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For the week ending Friday, January 19, 2001

With both chambers organized, the real work of the legislature began this week, as committees in both the House and Senate began reviewing bills and setting legislative priorities for the session. The House Committee on Health and Welfare began its overview of H.31, a modified version of last year’s pharmaceutical pricing bill. The rising cost of prescription drugs has been identified as a major contributing factor to the overall increase in the cost of health care, and leaders in both chambers hope to address these issues this year. It is unclear what position the pharmaceutical industry will take on this bill at this point, but the overwhelming controversy of last session is unlikely to re-emerge again this year. The House Committee on Commerce also heard a preliminary overview of financial privacy, which at the federal level included health care providers. Due the passage of the Gramm-Leach-Bliley bill at the federal level, the Legislature and/or the Administration must deal with privacy issue by July 1, 2001. Other major House committees concentrated on Act 60 education funding reform, Act 250 permit reform and the Governor’s proposed budget and revenue estimates.

Several Senate committees received overviews on health care issues but they did not delve into specific bills or issues. Other committee in the Senate spent much of the week focused on campaign finance reform, the rising cost of home heating oil and fuel, and the sale of Vermont Yankee.

Making the Rounds
The House and Senate Committees on Health and Welfare have spent the last few weeks receiving two different comprehensive overviews of the health care system, its programs, financing, governance and regulation. Susan Gretkowski, Deputy Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) presented an overview titled "Introduction to the Division of Health Care Administration 2001 – A Legislative Presentation" which focuses on the areas over which this division of BISHCA has authority. The presentation covered the following areas:

  • Insurance Rates and Form Filing
  • Quality Oversight of Managed Care Plans
  • Help for Health Care Consumers
  • Independent External Review Programs
  • Data Management and Analysis
  • The CON Program and Review of Law
  • The Unified Health Care Budget and Expenditure Analysis
  • Hospital Budget Review Process

The Joint Fiscal Office and Legislative Council also prepared a joint presentation for the Health and Welfare Committees titled "A Legislative Resource Book on Vermont Health Care Costs" which focused on the difference between federal and state laws and existing costs in Vermont’s health care system. Steve Kappel, JFO, and Herb Olson and Julie Silverstein Agris of the Legislative Council prepared the presentation that included a summary of statistics on Vermont’s health care system and a report on the uninsured population. Other areas included reports on:

  • Health Care Financial
    • Expenditure analysis
    • Hospital financial history
    • Insurance data and rates
  • Health Care Laws and Regulations
    • Hospital budget reviews
    • CON
    • Insurance rate regulation
    • Benefit mandates
    • ERISA
    • Health Insurance, Community Rating and Guaranteed Issue
  • Medicaid
    • Expenditures, Enrollment, Eligibility
    • VHAP Chronology
    • Spending and the General Fund
    • Medicaid Waiver
    • Cost Shifting
    • Prescription Drug Programs and Costs

Pharmaceuticals Health Care Costs
Certainly the cost and increased utilization of pharmaceutical drugs are one contributing factor to the overall rise in health care costs and the House Committee on Health and Welfare heard on overview of H.31, a modified version of last year’s pharmaceutical pricing bill. Although there was considerable discussion last year surrounding this topic, many new legislators need the background before making decisions on how to alleviate Vermonters from the high cost of prescription drugs. The committees began examining creative ways to allow Vermonters to access lower cost drugs. One such method is a regional purchasing pool with other states which several state legislators worked on through the summer and fall. Another idea would be to increase the number of Federally Qualified Health Centers (FQHC) in Vermont. Patients of FQHCs are allowed to receive the lowest price available to the federal government on prescription drugs primarily because they serve rural and/or underserved populations.

Money Committees Briefed on Economic Outlook
The House Committees on Appropriations and Ways and Means met jointly to receive a briefing on the state’s economic outlook from Tom Kavet, an economist with the Joint Fiscal Office. Kavet delivered a cautious report on both the national and state economies and for the first time in four years the revenue outlook recommends a downward adjustment from the previous forecast by approximately $7 million. Contributing factors to a growing risk of recession and lower expectations for revenues are a dramatic slowing of the national economy, higher energy prices and plunging stock market values. This revenue projection is likely to create further distress in the House Committee on Appropriations since they already are starting the budget process from the Governor’s recommended budget which includes an overall 5% increase and a $22 million tax increase the House majority doesn’t support. Further complicating the budget building process is the fact that the House leadership has vastly different spending priorities than the Administration – namely eliminating the Act 60 sharing pool which costs approximately $35 million.

Kavet stated that current revenue projections are somewhat mixed, but the state appears to continue to be on track for revenue surpluses, though less than originally anticipated. The personal income tax is likely to remain close to projections, though they may be revised downward if income from the stock market continues to decline. Several General Fund taxes are performing below expectations, notably the sales and use, estate, and purchase and use taxes. Others, including the rooms and meals, liquor and corporate taxes are performing above projections. Kavet concluded his report by strongly recommending revised macro-economic and state revenue forecast if economic conditions continue to deteriorate within the next three months.

On the Agenda
This week in the Senate Committee on Health & Welfare Norm Wright, President of VAHHS will be testifying. They will also be discussing pharmacy issues. The House Committee on Health and Welfare will continue their review of the pharmaceutical pricing issue.

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