Business & Economics Health

Meg Hansen: Flattening the Curve by Spiking Health Resources

Flattening the COVID-19 epidemic curve has taken precedence over every other facet of American life. Federal and state governments have issued lengthy “stay at home’ orders to discourage thousands from falling ill and needing medical attention at once. In Vermont, we have committed to aggressive mitigation with measures such as closing non-essential businesses, dismissing schools through the end of the academic year, and changing election laws.

Health officials advise that mass social distancing will prevent the contagion from overwhelming our hospitals, as it has in parts of Europe. Over 10,000 people have died of COVID-19 in Italy, where overburdened hospitals have resorted to rationing beds and ventilators. The UK’s National Health Service announced that it would ration cancer services to patients with the highest chance of survival, if the surge of coronavirus patients continues.

As of March 31, Vermont has 293 cases and thirteen 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. But we begin this battle with two serious handicaps. First, Vermont administrators impose a slew of draconian regulations that have restricted the supply of health resources for years. Second, the rationing of various healthcare services has been taking place since the creation of Vermont’s All- Payer Accountable Care Organization (ACO) model in 2016.

Regulating Healthcare Capacity

Thirty-five states including Vermont enact Certificate of Need (CON) 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 Vermonters could have had six more hospitals without these regulations. The crony laws also prevent nonhospital 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 hospitalization and respiratory support. Recently, North Carolina allowed hospitals to add beds without state permission. Vermont should likewise suspend its detrimental 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.

Rationing Underway

Managed by a private organization called OneCare Vermont, this model aims to reduce healthcare costs by: 1) Transitioning all payers (Medicare, Medicaid, and commercial insurers) from fee-for-service to value-based reimbursement; and 2) Promoting a population health approach that targets the local needs of a population to improve health outcomes. OneCare has spent of hundreds of millions on Health Information Technology and complex care coordination programs. These investments should help us manage our limited health resources during this pandemic. However, the database is unreliable and useful population-based health efforts do not exist. Instead, the All-Payer ACO model has led to the rationing of various healthcare services in Vermont.

In 2014, then Governor Peter Shumlin announced that his single payer plan had failed because its projected cost growth exceeded Vermont’s annual GDP growth. With the ACO All-Payer project, health 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 percent.

This austerity comes at the cost of Vermonters’ health. Data from the Department of Vermont Health Access demonstrates a decrease in the usage rates of primary care physicians and specialists, as well as a drop in the overall healthy rate across the state between 2013 and 2016. The utilization of primary care physicians, specialists, and diagnostic X-rays continued to decline from 2016 to 2018. In addition, 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 underway in the Green Mountain State to limit 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.

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Meg Hansen trained in an MBBS (British-style) medical degree program, and is the former Executive Director of Vermonters for Health Care Freedom (a health policy think tank). She is also a 2020 Lt. Governor candidate.

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