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This commentary is by Mark Hage, director of benefit programs at Vermont-NEA.<\/em><\/p>\n This commentary is the last in a series that included pieces by Patrick Flood <\/a>and Julie Wasserman. <\/a>We linked arms to make the case that a more affordable and equitable health care system is within Vermont\u2019s reach.\u00a0<\/p>\n But we must act. We can\u2019t wait for the federal government, even as the debate on \u201cMedicare for All\u201d continues. It\u2019s our health care system \u2014 and it\u2019s failing us.<\/p>\n The Vermont Department of Health\u2019s 2021 Household Health Insurance Survey<\/a> tells us:<\/p>\n What can Vermont do now to lower health care costs? And how can we strengthen community-based care practices in local communities and provide predictable funding to hospitals?<\/p>\n Building on the contributions of my colleagues, I propose these reforms:<\/p>\n A global budget is a publicly regulated system of funding that disburses fixed payments to cover a hospital\u2019s prospective costs for a designated population area in any given year. It is a model used commonly across the world.<\/p>\n The primary goal of global budgets is rational planning, with reasonable financial controls, to provide stable amounts of revenue and to optimize the delivery of essential services. The development of these budgets is based on several factors: previous expenditures, financial management, clinical outcomes, projected changes in levels of services, labor costs, administrative expenses, and proposed new programs.\u00a0<\/p>\n Global budgets can also establish the same prices for the same services (they vary wildly today).\u00a0<\/p>\n In a paper<\/a> published by the Commonwealth Fund this year, Robert Murray<\/a>, an expert in health care reimbursement systems, discusses both fixed and variable global budgets. He characterizes global budgets generally as having \u201cgreat potential for controlling overall costs, including by containing or reducing unnecessary hospital services.\u201d\u00a0<\/p>\n Global budgets, he argues, can also promote investments in programs that better coordinate hospital care with primary care doctors and expand access to early intervention for patients with chronic illnesses. Murray asserts further that global budgets can require \u201ca minimum of regulatory complexity to implement and enforce.\u201d\u00a0\u00a0<\/p>\n As Vermont\u2019s global budgeting system is being developed, I propose we bridge to it with a model of reference-based pricing benchmarked to Medicare rates. This means hospitals would be paid for services based on a multiplier of what Medicare pays.<\/p>\n In 2017, Montana implemented reference-based pricing benchmarked to Medicare rates for hospital services for its 31,000 state employees and their dependents. No hospitals were shuttered in the aftermath, and cost savings were impressive:<\/p>\n Other states<\/a>, in their fashion, have followed Montana\u2019s lead.<\/p>\n Revenue spent now on low-value care, emergency room overutilization, and potentially avoidable hospital services should be invested in rebuilding community-based care practices staffed by well-paid providers.\u00a0<\/p>\n The state must also make an enduring commitment to resolve critical workforce shortages in primary care, nursing, mental health and home health. That we have allowed their ranks to become depleted and overextended is a severe indictment of those who administer our health care system and of OneCare Vermont, the state\u2019s failing accountable care organization.\u00a0<\/p>\n Nearly one in four Americans<\/a> report not taking their medications because of cost. Yet, from 2016 to 2020, 14 major drug companies spent $577 billion on stock buybacks and dividends<\/a> \u2014 $56 billion more than they invested in research and development over the same span of time.\u00a0<\/p>\n Facts like these led Maryland in 2019 to establish the first Prescription Drug Affordability Board, a public body of clinical and health economic experts charged with \u201cprotecting Marylanders<\/a> and the Maryland health care system from the high costs of prescription drug products.\u201d<\/p>\n Other states<\/a> have since followed Maryland\u2019s example. Vermont should be next.\u00a0<\/p>\n Patrick Flood recommended we start funding the revitalization of community-based care with money from OneCare Vermont\u2019s budget. I agree. This infusion of revenue will jumpstart a larger transformation process that will pursue systemic cost savings and efficiencies of care through rational planning and pricing through global budgeting.<\/p>\n Vermont has spent approximately $80 million on OneCare\u2019s administrative costs since its inception, with $15.4 million approved in fiscal year 2022.\u00a0<\/p>\n Most of us, though, have no idea what OneCare is or why it exists, as it provides no direct care to patients. Since it launched in 2014, the number of underinsured Vermonters with private insurance has jumped by 17 percent (27 to 44 percent<\/a>) and state health care spending increased from $5.5 billion<\/a> (2014) to $6.8 billion<\/a> (2020).<\/p>\n The Green Mountain Care Board should develop a multiyear plan that would redirect OneCare\u2019s administrative revenue to these purposes:\u00a0<\/p>\n The Green Mountain Care Board\u2019s redistribution of OneCare funds should be informed by a task force of representatives from community-based care practices, hospitals, employers and unions, state colleges, and organizations committed to advancing health care affordability, equity, and anti-discrimination protections.\u00a0<\/p>\n It is in our power to rebalance the scales of hospital and community-based care and to restructure the integration of their missions.\u00a0<\/p>\n By necessity, this means bringing more rationality and accountability to hospital prices and expenditures with global budgets. It also requires eliminating or curtailing surplus accumulation by hospitals and reducing the volume of practices that land people in emergency rooms and hospital beds.<\/p>\n Finally, the state must compel the pharmaceutical industry to negotiate lower prices.\u00a0<\/p>\n These objectives are achievable with legislative will, regulatory resolve, and public support.<\/p>\n <\/p>\n \t\t\t\t<\/p>\n <\/p>\n Our journalism is made possible by member donations from readers like you. If you value what we do, please contribute during our annual fund drive and send 10 meals to the Vermont Foodbank when you do. <\/p>\n<\/p><\/div>\n <\/p>\n \t<\/p>\n\n
A modest path of reform<\/h2>\n
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Global budgets for hospitals<\/h2>\n
Reference-based pricing<\/h2>\n
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Rebuild and respect community-based care\u00a0<\/h2>\n
Prescription Drug Affordability Board<\/h2>\n
Funding reform<\/h2>\n
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Let\u2019s move forward<\/h2>\n
Did you know VTDigger is a nonprofit?<\/h2>\n