Expert says underfunding hampers health care delivery

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(Host) According to a new report, Vermont’s hospitals and health care related businesses account for 11% of all jobs in the state. Hospital officials warn the stability of the state’s health care delivery system could be undermined by the chronic underfunding of medical services by both the state and federal government.

VPR’s Bob Kinzel reports.

(Kinzel) The new report, which was released by the Vermont Association of Hospitals and Health Systems, shows that more that 32,000 people are employed in various health care related jobs in Vermont and that the health care industry adds $1.4 billion to the state economy – a figure that represents 7% of the gross state product. However VAHHS President Bea Grause says the state’s health care system faces an uncertain financial future because the state and federal government don’t pay the full costs of providing services.

Grause says the state reimburses roughly 70% of all Medicaid costs, while the federal government’s Medicare reimbursement rate is approximately 92%. Grause says this underfunding resulted in an $81 million cost shift last year – costs that had to be picked up by private health insurance payers. In addition, the hospitals are responsible for care delivered to patients who have no insurance:

(Grause) “As we have costs continuing to rise because patients are using more services, there’s a growing gap between what Medicare and Medicaid is paying, which in turn puts pressure on commercial payers, because providers want to raise their rates and they want to keep their rates down and so and the rising costs of premiums makes more people drop their insurance coverage. So it does create a vicious spiral.”

(Kinzel) Since there are finite resources that can be allocated to health care, Grause says it’s critical for all interested parties to begin a discussion concerning the kinds of services that will be available at Vermont’s community based hospitals in the future:

(Grause) “There are some dangerous trends here with aging baby boomers reducing reimbursement all around. We’re going to have to start changing the paradigm for how we are delivering health care. It’s not going to be an easy fix. It’s going to be a conversation that’s going to take quite some time and we just want to be make sure that everyone at the table has enough information to make the right decision.”

(Kinzel) Grause says that while there’s no need to consider closing any of the state’s existing hospitals, there is a need to redefine the role that these facilities play in the state’s overall health care delivery system.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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