Will the Governor’s Budget Proposal Impact Health Locally?

Yes, it will, potentially in a variety of ways. On January 15th, Governor Shumlin delivered a lengthy and wide-ranging annual budget address to the Vermont Legislature. In it, he announced his proposals for the coming year, some of them specifically relating to healthcare. We are currently working to better understand the various aspects which relate to healthcare and their impact on care in our community, our patients, the providers who deliver that care, and organizations like NMC.

I am glad the Governor spoke to healthcare in his address, as this serves as the start of what will likely be robust discussions during this Legislative Session about how best to move forward towards an improved healthcare system in Vermont. There are a number of facets of his proposal which I would like to discuss. There will not be space to do all of them detailed justice in this column, so I will start with an overview of my immediate reactions and questions on some of them. In future columns and through other venues, I will go into greater detail on specific recommendations from the Governor and on related recommendations from others as the discussions progress in Montpelier.

The Governor proposed “accelerating the hard work we’ve begun on cost containment and more rational ways to pay providers.” That is promising on the surface. Doing so strategically could help us move away from “fee for service”, where providers are paid for each test or treatment they deliver, towards a reformed approach where providers are paid for keeping people healthy. An approach of that nature, carefully thought through and properly implemented, could keep our providers sustainable in our community and allow for even more focus on population health.

The Governor proposed achieving $15 million in cost savings, saying “state government must address ways to be more efficient.” While that might sound promising, cuts in the wrong areas could prove to be counter-productive. Initial media reports say that this includes the funding for important prevention work being done in our community relating to obesity and tobacco. That is very concerning. Cutting efforts designed to increase physical activity and improve nutrition is not the path towards a healthier population. In fact, reduced prevention can lead to higher healthcare costs.

The Governor proposed reducing health care premiums by increasing Medicaid payments to providers. It has been explained that “The Medicaid cost-shift occurs when Vermonters buy private insurance (such as from Blue Cross and Blue Shield of Vermont) at higher rates to make up for payment shortfalls in the rates Medicaid pays to providers.” This holds great promise, as the failure of Medicaid to properly reimburse providers for the care provided to its enrollees artificially inflates the charges and premiums for those with commercial insurance. The Governor also proposed a 0.7% payroll tax to generate the revenue to reduce the cost shift. That will require significant review and discussion to ensure it is the right mechanism and does not begin to address one problem while creating others. Employers will need to know whether the payroll tax on their business will be smaller than, equal to, or larger than the savings they will see from the reduction in the cost shift. It is important that we understand the impact.

Clearly, there will need to be much thought and conversation invested in these topics and the other proposals the Governor raised, including increasing the Vermont Blueprint for Health payments to Primary Care and strengthening the authority of the Green Mountain Care Board. I look forward to addressing them in great detail in future columns and in other forums so you can have a better understanding of how I see them potentially impacting our health and the healthcare in our community.

These are crucial conversations for our community. Please join me in being actively involved in learning about them, considering all aspects of each, and providing feedback to our elected officials. By working together, we can find the right path for Vermont that leads us towards better personal and economic health.

— Jill Berry Bowen, NMC’s Chief Executive Officer