When the COVID-19 pandemic hit, it revealed a troubling paradox in Vermont’s healthscape. Monopoly-creating laws and regulations (like the Affordable Care Act and the Certificate of Need program) have artificially reduced the state’s health facilities and resources. Vermonters must contend with fewer hospitals and ambulatory surgical centers, and reduced access to medical imaging technology. On the one hand, insufficient health care capacity increased the risk of COVID-19 cases overwhelming the system and undermined the state’s ability to take care of all patients requiring hospitalization and respiratory support.

On the other hand, the pandemic worsened the financial challenges of many Vermont hospitals that were already teetering on bankruptcy. Vermont hospitals and physician practices have been financially struggling for years due to workforce shortages and a declining population. In FY 2019, half of the state’s hospitals experienced operating losses, and six of fourteen have seen operating losses for three or more consecutive years.

Hospitals have also been forced to cut services and staff because rationing of care has been taking place under the aegis of the Vermont All-Payer Accountable Care Organization (ACO) model. Created in 2016, the model is a state-federal experiment in health care payment and delivery, run by a for-profit organization called OneCare Vermont.

A number of primary care and specialty physicians, hospitals, and post-acute care facilities across the state participate in this experiment. Decreased utilization of primary care physicians, specialists, and diagnostic X-rays from 2016 to 2018, yearly worsening health care quality indicators, and growing evidence of long waiting lines to receive treatment prove that OneCare has been restricting access to hold down costs.

Further, in preparation for the projected surge of COVID-19 patients, Vermont hospitals canceled elective and non-urgent procedures. As a result, hospitals are now facing a fifty to seventy percent reduction in revenues – an aggregate loss of $115 million per month.

In truth, the pandemic has had a relatively mild impact in Vermont. As of May 1, eleven people in Vermont are hospitalized, and 20 are being monitored for symptoms. The infection rates are concentrated in the Burlington metropolitan area, while the rest of the state has seen far fewer cases. Michael Pieciak (commissioner of the Department of Financial Regulation) noted that the number of new COVID-19 cases has declined, and Vermont has peaked regarding the demand for hospital resources.

Yet, hospitals outside Vermont’s coronavirus epicenter have not resumed elective procedures. On the contrary, OneCare claims that the pandemic has inundated health care providers. In an April 8 presentation to the Green Mountain Care Board or GMCB (a five-member committee charged with oversight), the organization stated:

“Providers and facilities are intensely focused on delivering essential life-saving emergency and urgent services to Vermonters and have no choice but to defer many of the preventive and comparatively less urgent follow-up services that are intended to achieve the quality and population health targets outlined in Vermont’s agreement.”

Members of the GMCB (who have a demonstrated record of playing advocate instead of referee) agreed with OneCare. They sent a letter to CMS asserting that the pandemic’s “unprecedented scale and strength” prevents providers in the all-payer ACO model from both responding to COVID-19 and meeting health care quality and population health targets that are required by the federal-state contract. The Board has asked CMS to make 2020 a “reporting only” year, wherein providers will not be held responsible for meeting these targets.

The GMCB is also asking the federal government to allow the model’s participating providers to keep all savings and pay no penalties for operating losses this year. In other words, OneCare wants to privatize profits and socialize losses. It wants to treat profits as the property of the organization’s stakeholders, and losses as a burden to be borne by the general public.

Besides plummeting Vermont to the bottom in health care openness and access, the all-payer ACO model has constructed a billion-dollar bureaucracy in a largely rural healthscape grappling with monopoly-induced shortages and insolvency. The pandemic has unmasked this mangled health care system.

Meg Hansen is executive director, Vermonters for Health Care Freedom.

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