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Wallack On Vermont's Goal: 'Universal, Affordable Coverage'

Jun 07, 2012

This interview is part of KHN's video series "Supreme Uncertainty: What's Next After The Court Rules," which solicits views from public officials and policy experts about the upcoming Supreme Court ruling on the health law and its implications for the future of health care.

KHN's Marilyn Werber Serafini talks to Anya Rader Wallack, tapped to move Vermont toward a single payer health care system, who is confident the state would enact its own individual mandate requiring people to buy insurance if the Supreme Court strikes down the federal mandate. Still, finding the money to replace the lost federal subsidies won't be easy. Wallack says, "We'll have to cover [people] without adding new resources to the system or raising taxes at the state level. Both of those are difficult for a little state."

Read an edited transcript of the interview:

ANYA RADER WALLACK:  If we need a mandate, then we can do that at the state level, but I think we could actually get to some pretty low numbers of uninsured without that.  If the court were to strike down the entire law, that's much more significant for us, mostly in terms of money.  There are significant resources [in the law]… we're looking at maximizing the use of the federal tax credits to cover Vermonters. 

If those tax credits aren't available, we either have to cover Vermonters without adding new resources to the system or raising taxes at the state level — both of those are difficult for a little state all on its own.  The tax credits are probably the most significant part of it, because that's really fundamental to our coverage plan, and we’ll have to figure out how to replace that if we don’t have those resources. 

There's also a lot of federal money that's coming into Vermont to do things like enhance or replace our enrollment and eligibility systems for Medicaid and use those as the infrastructure for the exchange. If we don’t have that money, that's a big hole in terms of the IT needs in particular at the state level.

MARILYN WERBER SERAFINI:  So how far exactly is Vermont going with or without the law?  I know it sounds like there's a money issue, and you’d have to come up with some money.  But assuming the money is there and the law is upheld, how far will Vermont go in the way of coverage?

ANYA RADER WALLACK:  We're pushing for full coverage for everybody in Vermont: universal, affordable coverage.  That's the governor's goal.  He’s actually pushing for public financing for that increment and moving with federal permission — which currently we can't get until 2017 — moving to a fully, publicly-funded system.  He intends to do that.  He has said that he won’t ask for Vermonters to move to a fully publicly-funded system until we’re successful with cost control and can demonstrate that we can constrain the cost growth in the system — so that’s where my job comes in. 

MARILYN WERBER SERAFINI:  Do you think that the health law, if upheld, helps on that front, with the cost containment?

ANYA RADER WALLACK:  It does in the sense that the kinds of initiatives that the Center for Medicare and Medicaid Innovation, CMMI, is pursuing and making possible in terms of moving away from fee-for-service is integral to our cost containment efforts.  If they are not able to pursue those because CMMI no longer exists, or there’s no demonstration authority, that would be a hindrance to us, because we really need to include Medicare in all of the things that we’re doing around payment reform and delivery system reform, which will be the basis for our cost containment.

MARILYN WERBER SERAFINI:  And last question, why do you think Vermont has been so successful in moving forward?  Is it a matter of politics and which party is in Vermont? 

ANYA RADER WALLACK:  There’s certainly politics involved. It’s certainly a friendlier environment for implementation of the ACA.  We see the ACA as complementing what we’re trying to do.  We want to go further than what the ACA did, but it is providing us with some important opportunities and resources to do that. 

Also, health care providers all across the country, to a great degree, are seeing that the world needs to change in order for them to have a sustainable financial model out into the future and in order for them to practice medicine the way they want to.  In Vermont we’re lucky to have an entirely non-profit health care system.  It’s a pretty simple system. We have fairly exclusive service territories for our providers.  We have two payers in the market, so not a lot of competition or complexity that you see in other states, and a pretty cooperative environment in terms of our providers and our payers coming to the table —  for decades on end now — advancing good public policy, like insurance reform, Medicaid expansions, and so forth that have been the underpinnings of what we’re trying to do now.

MARILYN WERBER SERAFINI:  Give us just one example of what a successful cost containment initiative that others should be watching in Vermont.

ANYA RADER WALLACK:  Like many states, we are pursuing accountable care organization-type arrangements with some of our providers.  So if we are successful on that front, I think that will be instructive for other states.  That’s not so novel, because a lot of states are already doing that.  Probably more novel is: We’re actually looking at implementing hospital global budgets with some of our smaller, more rural hospitals.  Maryland has done this, and we’re learning from their experience.

Essentially, for hospitals that are isolated, serve a real distinct population, have a stable payer mix, saying:  OK, instead of you having to worry about generating enough volume of service, adding services that bring in a really good margin, just worry about taking care of your community as best you can, and we’ll guarantee that these base services are paid for.  You’ll get checks on a regular basis instead of having to generate enough fee-for-service business to make your bottom line.  And I think that — particularly for rural states — that could be a real interesting model.

MARILYN WERBER SERAFINI:  And what kind of results are you seeing?

ANYA RADER WALLACK:   Well, we haven’t implemented it yet, so we’re right now in negotiations with providers.  Their next fiscal year begins Oct. 1, and we’re trying to get some examples of this in place by Oct. 1.

MARILYN WERBER SERAFINI:  And this is moving forward with or without the health law?

ANYA RADER WALLACK:   Right.

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