Vermont Forced to Pay Medicare Recipients Twice in Budgetary Snafu

Published May 31, 2016

President Barack Obama’s health reform law has resulted in Vermont seniors on Medicare receiving their benefits twice in a budgetary snafu which is being criticized as a sign of the new law’s inefficiency.

State Sought Solution

In a June 14 letter to President Obama’s Health and Human Services Secretary, Kathleen Sebelius, Vermont Governor James Douglas (R)  identified the error and wondered why the Obama administration has not sought to correct it.

“We were hopeful that Health and Human Services would work collaboratively with us to develop a method to capture the $250 rebates directly, since we [the Vermont state government] are using state taxpayer dollars to pay for the donut hole prescription costs for these beneficiaries, and without capturing the rebates, beneficiaries would essentially be receiving the benefit twice.” Douglas wrote. “Unfortunately, Health and Human Services was unwilling to work collaboratively with Vermont and other states that have these cost-sharing programs.”

The $250 Medicare rebate checks in question were prominently touted by the White House and Secretary Sebelius, as four million seniors should receive the rebates across the country. But Douglas says this ignores states like his, where the funds were already budgeted for a different purpose.

“We have been placed in the untenable position of having to develop a plan to access these funds directly from elders after they receive the checks,” Douglas wrote. “At this point, due to the
lack of cooperation from Health and Human Services, it appears that it is going to be an administrative burden and also confusing to our beneficiaries to implement this effort as planned.”

No Guidance from Administrators

Susan Besio, director of the Office of Vermont Health Access, which administers the health care program for Vermont, notes her state continues to wait for guidance from Washington on exactly how to implement the new health care law to avoid the expense and difficulty of these administrative errors.

“We, like all other states, are waiting for guidance from the Centers for Medicare and Medicaid Services (CMS) about the specifics of all these different initiatives from federal reform. Because we are waiting, in some cases like here we are having to go ahead and make decisions without final guidance from CMS, just because of the timing, and so it is making it difficult right now in the early stages, for us and for other states,” Besio said.

Besio expressed frustration on the part of state officials with the lack of clear implementation plans.

“Many states are working on their budgets for the coming year and are now being forced to make assumptions on how the law will impact us in the near future, without formal guidance from Washington,” Besio said. “It is a situation in which many of us will have to make assumptions that are ultimately not correct.”

More Problems Expected

Professor Richard Epstein of the University of Chicago, an expert on health care reform, says this error has occurred because Obama and his appointees are ill-prepared to handle the administrative details of their health care reform.

“This new law is a complicated thing, and it requires administrative talent to apply it. Just because the president looks good and has a gravy voice, people think he’s brilliant, but he’s a politician with no executive experience,” Epstein said.

“When it comes to health care reform, he and his administration are completely in over their heads. This sort of thing is going to happen again and again because Washington does not understand what they are doing. You need real administrative talent to run reform, and it is not there,” Epstein added.

Epstein points out that ObamaCare cuts Medicare funding this decade by close to $500 billion, and he says these $250 checks were a move to offset the political damage of the pending cuts.

“This just the opening salvo in ObamaCare, which is full of proposals more about aspirations than responsible redirection of actual budgetary funding or administrative reform,” Epstein said. “Maybe such reforms are too boring, or for lesser minds—great minds deal with transcendent issues without figuring out how to pay for it all or make it actually work.”

Thomas Cheplick ([email protected]) writes from Cambridge, Massachusetts.