Lawmakers at odds over health care reform funding

MIDDLEBURY — Local lawmakers and area health care providers will be closely monitoring the progress of a $20 million tax package designed to further Vermont’s health care reform effort.
Part of that $20 million in revenues — derived from taxes on sugar-sweetened and diet beverages, tobacco products and dietary supplements — would be used to increase Medicaid reimbursement rates to doctors and other service providers, some of whom are struggling to remain solvent.
The proposed tax of a half cent per 2 ounces of sweetened beverage appears to be stirring the most controversy, according to local lawmakers who addressed the issue at this spring’s final legislative breakfast, held Monday at the Congregational Church of Weybridge (see related story, this issue). That beverage tax was first pitched at 2 cents per ounce, but was pared back.
The overall $20 million revenue proposal, as of early this week, had yet to pass out of the House Appropriations Committee.
A member of that panel — Rep. Diane Lanpher, D-Vergennes — offered an overview of how the proposed beverage tax has evolved.
The House Health Care Committee, she said, had recommended that $50 million in revenue be raised to further the state’s health care reform efforts. But the House Ways and Means Committee decided on a funding package of $20 million. That package also calls for a 25-cent tax on tobacco, and extending sales tax to include dietary supplements, according to Lanpher.
The House Health Care Committee has now come forward with a revised list of health reform priorities based on a $20 million budget, instead of the $50 million it had hoped to have at its disposal. Those priorities include:
•  Increasing affordability and access to health insurance. Specifically, the committee is recommending sustaining current cost-sharing subsidies for Vermont Health Connect, and boosting subsidies for those earning between 200 to 300 percent of the federal poverty level. Also recommended: An increase in Medicaid reimbursement to primary care providers equal to what is reimbursed through Medicare rates,  increased Medicaid assistance for those seeking substances abuse services, and consumer access and representation through the state’s Office of Healthcare Advocate.
•  Strengthening Vermont’s primary care system by boosting investments in Vermont’s Blueprint for Health, providing loan repayment incentives to recruit more primary care physicians to the Green Mountain State, allocating one-time funding to study the feasibility of universal primary care, and prioritizing primary care Medicaid rate increase to 100 percent of Medicare rates.
•  Bending the health care cost curve by increasing investments in structural health care reforms designed to produce savings, including the transition from a fee-for-service based system to a quality, outcomes-based system.
Lanpher said many health care organizations statewide are anxious to see the Health Care Committee’s priorities enacted — particularly the additional resources for Medicaid reimbursement.
“Right now if you are wondering if this bill should pass, talk to someone from Addison County Home Health & Hospice (ACHH&H),” Lanpher said. “They would be in a panic if this doesn’t pass. Also, the Counseling Service of Addison County and your primary car providers. It is very important to them.”
Testimony on the bill continues. And the tax components of the bill continue to draw concerns. Lanpher said the beverage tax could be killed in the Senate or by Gov. Shumlin.
“So the path to this is unclear and it’s making our local health care providers very, very nervous,” Lanpher said.
It should be noted that the Shumlin administration had proposed a payroll tax to help generate more revenue for Medicaid reimbursement. But that proposal failed to gain traction.
Larry Goetschius, executive director of ACHH&H, confirmed the anxiety that he and his counterparts are feeling as they wait out the Legislature’s decision on Medicaid funding.
“We’ve been seven years with only one increase in Medicaid (reimbursement),” Goetschius said. “It’s been a real challenge.”
Medicaid reimburses ACHH&H around 60 cents on every dollar it actually costs to provide services to Medicaid clients, Goetschius noted. And unlike other health care providers, ACHH&H can’t make up the loss by recouping more from those covered by private insurance, Goetschius noted.
“We end up losing money on these services,” Goetschius said.
The ACHH&H remains solvent, Goetschius said, by operating as cost-efficiently as possible, by optimizing its financial return on services to Medicare patients, and by fundraising. Approximately 55 percent of the organization’s clients are recipients of Medicare (the program for senior citizens), while 38 percent rely on Medicaid (the program targeted for low-income citizens). The remainder either have private insurance or no insurance at all, according to Goetschius.
While news can change in the blink of an eye in the Statehouse, the prospects for the sweetened beverage tax were not looking good early this week.
Sen. Claire Ayer, D-Addison, is chairwoman of the Senate Health and Welfare Committee. She does not believe the proposed tax will get a lot of momentum in the state’s highest chamber.
“The sugar-sweetened beverage tax has not really been taken up, in the Senate yet,” Ayer said. “I can tell you that what I sense and hear is that there is not much will for it in the Senate; it’s kind of too bad.”
Reporter John Flowers is at [email protected].

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