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Jan 20 2014

Vermont’s single-payer initiative

While America as a whole experiments with its clunky Affordable Care Act, the state of Vermont is on track to implement a state-run single-payer system, starting in 2017. Sean McElwee writing in The Atlantic explains in detail what the plan will do and how it came about.

Governor Peter Shumlin signed a revolutionary single-payer plan, Green Mountain Healthcare—the culmination of decades of work by progressive politicians in the state—into law in May 2011. The new system aims to guarantee universal insurance coverage, improve benefits for those who are currently underinsured, include universal dental care and vision care, and increase the Medicaid reimbursement rate to doctors in order to avoid cost-shifting.

The program was designed by Harvard economist William Hsiao, who detailed the plain in a 2011 Health Affairs article. Hsiao projected the state would save 25.3 percent annually in total healthcare spending, lower household and employer healthcare spending, job growth, and higher economic output for the state. The savings would come from lower administrative expenses, reduced fraud and abuse, eliminating middlemen, malpractice reform, and governance improvements. These savings, about $4.6 billion over the first five years, would be plowed back into paying to cover the uninsured and expanding benefits and services leaving $2.3 billion in residual savings. The law also created the Green Mountain Care Board, an independent group charged with overseeing the law and ensuring quality. What the plan didn’t do is lay out how the state government would pay for its increased spending.

The article goes on to say what the challenges are and why Vermost may be peculiarly suited to meeting them.

Vermont’s plan is a bold experiment in whether the government can convince humans, naturally risk-averse, to drop their wariness about changes that might affect their access to healthcare.

Arthur Woolf, an associate professor of economics at the University of Vermont, says the state “is very much like a Social Democratic Western European country,” both economically (because of its equality and prosperity) and demographically (because of its homogeneous population). So perhaps it’s not surprising that the state is also the first to explore a Canadian-style single-payer system.

Supporters of single payer hope that Vermont will be like Saskatchewan which was the Canadian province that first instituted a single payer system that later became the model for the whole nation. You can be sure that opponents will make every effort to sabotage the Vermont initiative, just like they are doing with the ACA.

5 comments

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  1. 1
    David Marjanović

    2.3 billion here, 2.3 billion there, and pretty soon it adds up to some real money!

    and demographically (because of its homogeneous population)

    *eyeroll* Sounds exactly like racism to me.

  2. 2
    wtfwhateverd00d

    I certainly hope this works for them. And then for the rest of us.

    I wish the article had covered what will happen to the existing insurance companies and their employees in Vermont. Layoffs? Of how many people? I would think across the US the dismantling of health insurance companies and what happens to their employees will be one of the largest sticking points.

    I am not as thrilled with the notions of tort reform though.

    I understand its necessity in keeping health care costs down, but my experience in California where medical caps on malpractice are $250,000 (or was about 10 years ago( is that by making malpractice suits uneconomic to pursue for contingency lawyers it incentivizes a lot of horrible care. To wit, my wife was almost literally assaulted during an operation, in that the surgeon was to perform one thing, and then performed another thing that was completely not medically necessary and dramatically injured my wife and created an enormous hardship on us, but with a maximum cap of $250K, it was very difficult to find any lawyer who would take the case, not because anyone did not recognize the harm done, but because it wasn’t worth their time.

    So tort reform of medical malpractice is a huge issue if you ask me.

  3. 3
    Chiroptera

    …the state “is very much like a Social Democratic Western European country,” both… and demographically (because of its homogeneous population).

    That’s an interesting point. This may not be what Dr. Woolf meant, but one thing I noticed about conservative opposition to basic decency has been how most of their propaganda is based on coded language about hating on black people and other minorities. Take away the ability of the conservatives to sow FUD, then people can be surprising in how they actually vote to be a reasonable, decent society to live in.

  4. 4
    Chiroptera

    Or, to riff on comment #1, maybe the racists in Vermont aren’t as afraid as the racists in other states that the “wrong sort of people” will benefit from these programs.

  5. 5
    richardrobinson

    @wtfwhateverd00d, the insurance companies will be reduced to paying for whatever additional services aren’t covered by the state-run program. In most of Canada, that includes covering ambulance rides, prescription drugs, elective procedures, eye-care and dental. They will have to significantly reduce their workforce.

    But have no fear, the market will look after those laid-off workers. Reduced healthcare costs for employees means more spending power, greater demand, and more jobs. Reduced healthcare costs for employers means they can pay their employees more, thus enhancing the demand-side effect. Ok, but seriously, employers will be trading insurance premiums for a tax, though the tax should be lower than the premium.

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