Public health and the economy are two sides of the same coin. Yet, as the number of COVID-19 cases escalates and an economic implosion looms, crisis managers feel compelled to pick either heads or tails. President Trump, New York Governor Andrew Cuomo, and Texas Lt. Governor Dan Patrick are eager to reopen the economy. Vermont Gov. Phil Scott, in contrast, foresees a protracted shutdown in response to the pandemic. On Tuesday, he issued a “stay at home” order that lasts until April 15.
We are told that the pandemic could overwhelm our healthcare system, as it has in Italy, resulting in the rationing of beds and ventilators. The UK’s National Health Services decided that it would ration cancer services to patients with the highest chance of survival, if the surge of coronavirus patients becomes too high. As of this writing, Vermont had 158 cases and nine deaths. The state has a total of 961 hospital beds – of which 500 are available for COVID-19 patients – ninety-nine intensive care unit beds, and 210 ventilators.
Vermont officials have committed to aggressive mitigation, but we begin this battle with two serious handicaps. First, administrators impose a slew of draconian regulations that have restricted the supply of health resources for years. Second, healthcare rationing has been taking place since the creation of Vermont’s All-payer Accountable Care Organization model in 2016.
Regulating Healthcare Capacity
Thirty-five states including Vermont enact Certificate of Need laws that are designed to curtail costs by artificially limiting the supply of health resources. Providers must receive approval from state authorities before they can create or expand healthcare facilities in a given area. Permission is only granted when sufficient need for new services has been demonstrated.
In practice, CON laws lead to rationing. The government often denies requests for new facilities to stifle economic competition and protect the monopoly held by the politically powerful University of Vermont Health Network.
Vermont imposes the highest number of CON laws – more than double the national average. A 2017 study by the Mercatus Center showed that it could have had six more hospitals without these regulations. The crony laws also prevent non-hospital settings from offering medical imaging technologies, which has led to lower utilization rates of CT scans and MRIs.
Fewer hospitals and ambulatory surgical centers, especially in rural areas, coupled with reduced access to medical imaging will thwart Vermont’s ability to take care of all COVID-19 patients requiring medical attention, hospitalization, and respiratory support. Recently, North Carolina allowed hospitals to add beds without state permission. Vermont should likewise suspend its counterproductive CON program.
CON laws are but one part of the state’s regulatory labyrinth. A 2020 Mercatus Center report ranks Vermont 43rd in overall healthcare openness and access. We place 47th in the nation because of our restrictions related to health insurance, and 45th for imposing operational constraints on hospitals, payers, and pharmacies. The latter distinction can be attributed to the All-Payer ACO model – the first of its kind in the nation.
Managed by a private organization called OneCare Vermont, this model aims to reduce costs using a two-pronged strategy: 1) Transition all payers from fee-for-service to value-based reimbursement; and 2) Promote a population health approach in place of the traditional biomedical model. A population-based approach targets the local health needs of a population to improve overall health outcomes.
To this end, OneCare has spent hundreds of millions in developing Health Information Technology and complex care coordination programs. My prior investigations, while leading Vermonters for Healthcare Freedom, demonstrated that the clinical database used for OneCare’s analytics is inaccurate and incomplete. During the most recent budget deliberations, OneCare admitted that they still lack access to reliable records. Moreover, the State Auditor and Health Care Advocate reported that OneCare could not prove it had conducted community programs for which it received funds. Nonetheless, health administrators approved the organization’s 2020 budget of $1.42 billion.
In 2014, then Gov. Peter Shumlin announced that his plan to implement a single payer system had failed. The model’s cost growth exceeded Vermont’s annual GDP growth, which broke the model. With the ACO All-Payer project, state authorities have been trying to create a new cost containment mechanism that will achieve what the Shumlin Administration could not. As a result, they have insisted on capping the growth of healthcare costs at 3.5%.
This stringency comes at the cost of Vermonters’ health. Data from the Department of Vermont Health Access demonstrates a decline in the usage rates of primary care physicians and specialists, as well as the overall healthy rate across the state between 2013 and 2016.
Additionally, analyst Susan Aranoff writes that OneCare scored worse on seven out of ten Medicaid quality measures in 2018 as compared to 2017. Worsening healthcare quality indicators, reduced visits to doctors, and growing evidence of long waiting lines to receive treatment indicate that rationing has been occurring in the Green Mountain State, under the aegis of the All-Payer ACO model, to limit healthcare costs.
We thus confront our invisible enemy at a significant disadvantage. The answer then to mounting the most effective response is straightforward – increase the state’s healthcare capacity. This strategy requires the political will to let go of regulations and ideological experiments. A pandemic without precedent in living memory demands the impossible.
Written by Meg Hansen. Hansen trained as an MBBS and is the former Executive Director of Vermonters for Health Care Freedom, a health policy think tank. She is also a 2020 lieutenant governor candidate in Vermont.