• Health care reform faces next challenge
     | May 18,2005

    MONTPELIER The Democrat-controlled Senate Tuesday gave preliminary approval to a health care reform proposal that differs significantly from a House plan and is not favored by the governor.

    Once the Senate gives final approval, which is expected today, the three sides will meet to forge a compromise. Talks are expected to be long and protracted, with negotiations often taking place behind closed doors.

    The debate is expected to last until the Legislature adjourns in early June.

    Doctors, insurance executives, health-care advocates, business leaders and hospital officials listened to the Senate's nearly five-hour debate. All agreed Vermont's $3.5 billion health care system needs reform or the state's uninsured estimated at 63,000 will grow.

    "I just hope we end up in a place where the administration and the Legislature come up with a thoughtful compromise that takes meaningful steps towards health care reform," said Beatrice Grause, director of the Vermont Association of Hospitals and Health Systems.

    The Senate bill would provide primary care coverage to the uninsured by July 2006 and calls for hospital coverage for all Vermonters by mid 2009.

    Hospital coverage, however, will start only if a series of cost-containment measures begin reducing health care's double-digit inflation rate and a series of economic studies show services can be provided without harming the state's economy.

    The vote was 21-6 with two of the Senate's nine Republicans voting in favor. Sen. Vincent Illuzzi, R-Essex/Orleans, and Sen. Phil Scott, R-Washington, voted for the bill. Sen. Diane Snelling, R-Chittenden, was absent.

    Many Republicans dislike the plan's call for an estimated 3 percent payroll tax on businesses that do not provide health benefits and on workers who do not have health insurance.

    They attempted to derail the tax scheme, claiming it was improper because the House's health care bill does not include a revenue source it only calls for a study and the Vermont Constitution says all revenue bills must begin in the House.

    Lt. Gov Brian Dubie, a Republican who chairs the Senate, ruled the tax was unconstitutional but senators overrode his decision.

    All Democrats voted to override.

    Republicans today are expected to try to replace the payroll tax with a 3 percent premium tax on health plans offered by private companies like MVP Health Care and Blue Cross Blue Shield, a scheme supported by Gov. James Douglas.

    Democrats said they will reject the amendment, which is expected to include other elements of the governor's health care plan, because it taxes the insured to pay for the uninsured.

    Sen. Mark Shepard, R-Bennington, believes the Senate proposal is the first step toward establishing a single-payer system. He is expected today to offer about a dozen provisions to change the bill.

    Nothing in the Democrats' proposal prevents employers from discontinuing private insurance in favor of the government-run plan, Shepard said. As the plan adds benefits and becomes more attractive businesses will migrate, he said.

    "Eventually you will break the commercial market and the government will be providing everyone's health care," he said. "That will increase taxes a huge amount."

    Some of his amendments are designed to keep insurance coverage the domain of private industry, Shepard said. None are expected to pass.

    Democrats said the state can initially afford primary and preventive coverage for the uninsured. Economic studies will tell lawmakers when government-sponsored coverage can expand, they said.

    "What we tried to craft is a first step," said Sen. Ann Cummings, D-Washington. "We will have to work things through before it will be a universally comprehensive system."

    Vermont's uninsured are broken into two categories: 35,000 who lack any kind of insurance and 27,000 who qualify for Medicaid but have not enrolled.

    The bill's primary care package estimated to cost $1,500 per person will be available to all uninsured, but the Medicaid eligible will be encouraged to sign up for that program.

    Businesses that provide private insurance will be exempt from paying the payroll tax unless they have employees who are uninsured. Companies would not get credit for workers who receive coverage through the Vermont Health Access Plan for the working poor.

    Uninsured self-employed workers will be required to pay a 3 percent income tax.

    The first $25,000 of a company's payroll will be tax exempt, as will all employees under age 18. This "soft landing" applies to all businesses, but was included primarily to shield small businesses that operate with little profit margin.

    The bill's cost-containment measures include capped hospital budgets, enhanced prescription drug initiatives, investments in health information technology, malpractice reforms and strategies to lower the cost of treating chronic diseases like diabetes.

    Contact John Zicconi at john.zicconi@rutlandherald.com.

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