Kimberly Longe keeps her adult son's half-million dollars' worth of unpaid medical bills in a wooden box in their Jeffersonville home. Fletcher Allen Health Care, where he underwent surgery for brain injuries sustained in a logging accident three years ago, used to send demands for payment on a weekly basis. But the 25-year-old man, whose name Longe does not want to divulge, has no health insurance or financial assets and so cannot pay the full cost of the operations and follow-up treatments for the tragedy that has left him unable to speak.
Fletcher Allen stopped sending bills about six months ago, Longe says. The hospital has probably written off the $500,000 as part of its longstanding policy of providing "compassionate care" to uninsured and indigent patients. Like all other Vermont hospitals, FAHC also absorbs the "bad debt" incurred by better-off Vermonters with health coverage who cannot or will not pay the portion of their bills not reimbursed by their insurers.
All 14 of the state's community hospitals offer what amounts, potentially, to universal access to health-care treatment. But many low-income Vermonters who would qualify for free or reduced-price emergency-room treatment do not realize that it is available. Longe, for example, had not heard of the policy until informed of it by a reporter.
Some eligible Vermonters who are aware of this opportunity do not take advantage of it because of privacy concerns, or because they regard it as an affront to their dignity.
Chittenden County State Sen. Jim Leddy suggests that income-disclosure requirements sometimes act as a deterrent to obtaining available care. And Dr. Deb Richter, director of the advocacy group Vermont Health Care for All, cites cases of patients who refuse to take on debts they can't pay, or to accept charity from a hospital, even when their lives may be in danger.
There's no way to estimate the number of Vermonters who forego essential medical care because they assume, incorrectly, that they can't afford to pay for it, says Mike Davis, director of the cost-containment program for the state's Health Care Administration.
Officials also don't know how many Vermonters actually receive compassionate care at the state's hospitals. Even the total dollar value of these services is the subject of conflicting estimates on the part of legislators and health-policy analysts. The most reliable figure may be contained in a spreadsheet prepared by the Banking, Insurance, Securities and Health Care Administration. In the current fiscal year it lists the budgeted sums for hospitals' and affiliated physicians' "bad debt" at $45.5 million, and for free care at $30 million.
The hospitals' policy of treating everyone in need, regardless of ability or willingness to pay, is surely consistent with what Richter describes as "the Vermont way of doing things." But the approach is also fraught with the inconsistencies and inequities critics say are typical of the health-care system as a whole.
"It just shows how the system doesn't function fairly or rationally," says State Rep. John Tracy (D-Burlington), head of the House's health committee. Many uninsured Vermonters who do not pay the full cost of hospital treatment "show up at the emergency room in bad shape because they didn't get preventive care," Tracy notes. Often their medical problems could have been addressed less expensively and more effectively with regular treatment in physicians' offices, but lack of insurance dissuades them from obtaining preventive medicine, Tracy explains.
Eligibility criteria for compassionate care are also not uniform or entirely just. Fletcher Allen, for example, does not bill uninsured patients with incomes up to three times greater than the federal poverty line. Some of the state's other hospitals set the eligibility standard at 200 percent of the official poverty level.
Fletcher Allen, which budgeted $18.6 million this year for compassionate care, also gives a 47 percent discount on the bills of insured patients who meet income standards. Leddy, chair of the State Senate's health committee, points out that an uninsured person earning $25,000 a year or less can thus receive free care at Vermont's largest hospital, while someone who is insured is expected to pay 53 percent of the uncovered portion of his or her bill.
Of course, hospitals bills don't truly go unpaid in the case of either charitable care or bad debt. The costs of providing free or reduced-price treatment are partly shifted onto the premiums charged to Vermonters who pay for health insurance, whether entirely out of their own pockets, through benefits provided by their employers or by a combination of the two. A state Senate economist estimates that this cost-shift accounts for about 7 percent of Vermonters' average health-insurance premium payments. A private health policy that costs $3500 a year thus includes an unitemized $345 fee representing compensation for the illusory "free care" provided by hospitals.
The 56 percent of the state's residents with private health insurance also pay a total of about $94 million in cost-shifts resulting from the caps on reimbursement for treatment of Medicaid and Medicare patients, according to the state's hospital association. Blue Cross/Blue Shield of Vermont estimates that its customers' premiums could be reduced by about 20 percent if the cost-shifts tied to these government-funded medical programs for the poor and the elderly were eliminated.
The cost-shifts amount to a form of premium tax levied on insured Vermonters regardless of their ability to pay, says Jeanne Keller, a lobbyist for the state's hospital association and for a small-business coalition.
About 61,000 Vermonters, or less than 10 percent of the state's population, are not covered by private insurance, Medicaid, Medicare or military policies, according to a recent survey by the Health Care Administration. And slightly more than half of these uncovered Vermonters are actually eligible for Medicaid, but for various reasons have not enrolled in the program.
Republican Gov. James Douglas and the Democratic-controlled state legislature are attempting in varying ways to lower the number of uninsured Vermonters -- and thereby reduce the cost-shift incurred by insured Vermonters.
One proposal under consideration would provide health coverage to 20,000 of the uninsured through a program to be financed by Medicaid, by an increase in tobacco taxes and by payments by the potential beneficiaries. In some cases, these premiums would be subsidized by the state.
A more controversial Senate plan would standardize eligibility criteria for free or reduced-price care by requiring hospitals and their affiliated physicians to provide such services to any parties with incomes below 350 percent of the poverty level. That would amount to $70,000 a year for a family of four. The bill also sets a $2000 maximum charge by hospitals.
This approach could cause the collapse of local health networks, warns hospital lobbyist Keller. Demand for free or reduced-price medical services will increase significantly if eligibility is raised to 350 percent of poverty and if hospital bills are capped at $2000, she predicts. And the legislation puts no limit on the amount of money this initiative would cost hospitals, Keller adds.
The program would also be financed in part through the existing cost-shift onto the privately insured regardless of their ability to pay, Keller says. That, in turn, would violate the principle of equity that a broad coalition of interest groups agreed last year should underlie any reform of the health-care system, she adds.
Keller and other advocates suggest that the legislature should, instead, increase rates of progressive taxation to finance the cost of covering Vermont's uninsured.
Leddy says the Senate legislation is under negotiation, and its final version may not contain all the provisions that the hospitals find objectionable. The Senate committee is seeking ways to compensate hospitals for free care so as to avoid the cost-shift onto the privately insured, he notes. One possible source of revenues, Leddy adds, is a fee that would be assessed on employers who do not provide health insurance for their workers.
The legislation may also seek to establish a program known as Catamount Health, which would provide preventive care and management of chronic diseases for uninsured Vermonters. Such a program would lower overall health-care costs by reducing reliance on expensive emergency-room services.
A broad and progressive tax increase cannot be enacted due to the stated opposition of the governor and many legislators, Leddy says. "The question is how to get the political will and unity to address those big issues. And if you cannot get that level of support," he adds, "then you have an obligation to move ahead as best you can."