Vermont plan aims to control health care costs

By Wally Retan, M.D.
The Birmingham News, July 3, 2011

Begin with what everyone knows. Health care costs and health insurance costs are climbing more than twice as fast as the cost of living and have been for years. There is no need for numbers to prove that statement. Just ask anyone who buys health insurance on his own, any employer trying to take care of his employees, and any employee whose wages are flat because of the rising cost of insurance.

There are two big ways governments are trying to control the rising cost of care. The federal government is cranking up the Independent Payment Advisory Board. The state of Vermont is starting something that's a little bit similar to the IPAB -- similar, but also a whole lot different.

The IPAB has gotten the most attention lately. The board is to be made up of 15 experts, including doctors and patient advocates, nominated by the president and confirmed by the Senate.

If Medicare costs continue to rise faster than the cost of living, the IPAB would recommend policies to Congress to help Medicare provide better care at lower cost. This could include ideas on coordinating care, getting rid of waste in the system, incentivizing best practices and prioritizing primary care.

The IPAB is specifically prohibited by law from recommending any policies that ration care, raise taxes, increase premiums or cost-sharing, reduce benefits or modify who is eligible for Medicare.

Congress then has the power to accept or to reject the IPAB's recommendations. If Congress rejects recommendations and Medicare spending exceeds specific targets, Congress must either enact policies that achieve equivalent savings or let the secretary of Health and Human Services follow the board's recommendations.

It would be fair to say there are critics of the IPAB. The Wall Street Journal wrote that President Barack Obama "is relying on the so-far-unidentified technocratic reforms of 15 so-far-unidentified geniuses who are supposed to give up medical practice or academic research for the privilege of a government salary." The Journal then concludes "the most likely outcome of the Board's activity is the political rationing of care for the elderly as now occurs in Britain or else the board will drive prices so low that many doctors and hospitals drop out of Medicare."

Whether the critics are right could be beside the point. There's one fatal flaw in the way the IPAB is intended to work: Everything depends on a future Congress choosing to follow orders the recent Congress wrote into the Affordable Care Act. There is absolutely no reason to believe a future Congress would feel it had to follow those orders. The only orders any Congress has to follow are in the Constitution.

Vermont has taken health care reform one step further. This spring, its governor signed a law intended to give all of its citizens government-funded, taxpayer-financed health insurance. It sets up a board with the following duties, among others: "Oversee the development and implementation, and evaluate the effectiveness, of health care payment and delivery system reforms designed to control the rate of growth in health care costs and maintain health care quality in Vermont, including (control over) payment reform pilot projects."

Also, it is to "implement methodologies for achieving payment reform and containing costs, which may include the creation of health care professional cost-containment targets, global payments, bundled payments, global budgets, risk-adjusted capitated payments, or other uniform payment methods and amounts for integrated delivery systems, health care professionals, or other provider arrangements."

No limitations. No exclusions. No exceptions. All insurance, not only Medicare.

Yes, Vermont's health care system is intended to become a single-payer system someday soon, but a single-payer system that controls the growing cost of health care.

Wally Retan, M.D., of Mountain Brook is state coordinator for the Alabama chapter of Physicians for a National Health Program ( and Health Care for Everyone-Alabama ( Email: