Analysis: Shumlin Has Much Left To Do On Health Care Agenda

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On a quiet morning in late February, Jonathan Martin, a political analyst for Politico, a leading national Web site, published a speculative piece about Hillary Clinton’s effect on the 2016 presidential election. Given her immense popularity, the possibility that Clinton might run is blocking the next generation of Democratic leaders from moving into position to replace President Obama, Martin wrote.

This dynamic is particularly frustrating to a half-dozen or so Democratic governors, he said, including John Hickenlooper of Colorado, Martin O’Malley of Maryland, Andrew Cuomo of New York, Deval Patrick of Massachusetts and, wait for it, Peter Shumlin of Vermont.

No accomplishment by these governors will match up to Clinton’s tenure as secretary of state, along with her political experience, Martin wrote.  "Even the most impressive health care delivery reforms and far-reaching gun control restrictions pale by comparison," he said.

In fact, the odds that Governor Shumlin might seek the presidency in 2016 run somewhere around zero, but this straw in the wind indicates how successful he has been in building a political record, winning by an eyelash in 2010, winning wide acclaim for his management of the effects of Hurricane Irene and then winning re-election by a landslide, launching the most innovative health reform initiative in the country, while maintaining a posture as a financial conservative.

Under all the political flash and dazzle, however, Shumlin has done much less well on the grinding work of actually getting solid legislation in place and working. Exhibit A for this conclusion is his management of health care reform, the centerpiece of his political agenda.

In fact, Shumlin got a terrific start on health care reform, mainly by virtue of the team he put in place to manage it. He got out of the blocks very quickly on establishing the "exchange," the federally financed structure that will begin subsidizing health care for the uninsured beginning next January. That effort is being led by Mark Larson and Lindsey Tucker of the Agency of Human Services.

For cost containment, he set up the Green Mountain Care Board, chaired by Anya Rader Wallack, a national-class health policy analyst, with a mix of strong players to fill out the five- member board. He persuaded Steve Kimbell, a retired lobbyist with long experience in government and politics, to rework the regulatory staff. And he installed Robin Lunge in his own office to manage the legislative components of the program, which have been successful so far.

Yet Shumlin has never been candid with the public about just how difficult this whole project is. Reforming health care will require controlling costs, which the United States has never been able to do since the passage of Medicare (insurance for the elderly) and Medicaid (insurance for the poor) in 1966.

Accomplishing it now will require not just much stronger regulation than Vermont has been able to carry out in the past, but a complete reworking of the financing of health care as well as rebuilding the whole structure of the health care delivery system, so that it can operate efficiently.

In other words, Vermont will have to lead the country in restructuring perhaps our society’s most important institution-one that deals every day, literally, with life or death for the people of the state, and in the process eats up nearly one-fifth of our entire national output. (In Vermont, it is 20 percent)

It is true that the governor has covered himself by stating on several occasions that "if we can’t get the costs under control," the state won’t move forward. But for the most part he’s adopted an airy confidence that single payer is a slam dunk, that he has it under control. He doesn’t have it under control, and it probably doesn’t help to pretend that he does.

The administration’s lack of candor showed up early in 2011, when William Hsiao, the Harvard professor who designed the first cut of a single payer system, introduced his opus to the Legislature. A key element in that document was a 14 percent payroll tax to pay help pay for it.

The problem with that idea was apparent immediately: Shumlin had promised the business community that whatever his plan turned out to be it wouldn’t be any worse for them the system now in place. So, companies ran the numbers on the Hsiao tax and found that they would be much worse off with the tax.

The upshot was that the Hsiao tax was dead by the afternoon of the day it appeared. Yet it was something like a year and a half before Jeb Spaulding, Shumlin’s secretary of administration who often acts as his spokesman for health care issues, acknowledged that the Hsaio tax was no longer on the table.

Meanwhile, the governor spent 2011 and most of 2012 saying that a Vermont single payer was rolling smoothly toward fruition; in fact, he said that he would get it installed by 2014, three years before federal law contained in Obamacare would permit it.

The state’s congressional delegation could get us a waiver, he contended, that whatever the federal barriers, Vermont could overcome them "because we’re smarter than the feds."

The reality was that there was never a chance to get a federal waiver and the much more important reality was that even if Vermont did get such a waiver it was not even close to being ready to put a single payer plan in place in 2014 because the cost containment effort was in its infancy.

The Green Mountain Care Board had managed just one hospital budget cycle and so, far from ratcheting down hospital costs, the board let them rise markedly. The board’s posture for the 2014 budgets, which take effect on Oct. 1 of this year, is much more aggressive. But even if it sticks rigorously to its targets, we won’t be much more than half way to a sustainable track for the more than $2 billion system.

And the structural reforms that we need to get the rest of the way–payment reform and system integration-have not yet moved beyond the early planning and pilot project stage. These two initiatives sound reasonable enough, but in fact they presume a huge technical and cultural shift in the whole warp and woof of the delivery of health care, so that even 2017 will be a very considerable stretch.

Even if those reforms can be put in place and tested, Vermont will still face the problem of financing a newly rebuilt program. That will be the most difficult step of all and Shumlin’s performance on this dimension has been pretty much a mess.

The immediate issue is the requirement in Act 48, which established the framework for the single payer project, that the Shumlin administration bring a financing plan to the Legislature in January of this year. To meet this requirement, the administration contracted with a consulting group at the University of Massachusetts.

At the last moment, however, the administration told the UMass group to drop the financing alternatives from its report. Spaulding told the press the reason for this was that since Vermont can’t move until 2017 there is no reason to go to that level now.

Meanwhile, as the realization of how gnarly the financing will be began to penetrate to the upper reaches of the administration, the governor announced that he would set up a new legislative panel to really dig into the financing problem. The panel will consist of Shap Smith, the House speaker, and John Campbell, the president pro tem of the Senate, along with a few others.

It’s hard to grasp just how strange and unsettling this maneuver was. A handful of legislators really has no ability to do groundbreaking work on how to finance single payer. No one on the panel is likely to have any real expertise in this area and Smith and Campbell have, well, other stuff to do. The panel doesn’t have any staff of its own.

The governor, on the other hand, has a fully professional staff already working on it. If they can’t figure it out, then who can expect the legislative panel to do so? And why not at least look at the UMass recommendations on the subject, since we have to pay for their work anyway.

Peter Shumlin is still the shrewdest and wiliest politician working in Vermont. So it is disconcerting to see him loosening his grip on the health reform project. It is possible that he set up the panel as a device to get early legislative buy-in for what will be one of the most momentous decisions a Vermont Legislature has ever taken, whether it comes in 2016, 2017 or later.

Or it could be that he is setting up a device to sidestep the political responsibility that would come with the failure of the reform effort.

Whichever reading is valid, on a bleak morning in March of 2013, it looks like a retreat from the real grit of getting health care reform accomplished in Vermont. The single payer is Pete Shumlin’s baby. And he still has a very long way to go to get there.

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