Week 10

Capitol Connection

If someone said to a child, “I am going to make your Mom and Dad pay more for their health insurance and that will mean you will be poorer” most of us would find it insulting to say the least. Well, while that is not the message being delivered by the majority in Congress and President Trump, that is in effect what will happen if the “repeal and replace” team in Washington is successful. Make no doubt about it, families will have less money to spend if President Trump has his way. The current federal subsidies which average $477 per month for Vermonters insured through the Affordable Care Act will drop as the subsidy is changed from one determined by your income, to one determined by your age.

In fact, not only will most ordinary Americans and Vermonters have to pay more for their insurance, but the very rich will take home millions more with massive tax breaks. Yes, while on the one hand Vermonters of modest means will be asked to get by with less, the wealthiest among us will be given more. How much? Estimates are $15.9 billion annually.

Those who make more than a million dollars a year will receive a reduction in investment taxes of 3.8 percent. In just three years it is estimated that millionaires would receive on average $197,000 per year. Those making more than $200,000 a year will enjoy a reduction of .9 percent in their Medicare tax they have had to pay since 2010 to help cover the cost of insurance for others who could not afford it.

While the wealthy are getting those tax breaks here is what would be happening to ordinary working people. A 27-year-old making $20,000 a year would have to pay $1250 more annually for their insurance. A 60-year-old making the same money would have to pay an extra $5900 for their insurance each year.

It has been said before that “the test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have too little”. It seems this proposal and the new way of thinking in Washington cares little about those with less.

When we take from those with little and ask them to make do with less, while giving more to those with much, we are all diminished, we are all shamed.

This reverse Robin Hood approach by the President is not the only perverse aspect of this legislation. It would break the 50-year relationship between the states and Washington regarding the safety net for the poor and disabled, which has always been a shared responsibility.

States paid some of the cost and the federal government paid the rest. Under the proposal states would receive a block grant for Medicaid and have to manage those funds regardless how many people were poor or disabled needing care. Nursing Home benefits which are mandatory services under Medicaid would become optional. Each state would decide what services they wanted to offer. Wealthy states with oil reserves for instance would be far more likely to offer full packages of care than other states. The distinction between the “have’s and the have nots” would be cemented into law.

The impact of this legislation on Vermont will be very harsh. The Vermont Agency of Human Services estimates this legislation would reduce federal funding for Vermont by $200,000 million each year.


The legislature was not in session this week and I had planned to take a break from my weekly reporting, but when this story unfolded, taking a break seemed like the last thing to do.

State House Update – Week One

Capitol Connections by Dave Yacovone


I, like most others I suspect, have never taken a drink from a fire hose before. Imagine for a minute that the only way you could get water was from a fire hose with the pressure on full blast. Well, this is how some describe the beginning of a legislative session, everything comes at you all at once. For sure, there is much pomp and circumstance in the beginning as people get sworn in and such, but the information you need to consume comes fast and furious, like water from a fire hose. You don’t get wet, but you quickly realize as Dorothy said, you are not in Kansas anymore.


If this legislative session is like others, some one-thousand one-hundred and fifty legislative proposals, otherwise known as “bills” will be introduced for consideration over the next two years. About two-hundred of those bills will pass. The rest will either never be considered seriously, or be rejected. As many know the legislature relies heavily on a committee process to deliberate on issues and various bills. No one human could possibly read and retain all one-thousand one-hundred and fifty bills. The fourteen standing committees in the House and eleven committees in the Senate will however delve deeply into some of these bills and report back to the other legislators with their recommendations on what to do. And, some five-hundred and sixty-four lobbyists registered with the Secretary of State and hired by someone, will try to persuade law makers one way or another on those bills.


