Overview of H. 202: The Vermont Health Reform Bill of 2011 Anya Rader Wallack, Ph.D. Special Assistant to the Governor for Health Reform May 12, 2011

Why now? Without cost control health care costs will continue to vastly outstrip economic growth Costs are not spread fairly – fall disproportionately on private sector and within private sector on small business More than 200,000 Vermonters are uninsured or underinsured* We don’t get the best value for our $$ The federal health care reform law provides critical federal funds to help *Underinsured = deductibles exceed 5% of family’s income AND/OR total health care expenses exceed 10% of family income (5% if income below 200% of FPL). 2

Health care eats up more of every dollar we earn each year 3

Three major components of the bill Vermont Health Reform Board (to control health care cost growth) Vermont Health Benefit Exchange (to reform health insurance purchasing and administration, consistent with federal law) Green Mountain Care (to plan for and implement a single payer) 4

First major component: Vermont Health Reform Board Payment reform at all levels – primary care, specialty care, hospital care Applies to all payers Incorporates Blueprint (patient-centered medical home) Overall budgeting with a reasonable rate of growth Eliminates cost-shifting Eventually has oversight of benefits and total system budget Comprehensive data systems, adequate staffing and expert analysis 5

Why is payment reform necessary? Fee-for-service does not control costs and actually creates an incentive to generate a greater volume of services Board will design payment models that move away from fee-for-service and toward budgeting – providers get fair payment from all payers with a rate of growth we can afford 6

Fee-for- service Bundled payments Shared risk Capitated or global payment models COST = PRICE X USE LESS INCENTIVE TO MANAGE USE MORE INCENTIVE TO MANAGE USE (BUT GREATER NEED TO MONITOR QUALITY) 7

Second Major Component: a “Health Benefit Exchange” A mechanism for purchasing health insurance (at a minimum a website) Simplifies shopping – like Expedia Standardizes insurance options “Qualifies” health plans Administers new federal tax credits Provides guidance and quality ratings to people shopping 8

9

10 For individuals (no employer “sponsor”)

Why do we need an Exchange? Individual tax credits are available only through the Exchange Funds to design and build the Exchange and revamp our eligibility, enrollment and claims processing for Medicaid to serve a larger population Reduced complexity of insurance purchasing Potential for single claims processing mechanism 11

Open questions about the Exchange Choice of participation in the Exchange – is it voluntary or mandatory? If mandatory, for what groups (50 versus 100)? What is sold outside the Exchange? Need more info on impact of federal law and impact of these choices 12

Third major component: Green Mountain Care (single payer) Occurs after Affordable Care Act waiver (2017 under current law) and other requirements are met All Vermonters covered by virtue of residency Minimum benefits set by board Overall budget set by board subject to legislative appropriations 13

What about the financing? The bill requires that we bring back to the legislature two financing plans: one with continued private premiums, one with all public financing Financing must maximize federal funds and spread costs fairly Many issues to be resolved: –What will the overall costs/savings be? –How much federal $ will we get? –How do we deal with border issues? –How are public and private coverage integrated? –How do we incorporate ERISA plans? 14

Why single payer? Single payer will save the most and will be simplest for patients, providers and employers Single payer will allow us to maximize: –Administrative savings –Efficiency in the health care system – clear incentives and rules for providers –Simplicity –Security (change of circumstances ≠ change of coverage) –Population health – much easier to make decisions about investments in health –Single payer allows for maximum reinvestment of savings in things we value – better coverage, other public investments, reduced costs to taxpayers 15

What now? Bill signing May 26 Lots of work on implementation Getting data and guidance ready for the board Designing the Exchange Researching outstanding questions Appointment of Green Mountain Care Board October Several more years of work before we are done! 16