Small business owners in Vermont face a crucial juncture. Vermont’s new Health Connect insurance marketplace is slated to open enrollments in October. Business owners are evaluating how federal and state healthcare reform will impact both their relationship with workers and their company’s economics.

Fortunately, Vermont businesses have an empathetic leader in Burlington businessman Al Gobeille, Green Mountain Care Board member. Halfway into his four-year term at GMCB, he stepped into the role of GMCB chair this month, after Anya Rader Wallack resigned. Betty Rambur, a registered nurse and professor was appointed by the governor to fill Wallack’s spot in mid-August.

His Hat in the Ring

Two years ago, Gobeille already got how healthcare reform would affect businesses and the Vermont economy. He wanted to be a player in those decisions that needed to be made. “After the Hsiao report came out,” Gobeille told me in a recent interview at his office across from the Burlington Ferry, “I was concerned. The more I read about, and got involved, I knew I wanted to be in the room, crafting a solution that would be good for the economy and good for the people. So I threw my 20-page application into the ring to be on the board.”

Harvard medical economist Dr. William Hsiao, commissioned by the Vermont legislature, issued a report to the body in February 2011. Hsiao recommended “a public-private, single-payer system” that would “show the way forward for the rest of the United States.” At that time, Gobeille was serving on the board the Visiting Nurses Association of Chittenden County on the payment reform advisory committee.

A Life of Service

Not everyone would read a 200-plus-page report such as Hsiao’s, and then be motivated to take action. But being of service is a life tenet for Gobeille. A self-professed “rambunctious youth with a lot of energy,” Gobeille originally came from Rhode Island to attend Norwich University in Northfield, the country’s second oldest military college. “I needed to go to military school. I landed there, and met some amazing people who taught me how to problem solve, and that we are supposed to serve the republic, not in a partisan way, and not in a selfish way. I am still close with President Schneider, and on the phone the other day, he said the same exact words to me he used to say: ‘Thank you for serving the republic.’ That place had a huge impact on me.”

Gobeille went on to serve as a U.S. Army ordnance officer in the 3rd Armored Division. At age 21, he was assigned in Germany as first lieutenant shop officer in an Army maintenance company. Gobeille and his crew worked on everything from jeeps to missiles to tanks to firearms to radios, and of that time, Gobeille says, “I loved running a shop.”

Business Acumen

Gobeille’s affinity for service led him to the restaurant industry. With his wife Kim, they own and operate the Gobeille Hospitality Group, which runs three popular Burlington restaurants, and a cruise business on Lake Champlain. Gobeille also serves on his town’s select board, and on the boards of Burlington Business Association, Champlain Valley Expo, and the Lake Champlain Regional Chamber of Commerce.

Of his work on the GMCB, Gobeille says, “I bring the DNA of what it takes to be a small business owner: the way we look at numbers, and people, and systems. Numbers to me are real. They’re material. They’re personal. So when I look at the hospital budgets, I understand from a personal level what the CEO and CFO are going through, and can have conversations with them to understand what they are trying to accomplish with their budget. I think it’s served me well so far on the board.”

Gobeille is keenly sensitive to the mixed reactions from Vermont hospital and insurance company CEOs. Hospital budgets and the rates of insurance companies are both regulated by the GMCB. He says that he is humbled by the spirit of collaboration he sees.
“There has been defensiveness, optimism, and pessimism. Yes, it is stressful. If your budget is constricted in any way, it could affect long-term capital planning, personnel, and purchasing. They are forced in some way to innovate, and that’s not easy. But the amount of cooperation we get from the heads of hospital and insurance companies has been incredible. This isn’t a case of the government forcing private entities to do something. We have the third largest accountable care organization in the U.S. I hate to say historic, because it’s cooler to say epic. But it’s epic.”

Gobeille is the parent of three young adults.

