Businesses Predict Health-Care Collapse Burlington Free Press Coverage of VBSR Health Care Survey Results

MONTPELIER—Wall Goldfinger, a corporate furniture manufacturer in Northfield, covered 100 percent of the health insurance costs for its workers for 25 years—until the price became too great.

Four years ago, the company asked workers to contribute 7 percent, but John Wall, company president, said health insurance costs continued to rise. The company's cost is now $320,000 a year for 39 employees and 52 family members. Wall said that's greater than rent, electricity and fuel at the factory.

Wall joined other members of Vermont Businesses for Social Responsibility on Tuesday at the Statehouse where they argued for reforms in the way health insurance is financed.

"Health care as a benefit of employment is going away," said Will Patten, executive director of the organization representing 600 Vermont businesses. "We are calling on the governor and the Legislature to confront this reality."

The business group presented results of a recent health insurance survey that was answered by one-third of its membership. The survey found that since 2003, 40 percent of the respondents saw their health insurance costs increase by 10 percent or more each year. This mushrooming expense forced many businesses to scale back health packages, according to the survey.

The employer-based health insurance system is crumbling, said Leslie Nulty, a member of the organization's board and proprietor of a financial management service. "It cannot sustain the burden that has been placed on it."

Nulty said many of the health reform measures under consideration by the Legislature are doomed to failure because they "assume there is going to continue to be a strong employer component."

This business group favors decoupling of health insurance from employers. Patten noted one bill under consideration that would take a step toward decoupling. The bill would provide hospital coverage for every Vermonter paid through taxes or fees. It would eliminate private health insurance coverage for hospitalization, but insurance would continue to cover doctor's visits and medicines.

Two legislative committees began taking testimony on the bill Tuesday.

Rep. Francis "Topper" McFaun, R-Barre, made the case for the bill that he has promoted for the past two years. Because it would cover the most expensive medical care, McFaun said, "It gives Vermont residents peace of mind that they aren't going to lose everything they worked so hard for when they have a hospital event."

Under his concept, hospital's administrative expenses would decrease because they wouldn't be billing dozens of insurance companies. One estimate of the statewide savings was $40 million.

He also proposes an annual cap on total hospital spending, with the state's 14 hospitals negotiating their share of the funding. This cap would begin to rein in future growing in health costs, he said.

Members of the House Health Committee and the Senate Health and Welfare Committee peppered McFaun with questions about how this new payment and budgeting system would work.

With hospital budget growth averaging about 9 percent annually in recent years—McFaun's proposal would allow for annual growth closer to 6 percent—Sen. Doug Racine, D-Chittenden, wondered how hospitals would stay within the cap.

Sen. Sara Kittell, D-Franklin, asked whether renovations would have to be accommodated under a cap.

Could hospitals have endowments, asked Sen. Ginny Lyons, D-Chittenden?

"I don't have all the answers," McFaun replied. "Let's talk about all these things that are negative. Then let's use the same energy to figure out how to overcome them."

The bill has run into opposition from hospitals. Beatrice Grause, president of the Vermont Association of Hospitals and Health Systems, argued that making hospital care free for all Vermonters would likely encourage people to use hospitals rather than go to doctors' offices.

She questioned whether hospitals would see the reduced administrative expenses McFaun expects because she said there would still be all the paperwork for Medicare and Medicaid.

McFaun's bill calls for the state to seek a waiver that would allow federal dollars for these two programs to be deposited in the same state fund as the taxes or fees raised to replace today's payments by businesses and individuals for private hospital insurance.

Dr. Deb Richter, a family physician with a practice in Cambridge, joined McFaun in arguing that the problems people were identifying could be solved.

For example, while she admitted that offering free hospital care might encourage more use of hospital emergency rooms, she said, "Is that a good reason to do nothing? No. It is a technicality we could work out."

Contact Nancy Remsen at 229-1298 or