WEYBRIDGE — Local lawmakers on Monday cited the so-called “provider tax” as a prime reason the state should scrap the current health care system and adopt a single-payer plan.
The House recently passed an increase in the provider tax that is assessed to hospitals, home health care agencies and other providers. It has now been extended to third-party health insurance claims.
Rep. David Sharpe, D-Bristol, is a member of the House Ways and Means Committee. He explained, tongue-in-cheek, that the provider tax on Medicaid expenses was established as a “magic money machine” through which hospitals were sent back $1.60 for every dollar they paid under the assessment.
But Sharpe said the provider tax is now just adding to hospitals’ financial woes because the federal Medicaid program is falling so short of paying for itself.
Rep. Michael Fisher, D-Lincoln, said the provider tax currently pays for around one-fourth ($250,000) of the state’s Medicaid budget.
It is a tax only used in a few states, according to Rep. Harvey Smith, R-New Haven, and is a funding mechanism the federal government wants to stop.
“The feds want to back out of it, creating a bigger problem for states like Vermont,” Smith said during Monday’s legislative breakfast at the Weybridge Congregational Church.
Porter Hospital spokesman Ron Hallman said the provider tax has created a $2 million hole in the institution’s budget.
“It is a long-term structural problem that has created a big (financial) hole in the state of Vermont, and the hole has trickled down to providers and it has trickled down to citizens,” Hallman said.
Budgetary concerns forced Porter to eliminate its Chaplaincy program about two months ago. And last month, the hospital cut its department of community health outreach, resulting in another five layoffs.
“These are real human consequences,” Hallman said. “We’re doing our best to tighten our belts and to make smart choices and changes, but there is no way around it, that this growing deficit cannot be passed on to you all as consumers and can’t be passed on through our insurance rates. We have to find a way to reduce our expenses, and unfortunately, we’re a business where almost all our expenses are people.
“Hopefully, we will make it to 2014 or 2017,” he added. “I don’t know.”
Rep. Willem Jewett, D-Ripton said he hopes Congress adopts budget policies that don’t foist more financial hardships on the individual states.
“What happens in Washington comes rolling into our budget and into our communities,” Jewett said.
He echoed concerns by U.S. Rep. Peter Welch, D-Vt., that the current U.S. House spending proposal places “100 percent of the solution on just 12 percent of the budget.” Much of that 12 percent piece of the budget consists of federal programs that are delivered through the states.
“Roughly one-third of the dollars in Vermont’s $4.7 billion budget are federal,” Jewett said. “When the numbers drift away, we can’t backfill those holes.
“We need to place our trust in the (U.S.) Senate and hope that some rationality reigns in Washington,” Jewett said.
Meanwhile, the Vermont Senate is poised this week to receive H.202, legislation that lays the groundwork for a single-payer health care system.
The bill has already passed the House and last week was voted out of the Senate Health and Welfare Committee, chaired by Sen. Claire Ayer, D-Weybridge.
If the bill becomes law, state officials will appoint a Green Mountain Care Board that will look into the logistics of setting up a single-payer system in Vermont. Then the state will establish an “insurance exchange,” as required by the federal government. By 2015, the state will apply for a waiver from the insurance exchange “as a pivot point on which to move to single-payer,” Ayer said.
“It is a multi-year process and there are checkpoints along the way,” Ayer said. A lot of things need to fall into place for the plan to work. I believe it will, but we have to see the numbers first.”
 
Other discussion at Monday’s legislative breakfast keyed on:
• The rough condition of the state’s roads and bridges in the aftermath of this past brutal winter.
“We are going to have a brand new, shiny (Champlain) Bridge, but it will stay that way because no one is going to be able to get to it,” Rep. Diane Lanpher, D-Vergennes, quipped about badly pocked Route 17 and other county roads that are scarred from the effects of freezing and thawing.
Lanpher lamented the fact that only $77 million has been budgeted statewide for road paving this year, a substantial reduction from the $93 million available last year, thanks to last year’s federal stimulus money as approved by Congress and the president to jump-start the economy after the worst recession since the Great Depression in the 1930s.
