Vermont abandons dream of single-payer state

The Vermont Medical Society has been neutral on the single-player plan and has not commented on the decision to forgo it, while the state’s hospital trade group, which has had concerns with the policy, is welcoming the move.

The land of the Green Mountains, dairy farms and maple syrup is no longer pursuing the progressive dream of a single-payer healthcare system.

Three years after Vermont’s legislature passed Act 48 creating a roadmap for a state-financed single-payer system called Green Mountain Care, Gov. Peter Shumlin has nixed the idea because the comprehensive tax scheme needed to raise more than $2 billion annually would be too disruptive.

“I have advocated for such a system for much of my public life, but over the past two weeks it has become clear to me that the risks and economic shocks of moving forward at this time are too great,” Shumlin said.

A team within the Shumlin Administration had drafted a financing proposal to fund Green Mountain Care, a public healthcare plan envisioned to cover 94 percent of healthcare costs for all Vermonters except those enrolled in Medicaid or Tricare. The proposal called for an 11.5 percent payroll tax on all businesses, as well as a 9.5 percent assessment on individuals earning more than 400 percent of the poverty level, with a lower, sliding scale tax for those earning under 400 percent of the poverty level.

[See also: The single payer movement expands.]

Considering “current fiscal realities, such a financing plan would be detrimental to Vermonters, employers and the state’s economy overall,” Shumlin said. “I have always made clear that I would ask the state to move forward with public financing only when we are ready and when we can be sure that it will promote prosperity for hard-working Vermonters and businesses, and create job growth. Pushing for single-payer healthcare when the time isn’t right and it might hurt our economy would not be good for Vermont and it would not be good for true healthcare reform.”

Other factors in the decision were estimates by the independent regulator overseeing the transition, the Green Mountain Care Board, that turned out to be off target.

The estimate for federal funding that would be available under an Affordable Care Act waiver in 2017, when the state was going to implement the system, now is less than half of the $267 million initially expected. The "hundreds of millions of dollars" in administrative savings that were predicted are now considered by the Green Mountain Care Board “not practical to achieve.” Also, a provider fee bringing in $160 million would amount to “a hidden tax that is circular in a universal system.”

Pushing for single-payer healthcare when the time isn’t right and it might hurt our economy would not be good for Vermont and it would not be good for true healthcare reform.

The Vermont Medical Society has been neutral on the single-player plan and has not commented on the decision to forgo it, while the state’s hospital trade group, which has had concerns with the policy, is welcoming the move.

"Vermont's not-for-profit hospitals support this decision and look forward to working with the Governor and the Green Mountain Care Board on meaningful healthcare reforms that provide coverage for all Vermonters and make health insurance more affordable without damaging Vermont's economy,” said Bea Grause, president and CEO of the Vermont Association of Hospitals and Health Systems.

Single payer advocates like Vermont Health Care for All are disappointed with the decision, although Deb Richter, MD, head of the group and a member of Physicians for a National Health Plan, thinks Vermont will still make strides in universal coverage and access, if not on the route and timeline envisioned.

Shumlin, over the next four years of his second term, is going to pursue a number of healthcare proposals with the legislature, starting with the next legislative session in 2015.

[See also: Health delivery and payment reform tested in Vermont and Minnesota.]

One goal is to “enhance the Green Mountain Care Board’s role as a central regulator of healthcare,” with the goal of lowering state healthcare inflation to between three and four percent in the long term. (The Board is already regulating hospital budgets and insurance rates.)

Shumlin’s Administration is also seeking an all-payer waiver from the federal government, to set up a system for providers to be reimbursed at uniform rates across commercial insurers and public payers. Maryland has an all-payer system for hospital care only. Vermont's proposal would make it “the first state to move from the current quantity based fee-for-service system to one that reimburses providers for quality and outcomes,” Shumlin said.

Vermont's plans for a single payer system were driven by a provision in the ACA that will let states receive waivers to pursue universal health coverage as long as every citizen is gauranteed access to health coverage at the baseline of insurance exchange plans. Whether other states take up that option after Vermont backed down remains to be seen.