As a boss, Gobeille is familiar with working with a staff. He has high praise for GMCB’s operation. “As a small business person, I didn’t know people who worked in state government, and I am impressed. We have a staff that helps us to meet deadlines, and carry out the regulatory and innovative powers that we have from Act 48. In a company, you can’t accomplish anything without great, highly motivated, wonderful people. They are unbelievably professional, highly educated, and absolutely committed to what we are doing. If you can surround yourself with people that are smarter than you, life is great.”

The Nitty Gritty

“A lot of people have heard the phrase ‘single-payer,’” says Gobeille. “And that certainly is a political term to some. But the real work we are doing is in delivery reform and system design. We are trying to enable and cheer on the private sector, and innovate to create a more efficient healthcare system. That’s the hard work that the doctors and nurses and management professionals are working on right now—that no one makes a slogan for a bumper sticker about.

“The current system we have…there are pieces of the puzzle, but the puzzle doesn’t always come together well. Our work is to facilitate an environment that brings these pieces together.

“If health care [cost] is rising at a hyper-inflationary rate, it’s not necessarily a question of who pays for it. It’s that no one can afford to pay for it—no government, no private person. That has to be fixed first. Then, in 2017, we will move on to how to finance it. But right now, we have to build a better mousetrap. I think we actually have a chance to do something profound here.”

Gobeille further explains the whys and hows of Vermont health care reform. His years spent repairing machines comes into play as he says, “In the example of a car you are going to buy, there’s how you finance it and how efficient the car is, [and they are] two very different things.

“How we finance health care in America is a terrible system. If you would compare it to a car, you pay the same amount every month. In health care, you pay the same amount every month and, if you get sick, you pay a huge amount that month and it blows your budget. It may cost you your home and your ability to pay for your children’s college. It may shipwreck your family financially. So that model is broken.

“Then, is the car efficient? Right now in health care, the miles-per-gallon is really low, not efficient. We are now financing an inefficient system. We need to make an efficient system that is financed more equitably. Right now, the GMCB is working on the efficiency of the system. And then the government and legislature will work on how it is financed. Two necessary and distinct steps.”

Efficiency and Quality

Gobeille admits it is complicated. “Any one piece of it can make your eyes glaze over, [whether it’s] the federal Accountable Care Act, Vermont’s Act 48, or how we finance health care, or how we form the delivery system. But health care is 20 percent of the Vermont economy, a giant part of our lives. And if you talk to anyone in the industry, they will tell you it could be done more efficiently and effectively, and achieve higher quality at a lower cost. There are conversations going on in the state that have never been had before, which causes me to have great optimism.”

Gobeille gives the example of OneCare. Dartmouth-Hitchcock and Fletcher Allen have formed an ACO (Accountable Care Organization, see Vermont Woman, Feb/March 2013) that includes all of the hospitals in the state working with Medicare. Under OneCare, the ACO members have agreed to work on integration and standardization of care. They expect a decline in utilization of outpatient services.

“It’s not a statistical blip,” says Gobeille of already realized savings. “It is coming from the way in which care is now managed in these institutions. Electronic management of procedures allow for more standardized care protocols. The right test at the right time is made more clear. What we are seeing is a drop in utilization; where three things might have been done before, it is now one.”

And in Gobeille’s view, efficiency of the system refutes opponents’ claim that health care reform will lead to a rationing of services. Critics worry that when the supply of health care is decreased, as with fewer tests, more demand will be created in the long run.

Gobeille answers them by again referring to automotive efficiency to explain why he isn’t worried. “A few years ago, with the federal CAFE standard (Corporate Average Fuel Economy regulations legislated in 1973 in the wake of an oil crisis), the government said, ‘Cars have to be more efficient.’ Now look at the cars you can buy today. The miles per gallon in a sports car is what an economy car was ten years ago. We need to do that with the health care system. We don’t need to give up the racy sports car, the high quality health care we all want. We just need to do it in a more efficient way.”

He puts on his business hat to further explain, “There’s a saying in business, that you can have quality, service, or price. Pick any two. The concept is, if you want high quality and high service, then you can’t have low price, or if you want low price, you have to give up service or quality. I think that’s true in a system that is already operating efficiently. But if you study health care, you will see there are tremendous opportunities to build efficiency into the system that allows you to have all three. CFOs and CEOs I have talked to agree with this. If you go to most industries you wouldn’t get that type of agreement.”

