Vermont and The Road Less Traveled
May 13, 201111:16 am
When it comes to health policy, all eyes seem to be cast toward New England these days. The high-profile issue this week is Mitt Romney’s defense of the health reform enacted during his Massachusetts governorship and his battle with the Wall Street Journal over its merits.
I think, however, a more interesting story is developing in Vermont.
Later this month, Vermont Governor Peter Shumlin is expected to sign legislation that would, in essence, create a single-payer healthcare system in the state. The framework of the proposed Green Mountain Care system is essentially this (it’s explained very well in a question-and-answer piece in The Washington Post): The state would roll up all of its payers – state and local employees, Medicaid and Medicare beneficiaries, individual and small group plans – into one system, with all of the dollars received for their coverage going into Green Mountain Care, which would become the sole health payment system in the state. Vermont will need Medicare and Medicaid waivers from the Obama Administration to make this work, as well as cooperation from the state’s largest insurer, Blue Cross Blue Shield of Vermont, which has already declared its support (and would likely be the hands-on administrator for the new system).
Sounds neat and simple, and it’s getting raves from those who have long supported a national single-payer system, but there are some critical questions left to be answered.
First, what does Vermont do with the large employers who are self-insurers and covered under federal ERISA regulations? One theory, expressed in the Washington Post articles, is that these employers will be taxed anyway to help pay for Green Mountain Care and, therefore, they’ll decide it’s cost-efficient to put their employees in a system they’re helping to finance.
Another question concerns the dual challenges of how to pay for a state-run single-payer system and how to contain healthcare costs to make it affordable. Part of Vermont’s answer is the creation of a Green Mountain Care Board, sort of a revved-up version of the controversial Independent Payment Advisory Board (IPAB) that would have rate-setting powers for doctors, hospitals, pharmaceutical products and medical devices.
This is where Vermont’s economic and healthcare future gets a little precarious. You see, there’s a major difference between enacting state policy and writing federal laws. If individuals and employers believe they’re being hurt by a new state law, it’s not all that difficult to pick up stakes and move to another jurisdiction.
Will employers be open to the higher taxes that will accompany a single-payer healthcare system? What will happen when the state has to ratchet down on physician reimbursements to keep Green Mountain Care affordable? Will New Hampshire be the beneficiary of Vermont’s sharp swing to the left in health system transformation?
Some groups will, no doubt, judge Green Mountain Care a success if it drives private insurers out of the marketplace and replaces them with state-run healthcare. Vermont citizens, though, may hold their judgment until they see if jobs and doctors start an exodus across the state line.
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One Response to “Vermont and The Road Less Traveled”
May 26th, 2011 at 1:02 pm
As an independent health insurance broker who works every day with individuals & small-medium size employers struggling to deal with rising health insurance premiums, I do understand the attraction of the Single Payer system. The basic rationale sounds airtight: “There is simply so much duplication, so much waste, so much profiteering in the private-market-based system, that if we roll it all into one big program, with one big single payer, we’ll save SO MUCH money that we can cover everyone, expand benefits, AND save money to boot!”
The problems here, as much as single payer advocates would like them to go away, are that several consequences are utterly inevitable. Such a system WILL lead to rationing in a number of different forms: “Do we really need so many XXXXX imagining machines in one geographic area?” “Do we really need so many XXXX specialists in one geographic area?” “Why do XXXX specialists charge so much money. We should really cut that down.” These are just a few off-the-cuff examples, but you can bet they & others will come to pass.
Additionally, simply putting single payer in place will NOT change a number of basic facts: Here in the U.S. (like all industrialized Western nations) we have an aging population that is therefore predictably consuming more healthcare; we have been born & bred to expect (demand?) the latest & greatest medical technology & newest drugs (regardless of cost), and furthermore would seem to be becoming less & less healthy every day. Simply going “single payer” cannot change these facts. Indeed, it clealy sets the stage for controls & limitations to TRY and address these issues.
And, lastly, the cost issue. Single payer, being the perceived panacea that is, opens the door to being set up to cover a vast array of health issues that arguably may not be truly “medically necessary”. In addition to the existing cost-drivers very lightly touched upon above, these items confound an already unsustainable economic proposition. I would sincerely & respectfully recommend that all advocates of a single payer system conduct a very careful & dispationsate investigation of the vaunted Canadian system, particularly their on-going fiscal struggles. One often finds the government-run single payer system becoming the less-than-attractive default system, with a “second tier” private system being the preferred option for those that can afford it (i.e. Britain’s situation).
Before being cast as some wild-eyed apologist for the entire private-market system, allow me to state that like all independent health insurance brokers that I know, I do believe we are in dire need of effective, intelligent, and well-designed health care reform. The National Association of Health Underwriters has developed several over the years, striving to strike a healthy balance between what the government does well, and what the private market does well.
Bottom line: Vermont-ers, prepare yourselves for soaring costs, associated taxes & “fees”, resulting rationing, and vicious finger-pointing by all parties involved.
David N. Johnston
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