I am pleased to have been appointed to serve on the Appropriations Committee. This committee recommends how much or how little government will spend and as such its impact on Vermonters is far reaching. For the next ten weeks or so I will be in our committee room listening to testimony from all of the department heads throughout state government as they pitch their budgets to us. If the Appropriations Committee wants to give one part of government more funds, they will likely have to come from giving another part of government less funds. It sounds simple, and I guess to a degree it is, but by no means is it easy. We are facing roughly a seventy-million-dollar budget shortfall for next year and in addition to that problem we are told the cost to begin the clean-up of Lake Champlain is sixty-eight million dollars. Without further tax increases which there is little appetite for, it seems a lot of budget cutting, or rethinking how we do the work of government at a lower cost, is on the horizon. I was pleased to hear Governor Scott say that no matter what we do, one of his top goals is to protect the vulnerable. As I face these budget challenges I will be guided by that good advice.


Next week I will provide an overview of some of the key issues facing us as I see it. The best way to communicate with me is via email at David.Yacovone@Gmail.com. You can call my cell phone at 730-0483 and leave a message too, or my home phone at 888-5958. I will get back to you as soon as I can. I am grateful and humbled to be a State Representative serving the towns of Elmore, Morristown, Woodbury and Worcester. I will work as hard as I can to do my best for you.

State House Update – Week Two

Capitol Connections


Policy minutia and details can be very boring and make our eyes glaze over, but they are very important, as the saying goes, the devil is in the details. I thought it might be helpful to shine some light on some of those policy details that drive costs in our government funded health care program known as Medicaid and show how policy interpretations can impact Vermonter’s taxes.

First it is important to note just how important Medicaid is to Vermont. It represents one-third of all health care spending in Vermont, and pays in full or partially for the health care for over 200,000 Vermonters. The slightest regulatory change on the federal level can translate into huge budget implications for all of us.

Vermont is facing nearly a $30 million reduction in federal funding that will likely have to be filled totally by Vermont tax dollars, without any help from the federal government.  The roots to our current problem started in 1965 when Medicaid was created. At that time there was an intentional effort to limit the amount of federal spending on “Institutions for Mental Disease” by limiting funding only to facilities that were less than seventeen beds. This was done in part to limit spending and in part for policy reasons to try to encourage less restrictive community based supports for those with a severe mental illness

Despite this 1965 directive Vermont was able to successfully negotiate a federal waiver to use federal funds to help operate a new 25 bed State Hospital after the original State Hospital was destroyed by Tropical Storm Irene. The federal government however recently renegotiated the waiver renewal and reversed their decision and now claims that the law does not allow the discretion that had been granted and that none of the facility is eligible for federal funding because it is over 16 beds. The Brattleboro Retreat is also impacted by this policy change as they too were granted an exception which will expire in several years.

Funding pressures resulting from federal changes regarding treatment of inpatient adult psychiatric care are not the only problems causing budget problems. Special payments received by Vermont to help defray the costs of school nurses will soon be gone, and the federal funds collected to help run the Woodside Residential program for troubled youth will also not be allowed due to the federal interpretation that came when our waiver was renegotiated. Those reductions could cost taxpayers another $5 million per year and when added to the inpatient psychiatric funding shortfalls will total more than $30 million annually.

Creative efforts to avoid state budget increases will surely be attempted. It would not surprise me if talk of downsizing the current 25 bed hospital and building another smaller one so we have two facilities that meet the federal funding requirements will be considered.

All of this goes to show how dependent we are on the federal government to help balance our state budget and meet essential heath care spending needs. We are told to expect even further pressures that will likely come during the Trump Administration. As a friend said, buckle up, it is going to be a bumpy ride!



State House Update – Week Three

Capitol Connections by Dave Yacovone


We learned this week that our state tax revenues for this fiscal year will be down some $24 million dollars. Some $10 million had been set aside in anticipation of this downturn in state revenues so we are left with filling a budget hole of $14 million. Vermont has roughly $140 million set aside in various reserve funds and Governor Scott has recommended we use some of those funds to solve what he thinks is a one-time budget problem. While it is always unsettling when our tax revenues are less than we had projected, it is clear the sky is not falling, at least not yet.

