MONTPELIER – The Vermont Medical Society thanks Rep. Peter Welch for voting to pass H.R. 3162, the Children’s Health and Medicare Protection (CHAMP) Act. Passage of this bill is an important step towards providing insurance coverage for children and protecting access to physician services for the most vulnerable citizens -- the disabled and the elderly.

The Vermont Medical Society supports the provision in the legislation reauthorizing and expanding the State Children’s Health Insurance Program. It is critical that every child have health insurance coverage for a healthy start in life. This legislation would preserve Vermont’s highly-successful children’s insurance program and allow more than 3,000 additional children to enroll. The SCHIP expansion would be funded by an increase in the federal cigarette tax. This is an appropriate step, because higher cigarette taxes will encourage some current smokers to quit, and prevent thousands of Vermont children from becoming smokers in the future.

Our experience with increases in the state cigarette tax has shown that while it lowers the smoking rate, the higher tax creates a net gain in revenue. Increasing the federal cigarette tax is a predictable and stable method for funding the SCHIP program expansion.

For the last several years, physicians have faced payment reductions by the Medicare program. Medicare already pays less than what it costs to provide care – about 25 percent below what commercial insurers pay. Reducing that rate even further would force many physicians to close their practices to new Medicare patients. With the scheduled 10 percent payment reduction in 2008 and 5 percent cut in 2009, Vermont physicians stand to lose $20 million over the next two years, at a time when many primary care practices are struggling to stay in business because of lower reimbursement and increasing costs.

Previously, Congress agreed to delay the planned payment reductions by one year, but the threat of cutbacks remained due to continued use of the flawed Sustainable Growth Rate formula. Not only does the CHAMP Act prevent the scheduled payment reductions, replacing them with modest half-percent increases, but it replaces the Sustainable Growth Rate formula with a different methodology. While the Vermont Medical Society has some concerns about the specific payment provisions in the proposed replacement, and will continue to work with Vermont’s congressional delegation to resolve those issues, we support the effort to find a fairer approach to reimbursing physicians.

The CHAMP Act also extends an important geographic payment adjustment, which is due to expire on Jan. 1. Without the extension, Vermont physicians would face an additional 1.7 percent payment cut, on top of the 10 percent reduction, for a total cut in 2008 of 11.7 percent.  A cut of this magnitude could have serious consequences on seniors’ ability to access physician services, as Vermont’s doctors struggle to stay in business due to increased medical liability costs and reduced payments from private insurance companies.

The Vermont Medical Society also thanks both Sen. Patrick Leahy and Sen. Bernie Sanders for voting in support of reauthorizing SCHIP, and we look forward to working with Vermont’s entire congressional delegation as the legislation goes through the conference committee process.

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