Community Letter: Mid-Year Budget Increases

A family biking together

A community letter by Don George, President & CEO for Blue Cross and Blue Shield of Vermont, about the current discussions happening on mid-year hospital commercial rate increases.

This has been a difficult two years for everyone who works in and relies on Vermont’s health care system. I have tremendous appreciation for the front-line workers who show up every day to care for the kids in crisis, for the people with advanced chronic conditions entering emergency rooms across the state, and who did so during the height of the COVID-19 pandemic while risking their own health. The economic challenges of this recovery period are far broader than health care and they impact us all. Vermont families are struggling with finding affordable housing, paying for energy costs to heat our houses and fill up the car, and in the midst of this the price of health care is climbing. 

When I consider the difficult lessons from this time and look toward the future, I am resolved in my conviction that we must renew our efforts toward health system reform. The pandemic has shown the many fractures in our foundation. We must turn determinedly toward value-based payments and global hospital budgets to think more holistically about patient health rather than incentivizing volume by paying for each service individually. We must focus on access and high-quality care for all of our residents. And because we are debating mid-year hospital commercial rate increases, we must recognize that hospital sustainability is about our communities not about financial bottom lines. Hospitals are important partners in health care reform and must be held accountable for meeting their annual budgets, balancing both cost pressures and expenses along with all of Vermont’s employers and families.   

Like employers across Vermont, hospitals are dealing with rising labor costs and the highest rate of inflation in decades. While it is tempting during a population health crisis to hold hospitals apart, we must keep perspective and remember the safeguards – such as surplus and days cash on hand – the Green Mountain Care Board allows hospitals to reserve for these circumstances. Businesses across the spectrum, from bookstores and corner groceries, to manufacturers and restaurants, as well as the community non-profits that provide critical services to our neighbors do not have these extra resources and are each grappling with crushing inflation and a labor force that is reexamining its priorities. One by one, these organizations are tightening their belts and adjusting their budgets. We cannot ask them to also shoulder an additional, unplanned 10% increase in their health care costs. Doing so will impact our collective ability to recover at this crucial time amid so much uncertainty. 

The Green Mountain Care Board has no say over how much Medicare and Medicaid pays hospitals, and while the underfunding of government payers exacerbates the problem, no one has the resources to keep pace with these shocking budget increases. Instead, we need to redouble our efforts to restructure our health care delivery system to emphasize the care we need and move away from a payment system that incentivizes all the wrong choices. Our focus must always be on the people and their access to affordable, quality health care services.