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Vermont’s pursuit of all-payer waiver sparks health care rationing debate

By   /   July 6, 2015  /   News  /   No Comments

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RATIONING?: Vermont’s move to obtain an “all-payer waiver” from the Centers for Medicare and Medicaid Services has some Vermonters worried the resulting payment model will harm Medicare and lead to rationing by health care providers.

By Emma Lamberton | Vermont Watchdog

With the Green Mountain Care Board seeking to transition Vermont into an all-payer health care system by 2017, one word continues to resurface in the discussion of Vermont’s health care future: rationing.

“If people mean taking choice away when they say rationing, then they’re right,” state Rep. Anne Donahue, R-Northfield, told Vermont Watchdog.

Donahue, a supporter of the all-payer waiver, believes limited government rationing makes sense in some cases, such as requiring health care providers to use less expensive generic drugs.

“If you did not have a choice and had to have the generic even though you wanted to pay more, is that rationing? No. (But) it would be controlling the decision making, which does mean taking choice away,” she said.

The idea of all-payer waiver is the remnant of Gov. Peter Shumlin’s single-payer hope shot down by the Legislature this past session. Vermont’s Green Mountain Care Board has begun negotiations with the federal government to obtain waivers that would hold Medicare and Medicaid to set payout rates and enable the Board to approve budgets of health care providers.

RELATED: Vermont’s Green Mountain Care Board presses feds for controversial all-payer waiver

While backers of the all-payer plan say waivers will help Vermont control health care costs and address the problem of underpayment by Medicare and Medicaid, critics argue the new system will lead to rationing.

Photo by Bruce Parker

LIMITED RATIONING WORKS: State Rep. Anne Donahue, R-Northfield, the ranking member of the House Health Care Committee, says limited government rationing is effective at controlling health care costs.

Donahue says rationing is already taking place.

“(Currently), you, the individual, don’t necessarily get to choose anything and everything you think you need for the best health care,” she said. “Insurance companies and the state require the use of generic (drugs) when they’re available rather than the big brand name. People still try to demand the brand name and try to pressure their doctors to prescribe the brand name even though the generic is available.”

Such decisions about care aren’t bad, Donahue said, even if the decisions aren’t what patients or doctors would choose.

An all-payer system can be implemented in multiple ways. One way is through the use of a global budget, as exemplified by Canada’s health care system.

In a 2012 report from the Montreal Economic Institute, economist Yanick Labrie described global budgeting for Quebec hospitals as “based essentially on amounts spent in the past.” According to Labrie, government decision makers increase spending amounts on an annual basis to account for rising costs of labor, drugs and medical equipment.

While Labrie says government decision makers view global budgets as “easy to administer and useful for reining in rising costs,” he offers a warning:

This cost control — which has not in fact prevented expenditures from rising — has historically come at the price of service rationing: given continually increasing demand, hospitals have had no choice but to limit admissions in order to stay within budget.

Photo courtesy of the state of Vermont

FEARS UNFOUNDED: Al Gobeille, chair of the Green Mountain Care Board, said an all-payer waiver does not mean Vermont controls federal Medicare funds.

Al Gobeille, chair of the Green Mountain Care Board, said Vermont has not determined how it will implement an all-payer system. However, some Medicare patients are concerned about giving the state control over the Medicare program. Gobeille dismisses those worries as unfounded.

“I think (this is) misunderstood that we could in any way collect the money into a state bucket,” Gobeille told Watchdog. “We can’t do that, and there has never been any conversation where we want to do so.”

Critics say while the all-payer waiver may not collect federal Medicare money “into a state bucket,” the state would gain some control over Medicare by setting payer rates and approving budgets for health care providers, leading to rationing.

Dr. Daniel McCauliffe, a private dermatologist at Rutland Skin Center, said rationing under Vermont’s all-payer system could go farther than limiting use of costly name brand drugs.

“Providers have to stay within the confines of (their) budget, and if they go over budget, the risk falls on them,” he said.

McCauliffe predicts a global budget system will automatically put physicians in the position of choosing between their patient and the state budget.

“If a patient comes in to see me, I’m trying to think about what’s best for the patient,” he said. “But under a global budget, dynamics change: this is an expensive patient, I can’t afford to take care of them, I’m going to lose money on this patient,” McCauliffe said.

“It’s a perverse incentive to ration care. It puts the providers in a moral dilemma in that, who are they working for? Am I working for the system trying to stay in the budget, or am I working to do what is best for my patient?”

The Canadian global budgets system is failing, according to a 2014 study on wait times by the Fraser Institute, a public policy research organization. The study found that Canadians seeking non-urgent surgical care were forced to wait an average of 4.5 months for care. These appointments included procedures like colonoscopies that are used as screening methods for diseases such as cancer.

“Other countries have done (the global budget), and it’s not working well,” McCauliffe said. “What happens with global budgets is that typically governments underfund the health care system. … Countries are moving away from single-payer, they’re moving away from global budgets.”

While Donahue could not cite examples of where global budget systems have been successful, she nevertheless maintained that health care costs need to go down, and the all-payer system is the way to do it.

“Does health care need to be managed differently? Yes. Does that mean people won’t always get what they want? Yes. Does that mean care is being rationed? No,” she said.

Contact Emma Lamberton at [email protected]


Emma Lamberton is Vermont Watchdog’s health care and Rutland area reporter. She has written for the Rutland Herald and Times Argus, two of Vermont’s largest newspapers, and her work has published in The Washington Times, FoxNews.com and a number of local Vermont newspapers. She is also a member of Investigative Reporters and Editors. Emma is always looking for new stories. Readers are encouraged to contact her with tips and story ideas.