This is an historic time for health care reform. While Vermont is doing better than most other states, we continue to face unprecedented increases in costs. If we make no changes, the cost of health care in Vermont is estimated to increase by $1 billion dollars, from $4.9 billion to $5.9 billion by 2012. Per capita, that would mean an increase from $7400 to $9400 per person in the state. This is simply not sustainable.

Over the past two years, the Vermont Legislature and numerous stakeholders have taken a long look at how we might improve the general health of Vermonters and reduce costs. Last week, the House passed S.88, a result of that work.

This 40-section bill begins by articulating goals for statewide reform and outlines principles that should underlie a statewide, integrated health care system. It strengthens primary and preventive care, builds community health teams, addresses chronic conditions and obesity management and takes a focused look at 3 different health care models for the future. In addition, it aligns with the new federal reform so that we can apply for grants and waivers, drawing in as much federal money as possible in support of our efforts to keep Vermonters healthy.

One section of the bill addresses expenses related to pharmaceutical marketing. Currently pharmaceuticals spend $29 billion annually on national marketing. Most people do not realize that when they fill a prescription, 30% of that cost goes to marketing and nearly 62% of that goes toward the distribution of free samples. Both the new federal legislation and S.88 look at this as an area where costs could be significantly reduced.

Free samples clearly fill a need and can be wonderful for doctors and patients, however they are not made available simply because the pharmaceuticals just developed a big heart. They are a huge marketing tool. A 2009 report from the Institute of Medicine concluded that samples affect prescribing patterns and lead to patients being put on medications which might have less costly, more medically appropriate generic alternatives.

In reference to the free samples section of the bill, we received numerous letters from patients and doctors around the state concerned that they would lose access to valuable free samples or would be required to jeopardize privacy and confidentiality in the doctor/patient relationship. This is incorrect.

First, this bill does not restrict the distribution or acceptance of free samples. Doctors and clinics will still be able to receive free samples and dispense them as they deem appropriate. Second, this bill does not require doctors to report anything. If you receive a sample, this information remains with you and your doctor. No patient names required.

What this section of the bill does do, is piggy-back on the new federal legislation which will require pharmaceuticals, not doctors, to report which free samples are going where as of January, 2011. If the federal reports are presented in a form that is not found to be useful to the state, S.88 would require the pharmaceuticals to report Vermont-based information directly to the Vermont Attorney General’s office. That is the sum total of the impact of this section of the bill.

So what will happen with this information? This data will be used to analyze what classes of medications are being given away as free samples. From this, it may be possible to set up a program to replace free samples with generic alternatives through a voucher program. This could save millions of dollars, taking one step toward reducing overall health care costs.

S.88 passed the House last week and is now in the Senate. If the Senate concurs, the bill will move on to the Governor for signature. If they do not concur, a “committee of conference” made up of 3 members of the House and 3 members of the Senate will meet to iron out differences before brining it back to both bodies again for a vote.

Leadership is like being at the top of a 30-foot diving board in a dark room and knowing you have to jump.  Just as you get ready to jump the custodian yells up. “Can’t remember whether I filled the pool or not.”

To take it further, you listen and hear water.  Is it the last of the water going down the drain or is it a full pool?  You still have to jump not knowing whether it will be a splash or a splat.

Such has been the experience responding to Challenges for Change. We are already committed to the $38 million cut. We have precious little time. We are trusting that the Administration is giving us the straight dope in the same way we are trusting that the custodian filled that pool.

Over the past two months, I have been the House liaison for the “Regulatory Challenge.” Four legislative committees developed five outcomes for the permit and licensing programs, not to make them easier, but more efficient with greater compliance. The financial target was set at $360,000.

In response to this challenge, Administration created a task force of 25 members drawn from the Agencies of Agriculture and Natural Resources; the Public Service Board; the Natural Resources Board and the Environmental Court. They reviewed the outcomes and developed strategies and measures to meet them. Some strategies could be implemented directly while others required changes in law. On March 30^th, the group asked for statutory changes they felt necessary to implement specific strategies.

Some of these requests made great sense, particularly in the use of web portals. Current law requires that changes in rules be published in area newspapers. Each rule costs the state between $1900 and $2300 or about $100,000 per year. Commissioners added that they were often reluctant to update rules due to the time and cost constraints.

Other requests proved more controversial. One would have reduced costs for the Environmental Court using the more formal “on the record” appeal process, but would have restricted the use of witnesses, evidence and cross-examination provided in “de novo” appeals. Another asked that some permits be eased from individual permits to “permit by rule” or “conditional exemption.” Others asked that license renewals be extended in time or re-licensed through an affidavit of compliance. All of these would have put greater responsibility on the applicant and reduced the time and paper work for the agencies. They argued that once freed from time-consuming ministerial duties, staff could be out in the field providing technical and educational support and monitoring for compliance.

The environmental groups expressed grave concern that these reforms were simply softening standards that would undermine years of work to protect the environment. They also felt that the legislature was abdicating far too much authority to the agencies. Their biggest and broadest concern, however, was about the Challenges process in general. Sweeping changes were being made without fully vetting the impact. The Administration had a month to develop changes while the environmental groups and stakeholders had only days, a huge change from the usual process.

Ultimately, we agreed to many of the requests and worked out the others. Administration withdrew the request for changes to environmental court appeals. We compromised on the permit changes, allowing “permit by rule” in two specific areas. We came to agreement to lengthen recertification requirements for low impact facilities such as recycling centers, but keep the 11 more hazardous facilities on the current recertification schedule. The web-portal changes were moved to the Government Operations Committee. By the 10^th major revision, the bill passed out of our committee with unanimous bi-partisan consent.

My own perception leaves me somewhat doubtful that we will achieve the full $38 million in 2011. As of this week, we are about three-quarters of the way through the process and Administration has accounted for about $20 million so far.

I realize that this process has been far more traumatic in the other challenge areas, particularly Human Services, Corrections and Education. The compressed time frame has been excruciating, opening great possibilities for unintended consequences. The process, however, has allowed people from within the agencies to step back, take a broad view and say, “I know a better way” with the legislature poised to listen.

We’re off the diving board and in the air. I am taking the Administration at their word that there is water in that pool. We will have quarterly meetings to address those unintended consequences.