the “stakeholders” today, agrees that state government should increasingly regulate, mandate, cap, require and control the health care of 623,000 Vermonters. The end result of all of these “reform” plans will undoubtedly be that Holy Grail of completely government-run health care, where competition is illegal, the (unionized) bureaucracy proliferates, and everyone gets “appropriate care at the appropriate time in the appropriate setting” (per Vermont’s Act 48 of 2011).

What is pitiful about this ongoing policy debate is that it willfully ignores a demonstrably superior path of personal responsibility, informed patient choice, provider competition, price transparency, less third party payment, diminished regulation, liability restraint and outcome accountability.

You’ve never heard of any of that? It’s because few if any of the “stakeholders” in today’s health care policy arena, including legislators, have any interest in learning from the vast literature on the subject, and developing such a radically different model. Instead, they’re concerned about protecting their power, livelihoods, and piece of the $5.6 billion health care money pie, at the expense of their patients and their employers.

John McClaughry is vice president of the Ethan Allen Institute.

Images courtesy of Wikimedia Commons/Ken Teegardin and John McClaughry

3 thoughts on “McClaughry: It’s time to rethink failing health care policies

  1. Single Payer health Care, the Green Mountain Care Board, the All Payer health Care and One Care VT are all diversions designed to dupe the VT public into thinking something is being done to control outrageous health care costs. They only care about protecting the viability of favored health insurance companies and favored hospitals. They care nothing about affordable health care or people’s access to health care.

    • The All Payer Waiver Plan ,a first of its kind, five year long experiment, was predictably doomed to fail and as predicted is failing. The GMCB has no plan B. I foresee extending the doomed failing experiment another five years to see if it will eventually bring about the desired results. After all, we have spent so much time and money on this failure, it would be a shame to abandon it now when we have clear evidence it will never work.

  2. Get rid of the One Care Board and let other health insurance companies come into the state for competition! This stupid idea of the Board does not and will not work.. The five member really has no knowledge of medicine and should be ousted, paid to much too!

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