2006 Legislative Updates:

March 27, 2006

Senate: Tuesday, the Senate Finance and the Health and Welfare Committees reviewed the first draft of their version of H.861 (Health Care Affordability for Vermonters). Major components include:

• Provide Catamount Health to the uninsured.
• Mandate that everyone in Vermont is insured by 2010.
• Concur with the governor on use of employer sponsored insurance (ESI).
• Provide "hospital default insurance" to replace uncompensated care.
• Assess a fee on employers not offering insurance to their employees.
• Increase Medicaid reimbursements to Medicare levels plus 10%. -Reduce VHAP and Dr. Dynasaur premiums.
• Limit enrollments to Catamount Health if there are not sufficient funds.
• Use a cigarette tax increase and the tobacco settlement dollars to fund Catamount Health.

Wednesday: Ken Thorpe, a consultant to the legislature, addressed the full Senate and made recommendations for changes to the Senate draft. A major suggestion was to drop the Senate's proposal institutionalizing uncompensated care. Other recommendations include: reducing benefits in Catamount Health; using reinsurance to reduce premiums to enrollees and risk to the state; limiting the use of funding through the Global Commitment.

Thursday: CEOs and CFOs from nine regional hospitals testified before a joint meeting of the Senate Finance and the Health and Welfare Committees. Their main opposition was directed at the uncompensated care provision. Peter Hofstetter, CEO of Northwestern Medical Center and chair of the Vermont Association of Hospitals and Health Systems, said, "Vermont hospitals provided $78 million in charity care last year.... Right now, Medicaid is a growing worry for us .... Last year, hospitals absorbed a $16.5 million cut in Medicaid payments .... The continued cuts along with increases in the number of uninsured patients means we have to pass those losses onto employers and employees in order to maintain a margin.... It is important to recognize, that fundamentally, bad debt and charity care are not revenue (as the Senate has proposed)."

The Administration: During VPT's monthly "Report from Montpelier", Mike Smith, Secretary of Administration, repeatedly challenged Senator Leddy and Speaker Symington: "Let's go into the back room right now and make a deal." Neither took Smith up on that offer. Instead, they asked -- as they have done throughout the session -- for the administration's estimates for how many of the uninsured, in the governor's plan, would move from Medicaid to employer-sponsored insurance.

Governor Douglas continued to suggest he would veto any bill that contained new taxes. Many Statehouse observers believe that if the legislature tries to accommodate the governor too much the result will be bad public policy but if too little, the bill will be vetoed as it was last year.

House Health Care Committee: The committee continued to work on S. 310 (Common Sense Initiatives or CSI). So far, the committee has made minor language changes to the Senate bill.

Vermont Business for Social Responsibility (VBSR): Paul Millman, CEO of Chroma Technology Corp., and a VBSR member, testified before the Senate Health and Welfare Committee. Here is some of his testimony:

Millman: Chroma is a manufacturer of interference filters for the ultraviolet, visible and near-infrared portions of the spectrum. There are many benefits to being an employee-ownership corporation. They include the direct relationship between increased production levels, strong employee-owner commitment, and financial rewards. We started the business ten years ago and now have sales of $12m. We provide health care benefits to all our 80 employees. However, as premiums increase at double digits, we are finding it harder and harder to provide comprehensive health benefits.

Millman: In business, no one writes off bad debt -- it goes to the bottom line as less profit and is reflected in next year's price structure. The way the Senate wants to treat uncompensated care as revenue does not make good financial sense. All Vermonters deserve health care -- the only issue is how to pay for it. Making the employer responsible does economic harm since those dollars could go into growing the company. Chroma is a member of VBSR and the Vermont Roundtable. However, I dare not speak for the latter Roundtable ......."

Senator Jim Leddy (D - Chittenden): Oh, come on ........

Millman: .... but I will speak for many of the VBSR members. For us, the two most important actions the legislature could take are de-linking health care from employment and funding health care through a broad-based tax.

Senator Kevin Mullin (R - Rutland): When government gets involved, history shows, it creates gross inefficiencies, services are not cheaper, they are more expensive.

Millman: The most efficient, less costly provider of health care services is the hospitals run by the Veterans Administration. The trains in Europe are publicly run and are much better than the trains here. I never said health care should be a government-run program. However, government does have a role to play.

Senator Leddy: You might get the majority of this committee to support what you are saying if more businesses -- especially the Vermont Roundtable members -- were to come in here and say the same thing. We need them to say the current system is anti-business.

Millman: Roundtable members, in increasing numbers, are coming over to our side. However, they are still a minority. But all agree that the current system of health care is broken. We are in disagreement as to what to do. Just offering wellness programs is not enough. The Roundtable has not offered a comprehensive solution.

Senator Leddy: Speaking as an individual, I don't often hear that businesses agree with you."

Millman: That is why I am here to say you are in a difficult position trying to balance the needs of all the diverse interest groups. If you de-link health care from employment, everything else falls into place. Then, the logical conclusion is that financing must be through a broad-based tax. We don't need a complicated solution that you and I don't understand.

Unidentified members: (laughter)

Senator Mullin: Why should others work to cover health care for the unemployed?

Millman: I'm a capitalist. Our company is one of the ten fastest growing companies in Vermont. I'm not going to stop working and neither are our employees. We have experienced three cancers and one death -- our health care premiums have increased dramatically.

Senator Mullin: Do you think Marxism and capitalism are the same?

Millman: I never said that.

Senator Jeanette White (D - Windham): I agree with you that we need to de-link. The governor's plan passes on $45m of coverage to employers. The Vermont Roundtable is opposed -- they very clearly said to the governor that this is a hidden tax. He is a nice person but I don't think he has thought this through.

Senator Mullin: (inaudible)

Millman: I resent that.

Senator Mullin: That Peter Clavelle (ex-candidate for governor) rubbed off on the current governor?

Millman: Sorry, I thought you said Clavelle rubbed off on me. I promise you that if the legislature is not listening we will fill your halls with employers.

Senator Leddy: We have tough choices that reflect the diversity of interests. Thank you for your testimony.

Afterwards in the hallway outside the committee room: Duane Marsh, president of the Vermont Chamber of Commerce, said to Millman, "I appreciate your remarks but I completely disagree with you."

Week of April 3rd: The Senate Health and Welfare Committee is marking up the second draft of the Senate bill. Senator Leddy (D - Chittenden), committee chair, would like to vote the bill out of committee by the end of the week.

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Vermont Health Care for All would like to thank VPIRG for their generous support of the 2006 Legislative Updates. They are also available on the VPIRG website http://www.vpirg.org. They will be produced throughout the 2006 Legislative session by Paul Forlenza. Forlenza can be contacted at paul@forlenza.us or 802-453-3592.