Green Mountain Care A projection of estimated costs and funding sources - PowerPoint PPT Presentation

green mountain care a projection of estimated costs and funding sources n.
Skip this Video
Loading SlideShow in 5 Seconds..
Green Mountain Care A projection of estimated costs and funding sources PowerPoint Presentation
Download Presentation
Green Mountain Care A projection of estimated costs and funding sources

play fullscreen
1 / 14
Green Mountain Care A projection of estimated costs and funding sources
Download Presentation
Download Presentation

Green Mountain Care A projection of estimated costs and funding sources

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Green Mountain CareA projection of estimated costs and funding sources Presented by Wendy Wilton May 2011 802-770-0743

  2. What has been discussed and why did I do this work? • Catamount-type benefit to be paid for by a payroll tax and the Medicaid global commitment from the federal government, although not in the bill • Curiosity about opportunities for cost reductions and change to the system based on the Hsaio recommendations…hopeful for positive changes • No one seemed to be doing this analysis (at least not publicly) even though it has relevance to current issues and the five member health care panel would see similar models to guide their policy recommendations • Important to do the research and test the assumptions on paper to see the impact on the state’s finances and how it might impact municipal budgets and key employers • Questions to answer: Who would be covered? What are the costs? How will it be funded? Is it feasible?

  3. Infrastructure in place to start Green Mountain Care • Name is in use for VT public health care plans including Catamount, VHAP, Medicaid and Dr. Dynasaur, currently funded by Medicaid global commitment, the state and some co-payments. • H.202 Shifts the decision-making power from the legislature to the administration through the creation of a 5 member panel • Creation of a universal plan can be done through the exchange in 2014, or after 2017 via H.202

  4. Who will be covered? • Those currently insured, uninsured or enrolled in Catamount, VHAP or Medicaid programs: 424,359Vermonters • Those covered by Medicare or military health care plans will be exempt: 92,099 Vermonters • Those participating in self-funded plans (large employer, multi-state) will be exempt: 105,302 Vermonters 68.25% of 621,760 Vermonters would be covered

  5. How much will it cost? • Projected Catamount premiums to 2014 as the start date for GMC, current product with $500/$1,000 deductibles, with increases at 5.7% per year for years 2010-2013 (BISHCA) • Health care cost increases estimated to be 6-9% for the period following 2013 (JFO)--an average of 7.5% reduced by 11% due to expected savings (Hsaio/JFO) • Other costs: deductible subsidies, supplemental coverage, administrative costs & loss reserves $3.156 billion in expenses, year 1… $3.893 billion by year 5

  6. How will it be funded? • Payroll tax paid by the employer and employee of 11%/3.5%=14.5% estimated • Medicaid global commitment >$1 billion/yr • Important: All VT employers and employees are paying in, global commitment increases, and no jobs are lost $3.032 billion in year 1… $3.760 billion by year 5

  7. Green Mountain Care: 7.5% cost increase, No payroll tax exclusions Note: The model is very sensitive to job and wage changes; a 5% drop in jobs would result in $119 million loss in Year 2 (versus $31.6 million). All VT employers & employees pay the payroll tax.

  8. Green Mountain Care what ifs…? …Rates of health care costs grow at 6% or at 9%, instead of 7.5%? At 9% expenses exceed revenues double the 7.5% rate; at 6% rate of growth will negate investment and increased reimbursements--unlikely due to historical data. …The federal government does not increase Medicaid funding? Expenses exceed revenues significantly over time to reach $500 million by year five …Payroll of the self-funded plan employers cannot be taxed? Expenses exceed revenues by $400 million by year two …VT loses jobs? Expenses will exceed revenues in every case, including the 6% cost growth model

  9. Green Mountain Care: 6.0% cost increase, No payroll tax exclusions Note: limited capital or technology investments and little improvement in provider reimbursements would be likely in this model; job losses would result in negative performance in this model as others

  10. Green Mountain Care: 9.0% cost increase, No payroll tax exclusions Note: 9% rate is reflective of VT’s actual health care cost increase experience from 2003 to 2006; moderated to 7.6% for 2009. With recovery this is a likely scenario, as costs will rise.

  11. Green Mountain Care: 7.5% cost increase, No exclusions, flat Medicaid Note: Given cost pressures on the federal budget due to deficits and the national debt, cutting Medicaid support to the states may be possible, even though PPACA calls for increases.

  12. Green Mountain Care: 7.5% cost increase, Self-funded plans excluded Note: Self-funded plans assumed to be 21% of state payroll. This scenario demonstrates that the plan would require all employers and employees to contribute or to dramatically increase the tax

  13. Is it feasible? • The proposed plan has the same basic flaw as the current system: The rate of growth in health care costs is rising faster than the economy which is tasked to support those costs… “The underlying cost versus revenue trends are likely to continue into the foreseeable future as I indicated in my February 24th remarks. This trend raises a fundamental challenge to any public or private health care program. Proposals that lower base spending, and/or ongoing cost growth may mitigate but not necessarily alleviate this trend” --Stephen Klein, Legislative Fiscal officer, Joint Fiscal Office in a March 7, 2011 letter to Rep. Mark Larson, Chair, House Committee on Health Care • The five member appointed health care panel will also likely conclude this to be true and will need to take drastic measures in order to make the plan work--even for a short time--and those measures may not guarantee long term success if all employers and employees do not pay into the system, federal funding diminishes, jobs are lost, or users of the system displace funders of the system, or cost growth exceeds expectations.

  14. Questions? Note: this projection does not take the following issues into consideration: • Increases in utilization due to in-migration and/or coverage of undocumented workers • Significant changes to the demographic profile of the state • Possible impacts on any individual or employer • Access issues or changes in provider populations/facilities • Use of out-of state facilities (portability) • Taxing of employees who are not VT residents • Complexities of continuing to maintain a multi-payer system while creating a major universal coverage plan • Cost reductions which may not be achieved