She explained that paving has not yet begun because the weather has not warmed to a point where asphalt plants can open.
“A lot of the patching going on out there is ‘cold patching,’” Lanpher said.
She encouraged community members to inform their town officials and the Addison County Regional Planning Commission about pressing road and bridge projects, so that those regional priorities can be passed on the Legislature for state funding.
• Legislative bill H.97, which proposes to create an advocacy group for child care providers to lobby for better education programs and wages for caregivers.
“It allows this group of people to work together to have a stronger advocacy voice to deal with decades of underpayment for child care providers,” said Rep. Michael Fisher, D-Lincoln. “Child care providers have not particularly had a strong voice.”
Bill H.97 is currently in the House General House and Military Affairs Committee, of which Smith is a member. Smith said that the issue has stirred some controversy, noting that some of the organizers of H.97 apparently identified as supporters some citizens who simply wanted to be kept abreast of the legislation by e-mail.
“I have heard more on this issue than any other issue up there,” Smith said. “It is a very difficult issue.”
He said H.97 could set up a system where, for the first time in the nation, an employer and an employee were sitting in the same bargaining unit. That’s because the group created by H.97 would be asked to speak on behalf of large child care centers as well as individual home-based providers.
• The ongoing debate on how to replace the Vermont State Hospital in Waterbury. The Vermont House passed a capital bill that included $482,000 to study the feasibility of replacing the state hospital with a facility at, or near, the Central Vermont Medical Center (CVMC) in Berlin.
“There has been plan after plan after plan to replace the state hospital, and they have all fallen away ultimately in disagreement about details and because we haven’t put the money behind it,” Fisher said.
He added he supports the latest plan, but he cautioned, “We’re going to have to come up with the money for it.”
• The nuclear plant breaches at the Fukushima nuclear power plant in Japan that resulted from the earthquake and tsunami. Addison resident John Ball voiced concern about the extent to which nuclear fallout is reaching the United States and the resulting potential of food contamination.
Jewett said the Vermont Health Department is doing air monitoring to determine whether the state is at risk.
“I understand that when the nuclear age started, there were plenty of promises — free power and a safe world, etc.,” he said. “After Chernobyl, people questioned the promises.”
He added the questions surrounding Vernon-based Vermont Yankee (VY) are much greater now, in the aftermath of Japan’s growing nuclear disaster.
He said the fuel pool at VY has 640 tons of spent nuclear fuel. Jewett said the total spent fuel at risk at the Fukushima reactor is “a fraction of that 640 tons.”
• Recommendations of Vermont’ Blue Ribbon Tax Commission. Sharpe said the commission’s report included two major recommendations: To extend the sales tax to now-exempt goods and services in a manner that would allow the state to reduce the overall tax from the current 6 percent to 4.5 percent; and to use the “adjusted gross income (AGI)” as the base for taxing income in the state of Vermont.
Sharpe said a move to the AGI calculation would expand the income tax base from the current $10 billion to $15 billion.
“The devil is in the details,” Sharpe said, noting there has been “tremendous push-back” on the idea from the mortgage-related community — residential and commercial Realtors, in particular.
“They feel the move to AGI would remove all itemized deductions, and the itemized deduction that the Realtors are objecting to (changing) is the one related to mortgage interest,” Sharpe said.
On the other hand, Sharpe said he and a majority of his colleagues believed that reducing Vermont’s sales tax to 4.5 percent would not provide enough of an incentive for shoppers to stay in Vermont instead of going into New Hampshire (which has no sales tax).
“That was pretty much dead on arrival,” Sharpe said.
• Cigarette tax.
The House recommended raising the cigarette tax by 27 cents, while the Senate has proposed raising it by $1, according to Sharpe. The two recommendations will need to be sorted out in conference committee with a figure “probably somewhere in between the two areas,” Sharpe said.
Sharpe said evidence indicates that a rise in tobacco taxes will simply send smokers across the border into New Hampshire, or to their computers to buy their supplies through the Internet.
Reporter John Flowers is at [email protected].