Universal primary care will strain a shrinking doctor workforce

Dear Editor,

As someone who has worked in Vermont’s healthcare financial advisory sector over the past year, I think Olivia Gieger’s recent VTDigger report does a great service by highlighting universal primary care, a goal both gubernatorial candidates view as important for Vermont. However, turning this vision into reality requires overcoming substantial structural and financial challenges.

On the care side, our delivery system is under immense strain. With nearly a third of our primary care doctors over 60 and 16% planning to retire, leave Vermont or reduce hours soon, eliminating cost-sharing will spike demand before capacity exists. Expanding access will likely force greater reliance on nurse practitioners rather than doctors. While nurse practitioners are vital to our system, studies show that relying on them to fill physician shortages can inadvertently drive up downstream costs through higher diagnostic testing and specialist referral rates. 

Actual 2027 program costs will certainly exceed the outdated cost estimate of $281.9 million projected in 2015. Grown at the same rate as hospital budgets over the period — which have averaged over 3% annually, tracking medical inflation — the $281.9 million initially projected by state analysts for 2017 could be closer to $400 million by 2027, if the scope remains constant. However, if we look at total Vermont healthcare costs in 2024, which I calculate at $7.5 billion, and use Maine as a composition proxy for primary care at 10% of the total, Vermont’s program would be closer to $750 million. We will also have to pay a premium to induce new doctors to relocate and fill our current shortages, creating additional expenses.

On the financing side, the federal Employee Retirement Income Security Act barrier is our primary obstacle. Because federal ERISA preemption bars Vermont from mandating that self-insured employer health plans, which make up about three-quarters of employer plans, join a state-funded risk pool, taxpayers face an unfunded $80 million to $100 million gap based on my estimate of 135,000 to 145,000 self-insured lives at an annual conservative cost of $600 to $700 per person. 

Additionally, bypassing a Medicaid waiver would needlessly forfeit around $107 million in Medicaid funding, much of it federal. Induced demand will likely outpace provider access at all levels, and offering free primary care may incentivize some to drop comprehensive insurance altogether, potentially increasing uncompensated emergency care and eliminating any projected emergency department savings, at least in the short term.

Total program costs without physician relocation bonuses would be $400 million to $750 million per year, and indirect costs of ERISA preemption and the Medicaid waiver would bring the total to $587 million to $957 million per year. Attempting to fund this project with almost $1 billion of taxpayer liability and cost shift using a targeted high-earner surtax is risky. 

The tax relies on about 3,500 filers who already generate over 30% of state income tax revenue, according to the Vermont Department of Taxes, meaning the tipping point for cannibalization of our general fund from out-of-state migration is only a few hundred departures. One billion dollars of total cost for universal primary care spread over the high-earner cohort would result in an average tax increase of $285,714 per filer per year. 

The numbers above are order of magnitude only. These challenges are formidable, but they may be solved. I look forward to seeing how Vermont meets this new moment in healthcare.

Myers Mermel
Manchester, Vt.

Read the story on VTDigger here: Universal primary care will strain a shrinking doctor workforce.