8-24-15 – Health Care In Vermont: The Overruns Strike Back

by Chris Campion

Several years ago, when Peter Shumlin and a crowd of adoring sycophants raised their tiny, shrill voices in a chorus of acclaim for single-payer in Vermont, a few people were raising their hands and asking questions about how to pay for it, regardless of the merits of a single-payer system itself.  Those people who had the temerity to ask impertinent questions were routinely shouted down, and found themselves in league with those awful people who wanted to shove Grandma off a cliff.

As the reality of the single-payer implementation materialized, even Shumlin had to finally concede that there was, indeed, no way to pay for it.  He delayed his plan to finance single-payer, and only released the plan after his last election, which he won by only a few thousand votes, over a last-minute challenger who had little to no campaign funding and support behind him.  Then, well past the November election, Shumlin announced single-payer was dead in December 2014, and finally presented his financing plan as evidence of its death, almost 2 years after he was mandated to do so.

So what’s happening now with Vermont’s defective “single” payer website?  The administrative costs are ongoing, and going up, well beyond the scope of what was originally promised to not cost Vermonters anything.  From VT Digger:

The Shumlin administration has placed a partial dollar amount on state staff costs stemming from manual processes and workarounds associated with Vermont Health Connect’s messy open enrollment period earlier this year.

The amount? $800,000 per month. That’s for the costs incurred for “staff augmentation” needed to process renewals manually “this winter and spring,” according to Vermont Health Connect spokesman Sean Sheehan.

The renewal and open enrollment period was from November 2014 to March 2015, which would mean the state paid at least $4 million to work around the incomplete IT system.

“Staff augmentation” is code for “additional unanticipated payroll spending for a website that was promised to work easily for all Vermonters at no additional cost to Vermonters, because it would be paid for by federal monies.”  As it turns out, implementing your own version of an exchange website is expensive, will incur costs not anticipated in the original scope, and will impact Vermont’s overall state budget negatively when it’s already operating on razor-thin margins.

So another $4 million is paid out of pocket to process routine, standard, run-of-the-mill changes made to health care plans that used to be done entirely outside of the state’s control.  Now, in order to provide health care to Vermonters, these changes are now being ably handled by the same people who once said it wouldn’t increase the budget by a dime, and would, in fact, save money.

This is a failed project, by any project management standard.  The scope, cost and schedule have all slipped, multiple times, and there is no solid date in place for recovery, nor any kind of a finalized recovery plan.  In fact, a large-scale IT project that switches software vendors in the middle of the project is an air-horn klaxon-esque indicator that the requisite requirements work was not done up front, which is what any project manager knows is critical to success.  The state cannot escape the triple constraint any more than it can escape the reality of gravity, or, apparently, the reality of Vermont’s politics.

Vermont Health Connect’s implementation was a political vehicle for Shumlin, not a project to actually provide health care.  Even if you issued every Vermonter an insurance card, magically, insurance that was paid for out of a unicorn’s lockbox of gold coins hidden deep in a cave in Buel’s Gore, that in itself does not provide one second’s worth of health care to any Vermonter.  It is access to health care, not an insurance card, that should determine whether or not Vermonters have what Peter Shumlin has called a “right” to health care.

Vermonters have access to health care.  They had it before the state decided to spend several hundred million dollars failing to create a website.  The mix of payers was available to every Vermonter, regardless of income level – commercial insurance, Medicare, Medicaid, VHAP, etc – every Vermonter had access to one of the payers, and had access to care.

The website itself is meaningless.  It’s just an enrollment vehicle, and even in that it fails.  It also fails because it’s not integrated with Medicare, or military health plans, and can’t handle plan changes without laying out hundreds of thousands of dollars in additional spending, monthly, to process the changes manually.

Would health care costs decrease if the dollars spent to implement a website were spent on care instead?  If we spend $200 million on a website, and the state’s largest hospital’s budget is $1 billion (in net patient revenues), then Shumlin threw 1/5 of a year’s worth of budget away on an unneeded failure.

As Shumlin’s own website states, he’s “determined” to get tough things done:

As Governor, Peter is determined to get tough things done. Since his inauguration, he has been working hard to create jobs for those who need them and raise incomes for those who have jobs, control skyrocketing health care costs, expand broadband and cell service to every corner of the state, reduce recidivism, invest in quality education opportunities, and rebuild our roads and bridges. Taken together, these and other key goals represent an ambitious agenda to create a brighter economic future for Vermonters. 

I guess Shumlin’s definition of “control” means something entirely different to him than it does for the rest of us.  If anything, Shumlin increased the cost of health care, by:

  1. By deciding to create a Vermont version of a health care enrollment website when the federal version was available, he’s incurring millions in additional costs in the creation, maintenance, and manual support required to keep the site operational.
  2. Increased the financial reporting and regulatory compliance burdens on all the state’s hospitals, which in part means additional staff hours required to maintain unique budget reporting to the Green Mountain Health Care Board.

Not one of the things done by the Shumlin administration has provided care to a Vermonter that needs it.  Not one thing.  And instead of getting tough things done, Shumlin is now quitting the office, and the Vermonters he was so “determined” to help.  While the Green Mountain Care Board awarded Blue Cross/Blue Shield a 5.9% increase, this was lower than the request rate increase of 8.6%, which will mean that there may or may not be monies available for reimbursement at the lower, approved rate.  Kind of like how Medicare only reimburses a certain dollar amount for any procedure, regardless of actual hospital costs.

It turns out that helping himself to a several governorships was Shumlin’s most successful achievement, considering that all of his determination has not changed the reality on the ground that hospitals, insurers, and patients have to live with, on a daily basis.

{ 2 comments… read them below or add one }

Valerie Mullin August 25, 2015 at 12:14 am

How sad to think about how much free health care could be given instead of $800,000. per month going to paper pushers trying to fix mistakes which are never ending.

Reply

Diane Wheeler August 25, 2015 at 10:17 am

Anytime the government becomes involved in ANYTHING..it costs the taxpayers more money and is usually worse than what it was before government involvement.

Reply

Leave a Comment

Previous post:

Next post:

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
Read more...

Latest News

VT Left Wing Media Bias Unmasks Itself

July 24, 2020 By Rob Roper Dave Gram was a long time reporter for the Associated Press, is currently the host of what’s billed on WDEV as a...

Using Guns for Self Defense – 3 Recent Examples

July 24, 2020 By John McClaughry  The Heritage Foundation’s Daily Signal last week published eleven news stories about citizens using a firearm to stop a crime. Here are...

FERC ruling on solar subsidies could help Vermont ratepayers

July 21, 2020 By John McClaughry Last Thursday, the Federal Energy Regulatory Commission finalized its updates to the Public Utility Regulatory Policies Act (PURPA), in what the majority...

The Moderate Left’s Stand for Free Speech

July 17, 2020 By David Flemming Harper’s Magazine, a long-running monthly magazine of literature, politics, culture, finance, and the arts, is hardly what you would call a ‘politically...

Trump’s Regulatory Bill of Rights

July 16, 2020 by John McClaughry “President Trump [last May] issued an executive order entitled  ‘Regulatory Relief to Support Economic Recovery.’ The executive order includes a regulatory bill...

Video