House Republican leaders say they support Gov. Peter Shumlin's proposal to increase the state's Medicaid reimbursement rate, but they strongly oppose how the governor wants to pay for this plan.
In his budget address, Shumlin urged lawmakers to deal with the growing problem of the Medicaid cost shift. This happens when health care providers are reimbursed by Medicaid at roughly 55 percent of the cost of their service. The remaining costs are then transferred over to private insurance premiums.
It's estimated that this cost shift accounts for as much as 10 percent of the cost of private policies.
Under the governor's plan, a new payroll tax of 0.7 percent would be imposed on all employers and a good chunk of the money would be used to increase the Medicaid reimbursement rate.
Westford Rep. Bob Bancroft is a new member of the House Health Care committee. He says the payroll tax will hurt the state economy.
"Many small businesses now are having difficulty making ends meet … I think it's pretty naive to assume that a seven tenths payroll tax is so small so minor that it won't have any impact on businesses," Rep. Bancroft says.
"Many small businesses now are having difficulty making ends meet... I think it's pretty naive to assume that a seven tenths payroll tax is so small so minor that it won't have any impact on businesses." Rep. Bob Bancroft
Lawrence Miller is the chief of health care reform in the Shumlin administration. He says it's important to remember that the plan will help reduce how much money these businesses spend on health care.
"When it's a new revenue source that's offsetting an existing expense, and we're doubling it with federal money, to help solve some real significant cost containment and coordination of care issues in our health care system, I see it as being a net positive not a net negative," says Miller.
"When it's a new revenue source that's offsetting an existing expense... to help solve some real significant cost containment and coordination of care issues in our health care system, I see it as being a net positive not a net negative." Lawrence Miller, chief of health care reform in the Shumlin Administration
Instead of using a new payroll tax, House Minority leader Don Turner wants Vermont to dump its state health care exchange and adopt a federal model. "This money can be re-prioritized to do some of the goals we've outlined," says Miller.
But Miller says the savings will be far less than Turner thinks because the state will still need its own exchange to operate the Medicaid program. "The bulk of Vermont Health Connect is the Medicaid eligibility and enrollment process and that's about 165 thousand lives," says Miller.
Both the House and Senate Health Care committees will be looking at these issues in the coming weeks.