In the grand scheme of things, a $24 million budget shortfall is 1.7% of our total budget. Had we not had the reserves to fill the shortfall, it would have been a much more troubling situation. The question of just how much reserves we should have did come up this week. We currently have reserves that equal roughly 5% of our total state budget. We were advised that the figure should be more than twice that amount.

I do believe it is prudent to stash away savings when unexpected revenues are available, but I am not inclined to reduce services for the poor and the vulnerable among us to bolster our savings accounts. Please do not get me wrong, savings are great for a state, and all of us. My concern is how they are achieved. If for instance, a wealthy Vermonter passes away and leaves the state some unexpected revenues, I say put them into our reserve funds to help us cope with troubled times that may come. I also believe that savings can be achieved by rethinking how we provide some of the government funded services we provide at the community level. I hope to lay out a plan for exploring budget savings soon. My intent would be to put some of the expected savings into reserve accounts, and to invest some strategically to help improve the economy and quality of life in Vermont.

On an entirely different front, we heard from consultants who were hired last year to examine the Vermont Health Connect and advise us on what to do with the beleaguered system. The Affordable Care Act required states to make a system available for citizens to use to purchase insurance. States were given the option of using the federal system, or build their own. Vermont like 17 other states decided to go it alone, and had many difficulties, including having one of our prime vendors go bankrupt while building the system.

Despite the challenges with the Vermont Health Connect, the advisors recommend keeping the system. They admitted it is not working well, in fact over 50 additional state employees have been hired to make the system work by processing applications manually that the system was supposed to do via automation. Yet, the consultants say Vermont has a unique opportunity to fix the system due to a $62 million grant that has been received from the federal government to modernize our forty-year-old system that is used to determine eligibility for public assistance. While the consultants admit it would be a heavy lift and have some risk to it, they think while the modernization of our eligibility systems is being done the fixes to Vermont Health Connect can happen simultaneously using the federal funds. Unless the federal grant is used to repair the system all other funds to fix the system will come solely from Vermont taxpayers. On top of this decision is the uncertainty whether a system will be needed at all. If President Trump and Congress repeal the Affordable Care Act, depending on what they might replace it with the Vermont Health Connect could be needed, or not. We have some challenges before us for sure.


I am privileged to be your State Representative. If you need me please email me at David.Yacovone @Gmail.com or call me at 888-5958.





State House Update – Week Four

 As I sat and listened to Governor Scott deliver his budget address I thought to myself how passionate he was about his hopes to make Vermont an affordable place to live. He made it clear to everyone that he would not support new taxes or fees. I am committed to working with the Governor to this end and if we can make responsible reductions, or reengineer the delivery of services to hold the line on spending I am all for it.

The Governor laid out a different plan for holding the line on state spending. He proposed transferring $136 million in expenses from the state budget that would normally be paid by broad based taxes such as the sales, rooms and meals and income taxes through what is known as the General Fund, to the Education Fund which is paid for by property tax payors at the local level, and other funds.

The Governor specifically called for all higher education spending, totaling $89 million, to be paid for from the Education Fund. Included in this $89 million is an increase of $4 million for the State Colleges, and $1 million for VSAC and another $1 million for UVM. In addition to the higher education spending he recommends adding $9.6 million for child care and moving $35 million in teacher’s retirement expenses to be paid for by the Education Fund.

The Governor recommends sending $86 million from the General Fund to the Education Fund to help pay for these costs. This would leave a $50 million shortfall in the Education Fund to be made up for at the local level. In short, while the state books would be balanced, at the local level these new budget pressures would have to solved by reductions in school spending.

The Governor recommends that our schools level fund their budgets to help pay for the shortfall. He estimates that would raise $30 million. To achieve that amount of savings would require laying off over 400 teachers statewide, unless other ways to cut spending were found.

Another idea the Governor has to reduce spending at the local level, and in turn fill the budget hole in the Education Fund, is to require teachers to pay 20 percent of their health insurance premiums the same way state employees do. He estimates this will save $15 million. Estimates are that the average increase for each teacher would be around $1,500.

