Pensions and Bonding Capacity Update in Senate Institutions
On Tuesday the Senate Institutions Committee received an update on the State’s pensions and bonding capacity from State Treasurer Pearce, Brad Ferland from the Agency of Administration, and Adam Greshin from the Dept. of Finance and Management. This was very much a repeat of the testimony from last week in Senate Appropriations and it was repeated again on Wednesday in Senate Government Operations. While all three witnesses agreed that the State faces a challenging situation with regards to liabilities, the course of action advocated for by Pearce differed from Ferland and Greshin’s analysis.
Treasurer Pearce stressed the viability of OPEBs as a mechanism for lowering liabilities and argued that a defined contributions approach would be far more costly than adhering to the current defined benefit plan. While certain members of the Committee pressed Pearce for an immediate course of action, Pearce maintained that a working group is in the process of putting together a set recommendations and urged the Legislature against pursuing any perceived quick fixes in addressing mounting liabilities. Questions posed by Senators revolved around unpacking the pros and cons of pushing payments back relative to increasing the rate of paybacks.
While Ferland and Greshin acknowledged that Pearce’s efforts have had a positive impact on reducing liabilities, the pair suggested that the State’s investment returns haven’t panned out as expected, citing flawed assumptions surrounding mortality, retirement, cost of living increases, and salary increases. It was argued that the efforts of the working group tasked with addressing State liabilities has been undermined by the absence of a holistic approach that takes the State’s four ‘buckets’ into account. The result has been a siloed process where each entity is singularly concerned with meeting their own short-term interests at the expense of long-term solvency. To address the situation, Ferland and Greshin advocated for a third party to assess the overall situation, identify all levers the State can pull, and assess a value to each of them, in addition to increased transparency around the process.
Healthcare Reform
This week Senate Health and Welfare continued testimony on S.290, the healthcare reform bill. As a reminder the bill would introduce additional reporting requirements for OneCare. It also expands the Green Mountain Care Board’s authority over rate setting between hospitals and insurers, price transparency, and contracts with designated agencies. Additionally, it caps rate increases for administrative costs for insurers and requires AHS to report back to the Legislature on the impacts of joining the ACO for state employees.
The Committee heard testimony from a number of concerned parties including the Green Mountain Care Board (GMCB). GMCB Executive Director Susan Barret focused her testimony on a number of specific language requests which more appropriately fit the environment in which they operate. Some of this was related to confidentiality concerns. For instance, a request to gather more Fee For Service (FFS) information from hospitals and insurers to understand how each procedure or billable item adds up to their total operating budgets. GMCB said they can request this information but have to live within certain confidentiality restraints which will not allow them to publish all of this data. They also asked for many of the bills expectations to be turned into a study so they could come back to report on things they would need to do to accomplish the goals within the legislation.
The testimony continues next week and there may be an extensive mark-up process on this bill before it moves forward.
For simplicity, this week I am only including the bills that have been taken up. Ways and Means continues to go through the Miscellaneous Tax Bill and will most likely hold it for as long as they can. Usually this is the week after “crossover”. Crossover this year is Friday, March 13th. This is the day that by rule, bills have to be out of their originating committee in order to be considered this Session by the other chamber. Of course members often find ways around this if necessary.
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S.290
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Sen. Lyons
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Read First Time and referred to Senate Committee on Health and Welfare 1/14/20
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An act relating to health care reform implementation
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Misc. Tax Bill
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Committee on Ways and Means
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Still in Committee, not introduced
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Miscellaneous Tax Bill- MAGI, Retirement Income Tax Discussion
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H. 922
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Committee on Gov. Ops.
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Passed House, sent to Senate Gov. Ops 2/20/20
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Act relating to miscellaneous amendments to the Vermont State Employees’ Retirement System
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H.930
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Rep. Scheurmann
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Referred to House Healthcare
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An act relating to accountable care organization benchmarks and recertification
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