From the opening days of Gov. Peter Shumlin’s single payer health care initiative, House Speaker Shap Smith has been a rock-solid supporter of the campaign. In 2011, he delivered Act 48, arguably the most far-sighted health care reform blueprint in the country, by lining up his huge Democratic house majority behind it.
In the early weeks of the current legislative session, however, the tone in the Statehouse around health care reform has turned remarkably sour, raising questions partly about the details of the project itself, but mainly about the political management of it. In fact, the actual engineering of the Shumlin design is going quite well – but the political operation of it is a mess.
Smith is Exhibit A for this conclusion. In late January, the speaker hired a consultant to advise him and the Legislature on the whole progress of health care reform so far and to assess whether the state should adopt a single payer plan.
“Everybody agrees that we want to make sure that we have quality health care. We’re doing things to bring down the rate of growth for costs,” Smith told VPR’s Peter Hirschfeld recently. “And if we don’t have those two things, we don’t want to move ahead with the single payer.”
If taken at face value, this is a striking piece of commentary by the most important member of the Legislature. In other words, if the consultant finds in the next four months that the Vermont effort that has been underway since early 2011 isn’t good enough, then you give up on single payer? What does that mean?
Do you repeal Act 48? Do you leave the regulatory structure based on the Green Mountain Care Board in place? What about the extensive effort now underway to reorganize the whole delivery system and change the way providers are paid? Do you return the $45 million federal grant that is paying for that project?
In point of fact, Smith undoubtedly did not intend any such cataclysmic reading of the reform situation. The remarks to Hirschfeld were made in a brief, fast moving interview in a busy day. In the normal course of things, they wouldn’t have caused a ripple. But the course of things in the Legislature now is quite far from normal, and Smith’s comments clearly reflect that political reality.
Financing And Payment Reform
The underlying problem in the rhetoric that encompasses health care reform is how enormously complex and multifaceted the issue is. The term “single payer” is used to refer to the whole spaghetti ball, but in fact there is a whole cluster of issues that make up the whole.
The Green Mountain Care Board, for example, regulates hospital budgets, and some other issues such as benefit packages and insurance rates, which are two complex subject areas.
But the board is also the locus of an extraordinarily complex program that seeks to change the whole infrastructure of the health care delivery system, reworking the way that doctors and hospitals relate to one another – do they compete, or cooperate? – and, equally gnarly, how doctors and hospitals get paid.
At the same time, the health care reform office inside the governor’s suite on the fifth floor of the Pavilion Building in Montpelier has to figure out how to build a new state financing system that pulls together the money streams now paying for health care in the state. It also must design a system to shift a major piece of the money now going into the private insurance system to a state financing system.
Meanwhile, of course, Shumlin’s health services bureaucrats have to wrestle the federally financed insurance exchange into some semblance of competent operation. Referring to this policy cement mixer as “single payer” doesn’t really get at the entirety of the effort.
As Speaker of the Vermont House, Shap Smith has a relatively narrow, but vital, role in the reform plan. He knows perfectly well that the regulatory effort and the design work at the Green Mountain Care Board have to continue. Smith knows that you unless you get costs under control, no reform is possible.
There isn’t much he can do about the difficulties with the exchange; Shumlin himself has to manage that. What Smith has to worry about is ultimately one of the most intractable obstacles to reform: the need for the Legislature come up with a state-run, publicly financed mechanism for the new system. That bill is estimated at this point to run somewhere between $1.7 and a little over $2 billion.
Collateral Damage From Exchange
That number will exceed the entire general fund budget of Vermont. It’s not just a “big lift;” it is a gargantuan lift and it will take every ounce of skill that Smith has to get it passed. The financing bill is now scheduled to come into the Legislature a little less than a year from now, and the situation could be different then. But as of today, a bill of the single payer magnitude has little to no chance of passage. So, why is that true? How has the project gone off the rails? And what will it take to get it back on the rails?
The troubled rollout out of the federal health insurance exchange has to have been a major part of the problem. It wasn’t just that the rollout was a mess – it was that Shumlin and his team failed to inform the Legislature about what was going on. The inevitable outcome of a mistake like that is the loss of both trust and confidence that the Shumlin Administration can handle a huge, technically complex issue like single payer.
In his tenure to date, Smith has managed the House with a deft touch, but that political skill alone won't suffice. So Smith hired a consultant, Ken Thorpe, a health care economist from Emory University earlier this winter. It doesn’t cost much, and can be justified by the relative lack of staffing at the legislative level and by the need to help legislators frame questions and begin to learn the complexities of health care reform.
Of course, it makes sense that Smith would want a green eyeshade type to examine the cost of single payer as part of the Legislature’s due diligence. But the risk is that people will see Thorpe as some sort of a referee or a judge of the quality of the work done so far by the Shumlin designers. That risk was illuminated by Thorpe’s comments in the Statehouse shortly after he was hired.
