Vermont Single Payer: What Went Wrong?

By Jill Zorn

vermontA lot of single payer advocates were holding out hopes that Vermont, the bluest of blue states, would be the state that would figure out how to get single payer across the finish line.  Yet, as we reported recently, that is not going to happen.

What went wrong?  Our current health care system is incredibly complex.  Any effort to develop a more rational system runs up against these two very real and intertwined obstacles: money and politics.

Taxes and Government

The financing of single payer requires replacing the many streams of private insurance premium dollars paid by employers and individuals with a funding stream that runs through the public sector, e.g. some sort of broad-based tax.  In the case of Vermont, the final financing plan relied on both an individual income tax and a corporate tax.

Inevitably, there were going to be both losers and winners.  For example, small business that don’t currently insure their workers would now face a new expense in the form of a corporate tax.   Clearly the losers, generally higher income, well-insured people as well as many businesses, would be vocal in pushing back against the financing plan.

The shift from private to public financing of health care would also double the size of Vermont’s current state budget.  Growing the size of government, along with the proposed tax increases, would lend themselves to pithy, negative oppositional messaging.  As always, the complexities of health care financing would not be as easy to explain in easy-to-digest, succinct sound bites.  Obviously, Governor Shumlin concluded that the political hurdles that the financing plan required were just too high.

Vested Interests

The most obvious ox that is gored by single payer is the insurance industry.  While some insurers would still likely do well, by administering the system to pay provider claims, the health insurance industry would certainly be smaller than it is now.

But this is not the only powerful interest that is threatened by single payer.  One large payer clearly has substantial power to set health care reimbursement rates.  This poses a significant threat to the bottom lines of large hospital systems, pharmaceutical companies, well-paid physician specialists and other health care heavy weights.

In the case of both providers and payers, MANY jobs are involved.  Although new jobs would doubtless be created, jobs focused more on prevention, for example, it would be hard to avoid the label of single payer being a job killer, at least in the short run.  And we know that it is very hard to sell long term benefits in American politics.

A further complication is that most large employers, are currently self-funded.  That means they don’t actually buy insurance, but instead pay each employee claim directly.  A large, national company like IBM (Vermont’s largest private employer) that finances and operates its health plan nationally is not likely to drop covering its employees in only one state.  If Vermont established single payer, IBM would have to pay the broad-based corporate tax, too, essentially paying for its employees’ health care twice.  Furthermore, states have no regulatory authority over self-funded health plans, they can only be regulated at the federal level, under a law known as ERISA.

Not Enough Administrative Savings

As strong single payer advocate Don McCanne of Physicians for a National Health Program points out in this blog post, the Vermont effort was not “true” single payer.  Many key players would be left out, chief among them, Medicare (federally funded insurance for those over 65) and employer self-funded payers, like IBM.  Participation of both Medicaid recipients and those receiving federally-subsidized insurance through Vermont’s health insurance exchange, could only occur through the granting of federal waivers.

With multiple payers still operating in Vermont, health care providers would have to maintain extensive billing operations.  And the power to negotiate prices would not be as strong as it would be if there was only one payer for health care.

Focus on the Building Blocks

Clearly, it is extremely tough, some would say impossible, to implement single payer at the state level.  So what next?

Even if the stretch goal of implementing single payer is off the table, Vermont, under the oversight of the Green Mountain Care Board, is well ahead of most states in putting crucial building blocks in place to transform its health care system.  Vermont’s State Innovation Model project, which received a $45 million grant from the federal government in 2013, is focused on extensive testing of several payment and delivery system reform initiatives.  Their Blueprint for Health program has established a system of advanced primary care and community health teams throughout the state to coordinate and improve care.

As Richard Davis, a disappointed but still resolute single payer advocate wrote recently, “Vermont’s health care system has the potential to be the best model for quality and equality in the United States.”

Connecticut and other states have a lot to learn from the pioneering work underway in Vermont.

To learn more about what happened to single payer in Vermont, check out these articles:

VOX:   How Vermont’s single payer dream fell apart, by Sarah Kliff

Politico: Why single payer died in Vermont, by Sarah Wheaton

Physicians for a National Health Program blog, by Don McCanne:  Listen to Deb Richter

Bloomberg News:  If single payer can’t work in Vermont…., by Megan McArdle

Brattleboro Reformer:  End of an era, by Richard Davis

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2 Responses to Vermont Single Payer: What Went Wrong?

  1. Pingback: Supreme Court Will Continue to Shape Health Reform With  Gobeille vs. Liberty Mutual  | Universal Health Care Foundation of Connecticut

  2. Pingback: Top Universal Health Care Foundation Blogs of 2015 | Universal Health Care Foundation of Connecticut

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