VT-Costs of Vermont’s Health Care System Comparison of Baseline and Reformed System (Initial Draft)

This report was prepared by Vermont Legislative Joint Fiscal Office and Vermont Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) under Section 14 of House Bill 202. According to the report the analysis:

• Updates Dr. Hsiao's original baseline estimates using more recent data from BISHCA’s 2009 Expenditure Analysis that were based in part on new data from VHCURES. The data update resulted in a 5-6% reduction in both health care system costs and potential savings, as savings are calculated as a percentage of total baseline costs. These changes do not affect Dr. Hsiao’s findings in any
  meaningful way.
• Updates Dr. Hsiao's original estimates to account for differences between his components of cost
  savings and those that are included in H.B. 202, specifically to exclude savings attributable to medical
  malpractice reform. This change reduces savings by about 8%. If subsequent legislative actions
  reform the malpractice system, savings could be obtained.
• Applies a “sensitivity analysis” to the savings calculations. In lieu of a detailed reevaluation of Dr.
  Hsiao’s work, an analysis was performed of the extent to which calculated savings changed if a key
  variable changed. They limited their focus to two major variables: the level of administrative savings
  which will be achieved by providers and the rate with which savings will be achieved. These were
  selected because of their relative importance and because they were the subject of the majority of
  questions from stakeholders.