The letter sent to Gov. Phil Scott from Green Mountain Care Board [GMCB] chairman Kevin Mullin last week may be the best representation of penny-wise pound-foolish that Vermonters will ever see. If not picked apart, and understood, and responded to, it may also mark the beginning of the end for Vermont’s experiment to flip from our traditional fee-for-service to one based on health care outcomes.

His letter was short, and pointed. He told the governor if the state did not increase its Medicaid funding Vermonters would continue to see double-digit increases in health insurance costs, and that our hospitals’ struggles would intensify.

We are where we are because, as Mr. Mullin explains in his letter, 45 percent of the health care delivery in Vermont deals with Medicaid and Medicare patients. The programs do not come close to matching a hospital’s costs, which results in a cost shift, meaning, from the state’s perspective, that the unmet Medicaid costs are made up by those not on Medicaid, or the commercial market. That cost shift for FY 2019 is being estimated at $493 million with Medicaid constituting $217 million of that cost-shift total.

The in-between-the-lines message is that the GMCB can’t be held solely responsible for the hospitals’ misery; the governor and the Legislature are also part of what is arguably the most complicated, time-sensitive, and far-ranging challenge the state faces.

But the cost shift itself isn’t news. Nor is its size.  It’s been recognized and talked about by Mr. Mullin and his board before. Why the drama now, right in the midst of the board’s interrogation of the state’s hospitals and their proposed budgets?

Perhaps because this is the only time of the year the state’s attention is focused on the issues most relevant to the GMCB, which is the health of the state’s hospitals as they prepare for the move to a new payment reform system. What Mr. Mullin and his board did was to shift some of that burden on the governor. If Mr. Scott agrees and ups the state’s Medicaid payment, then some of the pressure is off the GMCB and the state’s health care system. The way forward is a little easier.

Here is the telling paragraph from Mr. Mullin’s letter:

“We understand that limited revenue, tight budgets and limits on investment funds make it challenging to choose to invest Medicaid funds in health care reform at this time. Without Medicaid support, however, the investment in health care reform falls disproportionately on hospitals, Vermonters and employers in the commercial market, and those who self-pay. We urge you to consider these impacts and to prioritize affordability and health care reform by considering increasing your investment in Medicaid and DSR [delivery system reform.].”

So now, it’s an issue of how much of a Medicaid increase, which becomes an issue of all the various encumbrances when it comes to additional spending, state limits on borrowing, federal requirements, etc.

To eliminate the cost-shift would require additional spending of over $200 million, which, obviously, isn’t going to happen. But, as Mr. Mullin noted, the Centers for Medicare and Medicaid Services [CMS] have made federal matching funds available, but the state’s leaders, including those in the Legislature, have not agreed to the match, which is nuts. Over $56 million remains available over 2020 and 2021. Why is this money being left on the table if it’s matched federally and if used would soften the cost-shift, which prompts part of the increase in health insurance rates?

Why is all this such an unexplainable mess?

It’s a mess for several reasons; It’s almost unbearably complicated to explain because it’s so transformative, it’s enormously expensive, which makes it easy to demagogue, and there are players in the process who fervently believe the only way forward is a single payer [Medicare for All] system, and any other “reform” subtracts from that effort. It’s an instance where the administration’s natural reluctance to spend money lines up with the progressive’s opposition to anything other than getting rid of the health care system as we know it, replacing it with a single payer system.

That puts the state’s health care system in a precarious position going forward. Almost half the state’s hospitals are operating in the red. All of them struggle with the prospect of filling empty positions. And almost no one understands the details of moving from a fee for service   system to one based on health care outcomes.

Mr. Mullin may not have intended such, but his letter to the governor should be seen for the clarion call that it is to Vermont: We are in a transition period that is not being adequately supported or understood, which is ridiculous considering our health care system is the one thing that affects every single Vermonter and a force that constitutes 20 percent of the state’s economy.

Anyone who believes this uncertainty is contributing positively to Vermont’s well being and to its reputaton beyond our borders is shopping in the wrong aisle.