Change is Hard

As of January 1, 2014, Vermont Health Care Connect, the federally mandated insurance “exchange,” will be the only place individuals or businesses with fewer than 50 employees can purchase health insurance. The first “open enrollment” period is slated to begin October 2013, and will include all of the plans Vermont currently offers, including Blue Cross/Blue Shield, MVP, and the state-funded Catamount Health Care and Medicaid. They will all be presented side by side, with comparative price points.
Gobeille explains, “Businesses [with 50 or fewer employees] can fund plans in the exchange for their employees, or they can drop company-sponsored insurance plans so that employees can join the exchange on their own. And the best option will be different for different sizes and types of companies.

“The exchange is a big change for America. There is all this unknown. It is almost like Y2K, where everyone sat there asking, is anything going to work? Is nothing going to work? It’s like that with the exchange. Will we be able to understand it?

“My answer to that is, I have complete faith and confidence in business owners. They’re the people who will work a 20-hour day just to get by. They figured out their business, their company. They will figure this out.

“Just like they do with taxes. There are c-corps and s-corps. When we look at the tax code, we have somehow managed to apply it to our businesses. There are all these options. If you can figure out the U.S. tax code, you can figure out almost anything, including the exchange.

“I know that from behind the scenes, the exchange is the first time there has been a truly transparent look at what businesses and individuals will actually be buying.
“When you go on the exchange, you will be able to pick what cost shares and co-pays you feel comfortable with. The average employee only ever got to see what the employer offered.

“Is it going to be bumpy? I have no way to know. I have talked to a lot of business owners who are afraid of this change. One employee gets insurance, the other doesn’t. They both get paid the same. What is fair?

“The answer is, what you are doing now isn’t fair. We’ve come up with the current system, which is clunky and lacks equity between employees, and we are all okay with it, because it is the status quo.

“There is going to be an adjustment, but five years from now, when we look back, we will say this is a much better way to purchase a product for my family than have some owner or human resources manager from the company pick something.”

How will this affect group rates? Gobeille answers by bringing up VACE insurance, which the Vermont Association of Chamber of Commerce Executives has provided through BC/BS and Delta Dental, for small business owners that belong to VACE and their employees.

“Group rates are already confusing,” he says about them. “One can join VACE, and get an individual plan, a small group plan with choices for up to 10 people, or 10-29 people. The new system is different—in that it is something new—but it isn’t like the old system was not confusing.”

And in 2017? When Vermont’s single-payer system is slated to begin? What does he anticipate will happen?

“That hasn’t been decided yet. That will be the political debate,” he says.

Vermont’s upcoming debate will have to determine how Vermont’s newly efficient health care system will be financed. Who will pay? How, and how much? Business owners and individuals can learn more from federally funded Vermont Health Care navigators, who will help educate individuals and businesses about the new insurance exchange. (see sidebar)

Reaching out to the Public

Gobeille sees the GMCB board members as representatives of the people of Vermont. “We embody the people so that we can speak to the insurance companies, hospitals, and say, ‘We have to fix this – because we can’t afford you.’ Profoundly, it is we. We have to fix it and we have to think this is the right solution, and we have to embody this to the best that we five can.”

To that end, the five-member GMCB strives to be transparent, through public and televised meetings, travelling to businesses, and publishing minutes on its website. But Gobeille feels it still isn’t enough.

“I have learned, as a select board leader, that no matter how public you think you are, you’re not. People work. They have families. It is hard to hear from 630,000 people. And that concerns me. I still feel like we are just scratching the surface of hearing from the average person. The number of people who make statements that show me they really don’t know what is going in with health care reform tells me we have to do better.”

Gobeille concludes, “I think we actually have a chance to do something profound here. The pressure I feel is just not to blow it. Vermont is a special place, and we may have a special solution.”