Thorpe made two key points in his first presentation. First, he credited the Vermont Blueprint for Health for important help in bringing down the rate of health care inflation in the last few years. His second point was that the state has to get costs for chronic care under control or its reform efforts are doomed to failure.
Neither of these claims makes much sense. The Blueprint for Health, which essentially provides social service support for vulnerable sick people in a way that leverages the actual medical work done by doctors, is an interesting initiative and may be saving money, but there is no way that it begins to match the other forces that have been acting on health care inflation.
The most powerful of those was the 2008 great recession, which hammered down costs in Vermont just like it did all over the country. That was followed by two years of caps on Vermont health care cost inflation to rates that were half the historic trend. The Green Mountain Care Board’s mandated hospital budgets for the current fiscal year came to 2.7 percent, the lowest level of increase since the launch of Medicare and Medicaid in the mid-1960s.
As for the comments about chronic care, they were far more true 10 or 15 years or ago than they are now. Two of the very important issues in that arena are the management of diabetes and asthma. The essence of the problem with those diseases is that the patients themselves can manage much of the problem themselves – if they know how. If they do, that means they don’t have to rush to their doctor or to a hospital emergency room if they are having a problem.
This leads to another point: the underlying reason why doctors some years ago dragged their feet over solving this problem was that to the extent they succeeded, they also succeeded in reducing their incomes. No care, no payment.
Inflationary cost pressures suffuse the entire health care delivery system. There is no panacea – fix this one little glitch and the whole problem goes away. And even if you believe that the costs of chronic care are the key to everything, you still face the question of what to do about them.
If your analysis reaches that point, the answer that much of the health policy community now endorses is that you have to reorganize the delivery system and change the payment mechanism. The system has to be moved away from fee-for-service – no care, no payment. Instead, it should favor some sort of “capitated,” or fixed price per patient, mechanism that allows – or forces – doctors and hospitals to take financial risk for the system that they operate.
If this analysis is valid, then why would Smith bother to hire Thorpe in the first place? The reason can only be that the speaker can’t get what he needs from the Shumlin team, even though it exists there. And it isn’t mainly substance he can’t get: his house members don’t really trust what they do get from the Shumlin team.
As to what can be done about it, you can gain some insight into that question by considering two earlier “heavy lifts” that were successfully undertaken by Vermont legislatures.
One was the civil unions-gay marriage campaign; another was the passage of Act 60, which drastically reworked the way that Vermonters finance their public school systems.
Neither of these was actually as complex as the health reform project. For one thing, both the earlier “lifts” were driven by the lash of Vermont Supreme Court decisions that something had to be done. Another is that they were nowhere near as technically complex.
Still, their political management was illuminating. The civil union and gay marriage campaign that spanned some eight year was managed by two people primarily. The lead was Beth Robinson, a Middlebury attorney who also led a statewide advocacy group pressing for change. The second was Steve Kimbell, then a veteran lobbyist from the Montpelier-based firm Kimbell, Sherman and Ellis.
Whenever the issue was “live” in the Legislature, Robinson, who knew every detail of the relevant law, was there to deal with it. Kimbell, meanwhile, spent much of those eight years walking the halls of the statehouse with a checklist of names of every senator and representative in his pocket. He knew, every day, where the members stood.
If a Democratic representative, for example, began to get shaky about losing his seat, Kimbell could talk to one of the Democratic leaders and they would try to find a way to help encourage him or her to hold firm.
The “management” of the school issue was different superficially, but based on the same in principle. The real “manager” was Paul Cillo, a representative from Hardwick who was a member of the Ways and Means Committee, the linchpin for any tax issue. Cillo knew all the legislators, and moreover, had an encyclopedic grasp of the financing involved. Cillo could also respond instantly to a query from a legislator about how the new education funding plan would affect his or her town. And Cillo could also keep track of the running count of supporters and opponents of the bill.
Right now, the Shumlin Administration has no one person in the Statehouse directing the political strategy and messaging necessary to move the health care reform measure. The administration believes that they don’t need anyone like that because the Legislature doesn’t have to pass anything this year.
They are wrong about that. The fact is that opposition to and doubt about the Shumlin initiative are settling like a miasma over the Legislature. That doesn’t mean that single payer is doomed at this point, but it is clearly worse off than at any time since Shumlin launched his initiative. For evidence of that you don’t have to look any further than Shap Smith’s hiring of Thorpe. If that’s not enough, try sitting in on the House Ways and Means committee when it’s working on health care and take the temperature.
A reasonable conclusion from all this is that Shumlin needs to get a grip on the political management of his pet project – and he better do it sooner than later. He has some very strong players, but he has no quarterback.
Without one he is risking failure, because there has never been as heavy a lift as health care reform. And if this chance is lost, we won’t see another for at least a generation.