Finally, the Governor recommends closing the funding gap by planning on a $5 million dollar surplus in one-time funds from the Education Fund at the end of next year.

The Governor has attempted to put education spending in our schools front and center in the “how do you make Vermont affordable?” discussion we all feel so deeply about. It is not likely our schools could level fund their budgets as most have already finalized and submitted them to the printer for Town Meeting.

 Health care benefits are part of teacher contracts and may not be subject to an across the board policy change. His plan would require schools to bear the brunt of reductions in the future to help balance the Education Fund, unless revenues increased significantly due to economic growth. Additionally, level funding schools cements in place disparities in education spending. High cost schools would have budgets frozen as would low costs schools. Fairness and equity are not supported in one size fits all approaches. Local control as we know it would change significantly under this plan.

While I have grave concerns over the Governor’s proposal I am not criticizing him. He has made a bold proposal and it needs to be respectfully and thoughtfully examined. He needs the opportunity to explain more fully how his plan to shift costs from one fund to another will help Vermont be more affordable. I pledge to work with him in the weeks ahead to do our best to help keep spending in line while protecting the most vulnerable and finding a path forward to help improve our economic climate.




State House Update – Week Five

Capitol Connection – Week #5


To say this week was packed full of a variety of different issues for me would be an understatement. My week started with testimony about mosquito and tick problems, moved to issues surrounding our eighty liquor stores, the lottery, and included debate on whether to support Planned Parenthood, approve a recount of a contested election, and finally ended with a discussion about the Governor’s proposal to change the date of School District meetings in our communities.


Throughout most of the comings and goings of our legislative work people are jovial, good natured and a delight to work with. Something happens though when the work shifts to the floor of the House when debate starts, at least that was the case this week.


The tone seems to shift and things take on more of a combative feel. Perhaps that is the nature of things when people with opposing ideas come together, but I had hoped for more. Mind you, I have watched on C-Span while the British Parliament works their Prime Minister over, it can surely be a raucous event, and I have been to my share of heated Town Meetings. In Vermont though I like to think people can be more civil, after all we should be able to disagree agreeably. Seems like on the national level the hard-ball take-no-prisoners style has permeated the Vermont way too, sadly.


A debate centered around whether to authorize another recount of a contested election. On one side some folks felt the first recount settled the issue; a judge was involved, Town Clerks had worked hard, and the seven vote victory should stand. These are valid views and have merit.


On the other hand, some people, including myself, felt there was enough uncertainty over the election. Especially when considering evidence of voting tabulators making mistakes. This side of the argument had merit too. In the end it was decided by a wide margin to proceed with the recount.


In my mind disagreement is healthy. I like to think during a debate people can make their case on the merits of their position; you vote and move on. During this debate that was not the case.  Those who did not support another recount characterized those who did as dishonest, insincere and simply being partisan. They claimed if you did not agree with them you felt Town Clerks who are experts on elections did not know how to do their job. As for me, I know our Town Clerks are hardworking and conscientious. To say I disrespect them because I was concerned about the accuracy of a voting tabulator seems unfair.


A bit of a stir was caused on the debate concerning whether to change the date of School District Meetings from March Town Meeting to a date in May. Those who advocated the Governor’s view claimed that if you did not support the Governor you were not serious about getting spending under control.


Those who did not support moving the date for all School District Annul Meetings to May, such as myself, reasoned that School Districts already have the local control to move the date of their meetings now if they need more time to deliberate their budget, and Montpelier does not need to mandate it. This position led to claims that “local control” was being exploited as an excuse to block the Governor.


A friend of mine once said, no matter how thin the pancake there are always two sides to every issue. I hope as we move forward through this legislative session the civility and quality of the debate can move to higher ground as we explore all sides of an issue based on their merit and not politics.


As to cutting spending we need to focus more on the cost of health care to help reduce spending than changing the date of an annual meeting or spending time on recounts. Nearly one-fifth of everything we spend on k-12 public education goes to pay the health insurance premiums of staff. Until we get health care spending under control, not by passing crushing deductibles and co-pays to consumers, but by addressing the factors that drive health care spending like behaviors and poverty, everything else is a distraction.


