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A principled approach to health care reform in Vermont

First, do no harm. This simple phrase, attributed to the ancient Greek physician Hippocrates, represents a fundamental principle of the ethical practice of medicine. It was therefore both appropriate and encouraging to find this identical phrase and principle imbedded in the 2007 report published by the Vermont Commission on Health Care Reform in the section entitled "Reduce the Cost Shift". Their message was clear: we must avoid further increases in commercial health premiums and "cost shifting" resulting from Medicaid underpayments. Even as we in Vermont explore a wide-range of options and proposals to improve and reform our health care system, the Commissions report clearly states that it is imperative to be guided by the basic principleFirst, do no harm. Thus, it is understandable why hospital leaders throughout Vermont were dismayed to learn recently that the Administration is proposing to impose a 5.5% provider tax on hospitals this year with full knowledge that Federal payment limits will result in a $16 million shortfall to the states hospitals. Here in Addison County, Porter Hospital will be required to raise our rates more than $1 million next year to offset what amounts to a "hidden tax" on the cost of providing health care services to our community.Additionally, Porter will be forced to absorb a revenue shortfall of well over $100,000 during our current budget year. This budget was approved byour community board of directors last June, and by State regulators back in September. We have heard rhetoric in recent years that the Administration believes in "fair and sustainable" financing for hospitals and other health care providers. However, actions such as this undermine hospitals fundamental ability to care for our community. This hidden tax will add to the Medicaid cost shift for local employers who offer health insurance to their employees; thereby making health care insurance premiums even more unaffordable for many Vermont employers and Vermonters. For many years, hospitals have participated in the provider tax program, and the state has returned sufficient funds to hospitals to help meet the needs of low-income patients. Hospitals, through the Vermont Association of Hospitals and Health Systems Network Services Organization (VAHHS-NSO) also maintain a foundation that supports health care reform efforts. For example, hospitals receiving a payment in excess of their provider taxeshave donated the excess payment to the VAHHS-NSO non-profit foundation. For the past two years, 100% of these excess dollars have been used to help fund the Vermont Information Technology Leaders (VITL) and hospital patient safety and quality improvement efforts. All of this will be lost if this proposal to impose a 5.5% provider tax is implemented. The bottom line impact of this tax will be to leave a $16 million shortfall for our community hospitals to addresseither by cutting programs and staff,or increasing rates (and therefore insurance premiums and the cost-shift). In plain language, this is a significant tax increase levied on those who pay for hospital caremost notablyemployers who offer private healthinsurance coverage, andindividuals without any health insurance coverage. In addition to the financial burden on hospitals, businesses and individuals, $500,000 in VITL funding will disappear, thereby jeopardizing current statewide information technology initiatives. Assuming the provider tax continues on a yearly basis to exceed the Federal spending limits, this policy decision will effectively add millions of dollars of unreimbursed costs each year to hospital budgets. This fundamental departure from the long-established commitment to Vermont hospitals as it relates to the Provider Tax issue is simply bad policy. To make things worse, the quotein last week's Addison Independentfrom theDirector of the Office of Vermont HealthAccess (assuring usthat this unanticipated revenuedisaster will be addressed in future years) is simply not accurate. Clearly, difficult discussions must be had and tough decisions must be made, but let's begin with a candid and honest dialogue--not fuzzy math. Here is the real storythe Medicaid cost-shift in 2001 was $20 millionthe Medicaid cost-shift in 2008 is budgeted at $96 million. As we move forward, together, to reform our health care system and make the difficult decisions that must be made, we need to be guided by basic principles that will allow us to do so without undermining the very system we are trying to save. James L. Daily
President
Porter Medical Center
Middlebury

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