In May 2024, Vermont Governor Phil Scott signed into law House Bill 861 (H.861), a measure that mandates equal reimbursement rates for healthcare services delivered in person, via telemedicine, or through audio-only phone consultations. Championed as a step toward improving access and equity in healthcare, the bill passed the Vermont Legislature with little fanfare and no recorded opposition. But beneath its progressive veneer lies a policy that defies basic economic principles and raises serious questions about how taxpayer dollars are spent.
The Policy in Brief
H.861, now Act 108, requires healthcare providers to receive the same payment for their services, regardless of whether they’re offered in a traditional office setting, over a video call, or via a simple phone consultation. Proponents argue this ensures patients can access care through whichever mode works best for them, particularly in rural areas where transportation can be a barrier.
But while the policy’s intentions may sound noble, the financial implications are far less so. Reimbursement parity ignores significant differences in the cost of delivering these services, creating a windfall for providers offering low-cost telehealth or phone consultations while unfairly burdening taxpayers who fund the healthcare system.
The Hidden Costs
In-person visits come with substantial overhead: maintaining a physical office, employing staff, cleaning and sanitizing between patients, and keeping equipment up to date. Telemedicine has its own costs—video conferencing software, IT infrastructure, and cybersecurity—but they are considerably lower. Meanwhile, phone consultations incur the least expense, requiring little more than a phone line and time.
Despite these disparities, H.861 mandates identical payments for all three. In practical terms, this means that a phone consultation, which might cost a fraction of an in-person visit to deliver, yields the same revenue for providers. This isn’t just inefficient—it’s unfair. Taxpayers effectively subsidize unnecessary profits for the least resource-intensive services.
A Double Standard in Spending
Imagine hiring an accountant. If they charged you the same rate for a brief phone call as for a detailed, in-office consultation, you’d probably feel cheated. And yet, Vermont’s legislators saw fit to impose this very model on the state’s healthcare system—only they’re spending other people’s money to do it. It’s a textbook case of government officials “spending money like it’s going out of style.”
This double standard is striking. Many of the same policymakers who rail against corporate profiteering have now created a system that incentivizes exactly that. By mandating equal reimbursement rates, the policy rewards providers with outsized profits for delivering lower-cost services, undermining the principle of fairness they so often champion.
Unintended Consequences
Beyond the immediate financial inefficiencies, H.861 risks distorting healthcare delivery in Vermont. Providers may be incentivized to prioritize telehealth and phone consultations over in-person care, which remains critical for complex cases requiring physical exams or hands-on interventions. Over time, this could erode the infrastructure for in-person care, making it harder for patients to access services that can’t be delivered remotely.
The policy also sets a concerning precedent. If the state doesn’t consider cost structures when determining reimbursement rates, what’s to stop other sectors from following suit? Such policies may create short-term gains in access but at the cost of long-term sustainability and trust in government decision-making.
A Better Path Forward
H.861 could have been an opportunity to strike a thoughtful balance between expanding access and maintaining financial responsibility. A more nuanced approach—such as tiered reimbursement rates reflecting the actual costs of each service mode—would ensure fairness for providers while protecting taxpayers. This would align incentives more closely with the realities of healthcare delivery, fostering innovation without sacrificing accountability.
The Bigger Picture
The passage of H.861 underscores a broader issue in public spending: the tendency for lawmakers to prioritize optics over outcomes. While the bill’s supporters may point to its potential to expand access, they’ve done so at the expense of fiscal prudence. Taxpayers deserve better than policies that ignore basic economics and subsidize profits under the guise of equity.
If Vermont’s legislators wouldn’t tolerate such inefficiencies when spending their own money, why should the public? As the healthcare system grapples with rising costs and limited resources, policies like H.861 should be a wake-up call for voters and policymakers alike: accountability and common sense must take precedence over feel-good solutions.
Dave Soulia | FYIVT
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