State House Update – Week Six

Capitol Connection


As we wrestle with stabilizing Vermont’s finances, an interesting exercise is unfolding. We have been told not to count on more money to balance the budget. Budget writers, including myself as a member of the House Appropriations Committee, have been assigned the task to achieve roughly $40 million in cuts to state spending for next year to balance the budget.

Each avenue we explore generates a flurry of special interest attention with the hope of discouraging us from cutting their part of the budget. It is one thing to advise law makers about the unforeseen ramifications that a budget cut may cause, and another to suggest if you cut a budget a block of voters will rebel against you. It also seems few people come forward with suggestions about how to do the business of government differently to achieve savings.

For instance, the Governor recommended cutting the hospitals by $3.7 million next year. A question was raised whether this amount could be increased. Why $3.7 million, and not $5 million, or for that matter maybe $3.7 million was too much and it should be a lower amount. Within minutes of the discussion I was approached by hospital lobbyists asking who raised the question, what was behind the discussion, and such. The point to be made is not that hospitals should not protect their interests, it is just that everyone does that. There is it seems no easy low hanging fruit when it comes to cutting budgets.

Another area for budget changes may be the Vermont Veteran’s Home. Our Veteran’s Home serves some of the easiest to care for patients in the state, yet has the highest staffing level in the state. And, unlike any other nursing home in Vermont it will receive a special payment of $6 million in state funds above and beyond what it is paid to care for patients through the Medicaid Program. All other nursing homes in Vermont receive no additional state funding above what Medicaid pays them.  Can we rethink how we provide this care? We could spend half of that $6 million and serve far more Veterans in their homes at a much lessor cost. To be sure such inquiries will generate a strong reaction from supporters of the Veteran’s Home. None of this effort means anyone wants to hurt our Veterans, it means we have to examine how we do things and try to think if we can do things differently. As the saying goes, if you always do what you always did, you will always get what you always got.

I am pushing for more revenues to help fight homelessness. A bill has been introduced to add a $2 per night fee on hotel use. It is estimated ninety percent of the revenue would be paid for by out-of-state visitors. This fee would raise around $10 million yearly. By my way of thinking if someone is going to vacation in Vermont whether they pay $150 per night or $152 per night, they will still come.

We have learned that if your housing situation is not stable it is hard for anything else in your life to work. Our Agency of Education estimated nearly 1000 children in our schools last year were homeless. Over 800 children were served last year in our shelters. The housing challenge is huge and to the Governor’s credit he is proposing $30 million in bonds to build more affordable housing in Vermont in his budget. In order for his investment to work however, there may be a need for supports for the people who will move into the homes, and the $2 per night charge at hotels can cover that cost.

Bricks and mortar for more housing, by itself will not solve the housing crisis. There are many who once in safe affordable housing, still have a multitude of challenges that made it hard for them to secure safe housing and sometimes their ability to take care of the housing is limited by addictions or mental health challenges. Case managers who can help support the families in the housing, can make a powerful difference in housing efforts. These supports, together with the Governor’s housing plans can be life changing for vulnerable Vermonters. One without the other, housing by itself, or support services alone, will not work. If we do not help address the underlying issues that make it hard for so many to keep their housing, we will not be successful.

As I deliberate and grapple with our budget dilemma, I am guided by a quote from Abraham Lincoln that I am fond of. “The legitimate object of government is to do for a community of people, whatever it is they need to have done, but cannot do at all in their separate and individual capacity.”

State House Update – Week Seven

Capitol Connection Week # 7


“An investment in knowledge pays the best interest.” I think Benjamin Franklin was right. Education can be a great pathway out of poverty for many. We should do what we can to help Vermonters who want a higher education.

Today, Vermont ranks third worse in the nation with the level of support it provides to support higher education. The vast majority of all Vermont students choose to go to college in Vermont at our Vermont State Colleges (VSC). The percent of college cost parents in Vermont pay to help their children go to college is the highest in the country. The debt a student graduating from our Vermont State Colleges faces is around $28,000.

Unless something is done to help the VSC they are looking at ending the year with a 4-million-dollar deficit. The more VSC increases tuition the less competitive they are in attracting students from out of state, and fewer Vermont students will make college a choice in the face of more staggering debt.

So, what then do we do? Anyone want to pay more taxes to help? To the Governor’s credit he recommends providing $4 million to the VSC next year. He proposes to fund it however by shifting the cost to the Education Fund which can mean higher property taxes. There does not appear to be much of an appetite for that.

The VSC deserves much credit for trying to fix their financial situation on their own. They have laid off over 200 staff in the last three years, cutting their expenses by $3.6 million. They have consolidated business office functions across our five State Colleges saving another $1 million. The unification of Johnson State College and Lyndon State College into the Northern University of Vermont will save $2 million. The VSC has worked hard to change their retirement and health insurance plans to save another $2 million.

None of these cost saving efforts have been easy, the VSC Administration, Faculty and Staff deserve much credit for trying to fix their problem. Yet, despite these efforts they still face a $4 million shortfall.

All possible solutions need to be explored to do more for Vermont families who want to better themselves through a higher education. Vermont will spend $4.9 million this year of tax payer dollars to send students to out-of-state colleges. The question of curtailing that policy has come up for consideration.

Right now in Lamoille County 126 students out of 514 used their Vermont financial assistance to go to an out of state college. The number in Washington County was 347 out of 1,231. No one would suggest pulling the rug out from under these students in the middle of their college years. All who want to finish their education out of state should be supported. However, after they had completed their education a line could be drawn and no additional out of state assistance would be granted, allowing the dollars to stay in Vermont, where many would choose the VSC.

If a student wanted to pursue a course of study out of state that was not offered in Vermont, they could be allowed to do so with state help. Those who might attend a border college like Keene State could be allowed if they were a day student, but those who lived on campus might have to attend a Vermont college instead.

None of this is easy, there are no ways to magically print more money to solve the VSC challenges. There are not many other options. I will be exploring the possibility of limiting tax dollars to in-state colleges as a way to help the VSC. I do not take such a decision lightly. There will be those who argue students from modest income families should also have opportunities to explore learning in different areas of our county and not just those from families who can afford it. The sad story is we may not be able to afford to do that.

State House Update – Week Eight

Capitol Connection – Week #8


I was having a conversation years ago with a person from Johnson whom I respect a lot and he said to me “Dave, you have to spend money to make money.” I am sure we have all heard this phrase many times but from that conversation forward it has stuck with me.

This week in the legislature I was suggesting to my fellow members on the House Appropriations Committee that we might have to spend some money to save some money, to help us balance a budget hole in the vicinity of $50 million. That figure is fluid by the way and seems to edge upward each week.

By way of background, efforts to help control health care spending are constantly evolving. Throughout much of the 1990’s Vermont and other states, relied on a Managed Care model that essentially imposed a “Mother May I” system over physicians. It made Physicians get approval for much of the care they felt their patients needed through what is called “Prior Authorization”. They had to call insurance companies to get approval before they could order care. Such efforts were applied to all patients, the healthy and very ill alike. In short it was a one size fits all approach and not very effective. Over time as payment reform evolved efforts to control costs became more targeted, though some of the vestiges of “Mother May I” still exist to the consternation of physicians.

In 2007 during the Douglas Administration the Vermont Chronic Care Initiative(VCCI) was born. The aim of this effort was to focus on the highest cost Vermonters on Medicaid to help reduce costs. It has evolved into a highly successful effort to help Vermonters and save taxpayer money at the same time.

VCCI targets the top 5 percent of people receiving Medicaid whom the most money is spent on to help them so the amount spent goes down and the care results go up. The VCCI performance data is impressive. VCCI indicates in their last annual report they saved $30 million over projected expenses, decreased Emergency Room use by 15 percent, reduced hospital stays by 30 percent, and were able to reduce the number of people who had to return to the hospital by 31 percent.

They achieve these outcomes by assigning staff to attend appointments with patients to help make sure they understand what their physician said and more importantly that they do what the Physician told then to do. In the bureaucratic terminology they use predictive analytics to identify those patients most likely to spiral deeper into the health care system and provide intensive case management. They work to help change the behaviors of those with chronic illnesses by helping them self-manage their care and in so doing empower them to reclaim some control over their life.

So, what does all of this have to do with helping to manage the state budget? We need to spend money to save money. We need to hire more staff to target more people because the VCCI cannot reach all of the top 5 percent of health care users. This is what we know. The top 5 percent of most needy Vermonters consume 39 percent of all spending. This is where real savings can be made. And, most importantly, for years our definition of who the top 5 percent are has intentionally omitted the highest cost people, those who receive both Medicaid and Medicare, the dual eligibles. Vermont decided not to target these people because any savings would have gone first to the federal Medicare program and not helped the state budget. That practice needs to stop. We just received special permission from the federal government to keep those Medicare savings which is a game changer. By serving this very needy cohort even more savings will be achieved. These are the oldest patients with chronic illness. Estimates are if we hire 10 more nurse case managers, the net savings will likely be another $9 million annually. That $9 million will help reduce Medicaid spending and help close our budget gap. Yes, we need to spend money to save money.






State House Update – Week Nine

Capitol Connection – Week Nine

It has been said that the art of taxation consists of the ability to pluck the most amount of feathers from the goose with the least amount of squawking. A feather here and a feather there, and the goose, or tax payer, does not get too upset the thinking goes, until you pull a lot of feathers all at one. The property tax is a case in point, it hurts.

In the early 1990’s states started to quietly remove some tax feathers from health care providers. It started with taxing hospitals, then nursing homes, then home health agencies, and before you knew it every state in the country except Alaska had some form of provider tax. The provider tax works by requiring health care providers to send tax dollars to the state, then in turn the state takes those dollars and uses them to draw down and receive more dollars from the federal government through the Medicaid program. The states then take those dollars they receive and pay their health care providers to provide access to health care. It is little wonder why this convoluted process has been dubbed “Medi-Scam”.

The federal government has unsuccessfully attempted to have the provider tax declared unconstitutional.  They have been able to limit the amount of the tax but without question the significance of the tax is huge on the state and national level. Not only has the breadth of the tax grown to cover more providers but the actual tax rate has skyrocketed. Nursing Homes for example started with $50 per bed tax. Today the tax is more than $4900 per bed annually. Vermont, like many other states, has drunk heavily from the provider tax Kool-Aid pitcher and now is very dependent on this funding source to operate our health care programs. In fact, Vermont raises $164 million annually from provider taxes, which is more than half of the Vermont State Health Care Resources Fund.

So, what does all of this have to do with you and me?  Our Home Health industry in Vermont has been badly wounded by the way the provider tax has been applied. Home Health is the connective tissue, the glue, that holds much of health care together for thousands of Vermonters and the health care system as a whole.

Federal cuts for the last several years to Medicare, with more coming on the horizon, coupled with a flawed provider tax design, is putting these essential services at risk. Vermont taxed Home Health, added more people and services for them to provide for, but continued to under pay them. Portions of the provider tax revenue drawn down from the federal government, while paying for more to be served, should have gone into more reasonable payment rates. Instead the revenues were all used for services ignoring the need to compensate at realistic rates. In short the more Home Health does for Medicaid, the more it loses.

We cannot expect such a crucial player in the Vermont health care landscape like Home Health agencies to hold bake sales to balance their books. Their mission requires them to serve us all. We now need to fix the payment systems that are hurting them. I hope the legislature can find a life line for some short term relief while a longer lasting solution is found. The Home Health tax goose has no feathers left to pluck, action is needed now.