Single Payer
Health Care Reform Vermont
Style
Leonard Rodberg, PhD
Urban Studies Dept., Queens College/CUNY
and
NY Metro Chapter, Physicians for a National
Health Program
www.pnhpnymetro.org
February 22, 2011
Health Care in Vermont – Basic Facts
VT #
VT%
Total Population
613,900
0.2% US
Population Living in Poverty
73,500
12%
Health Spending per Capita
$6,069
Uninsured Population
59,000
Annual Growth in Health Spending
Average Family Premium – Employer-based
Insurance
10%
17%
9.7%
8.6%
$13,027
5%
10%
25%
19%
Overweight or Obese Children
26.7%
31.6%
Adults who Visited a Dentist
75.4%
71.3%
Medicaid Enrollment
Source: www.statehealthfacts.org, Kaiser Family Fund
6,600
20%
$5,283
$14,558
Uninsured Children
US
Vermont's Path to Single Payer Reform
• 1989 - Howard Dean's Dr. Dynasaur - "universal health care
for children" using state funds
• 1992 - Health Care Authority created to propose single payer
plan and a "regulated mutli-payer" plan. Collapsed in 1995,
with Dean opposing single payer advocates.
• 1995-99 - Medicaid waiver creates Vermont Health Access
Plan (VHAP), expanding eligibility.
• 2005 - Governor vetoes publicly-funded Green Mountain
Health for uninsured, to be expanded to universal coverage
• 2006 - Catamount Health - subsidized private insurance
• 2006 - Blueprint for Health - chronic care coordination
through primary care medical home and multi-disciplinary
community team
• 2008 - Health information technology fund created
• 2010 - Act 128 passed - move toward single payer through
consultant study and legislative action
For two decades: PNHP (esp. Deb Richter) activism
No. 128. An act relating to health care financing
and universal access to health care in Vermont.
Sec. 2. PRINCIPLES FOR HEALTH CARE REFORM
• Access to essential health services for all Vermonters
• Health care costs must be contained
• Transparency, efficiency, and accountability to the people it
serves
• Preservation and enhancement of primary care
• Free choice of provider
• Respect for the professional judgment of providers and the
informed decisions of patients
• Fair and equitable financing
No. 128. An act relating to health care financing and
universal access to health care in Vermont.
Sec. 6. HEALTH CARE SYSTEM DESIGN AND IMPLEMENTATION
• Consultant to propose at least three design options for creating a
single system of health care which ensures all Vermonters access to
affordable, quality health services:
(1) Government-administered and publicly-financed single-payer
health benefits system.
(2) Allow individuals the choice of private insurance or a public
option
(3) A third option designed by the consultant, according to the
principles in Sec. 2 of this act.
• Sufficient detail to allow the Governor and the General
Assembly to adopt one design in 2011, and to begin
implementation by July 1, 2012.
Haiao Study Design Principles
• No overall increase in health spending — any
new funds needed have to come from savings
• Maximize federal revenue for Vermont
• Maintain average current benefits of Vermonters
• No reduction in income of physicians, hospitals
and other providers
• Sustain and increase supply of physicians and
other providers
• Eliminate the perverse incentives of fee-forservice system through risk-adjusted capitation
plus performance bonuses and integrated
delivery systems
Hsiao’s Overall Strategy
Build a single payer system that can:
• Provide universal coverage and everyone
covered with a standard benefit package
• Produce significant savings to fund the
uninsured and under-insured
• Control health cost escalation
• Move Vermont toward an integrated health
care delivery system
• Use payroll taxes as an equitable way to fund
single payer benefits
Identified 15 Hurdles that Must
be Overcome
• Fiscal: No additional overall spending for
health care.
• Legal: Medicare, Medicaid, ERISA, PPACA
• Political: Major stakeholders’ positions
• Operational: Smart card, uniform electronic
operational systems, common procedures
Essential Benefit Package
• Cover
every resident with at least 87% of medical,
77% of drug expenses (the average private policy)
• Expand coverage for dental and vision care
• Exclude nursing home and home care
• Emphasize prevention and primary care
• Modest, capped copayments for outpatient
services (no copayment for preventive services)
• Deductible, coinsurance for inpatient services
• Supplemental coverage available via private
carriers
Three Reform Options
• 1. Publicly-financed, government-administered
single payer system
-- Essential benefits (87% actuarial value)
-- Comprehensive benefits (98% actuarial value)
• 2. PPACA plus public option
• 3. Publicly-financed, privately-administered (by
stakeholder board) single with “essential benefits”
Recommended Option 3, “Public-Private Single Payer”
“Most likely to be acceptable to major stakeholders, will
produce most savings, should rely on market when
possible, minimize political interference, gain transparency
and accountability”
Source: Gruber Microsimulation Model
Costs and Savings for Option 3
Additional Costs for Essential Benefits
Covering the uninsured and poorly-insured
Adding primary care and community hospitals
Dental and vision benefits
Total New Cost
Savings
Reduced insurer & provider administration
Reduced fraud and waste
Integrated delivery system (PCMH, ACOs)
No-fault malpractice system
Total Savings
* Highly uncertain!
Net Savings
5 %
1%
2%
8%
8%
5 %*
10 %*
2 %*
13-25* %
5-17*%
Note: Reduced cost-sharing for “comprehensive benefits” would add 11%
to the cost; long-term care benefits would add another 4%.
Revenue Requirements for Option 3
(Payroll Tax, for Illustrative Purposes)
Essential
Benefits
Comprehensive
Benefits
Employer
Contribution
9.4%
13.6%
Employee
Contribution*
3.1%
4.6%
Total
12.5%
18.2%
* Excludes wages below 200% of Federal poverty level
Note: Assumes $340 million receipts (6.4% of total) through PPACA
Hsiao Study Conclusions
• Vermont can fix its broken health system
• A new system can control health cost escalation
while provide universal coverage
• A single payer system can reduce 8-12% of the
health care cost immediately and an
additional 12-14% over time
• A single payer plan is an effective instrument to
establish integrated delivery of health care
• Vermont can show the way forward for the USA
Goals of Shumlin Bill
"The creation of a single-payer health care system to
provide affordable, high-quality health care coverage to all
Vermonters and to include federal funds to the maximum
extent allowable under federal law and waivers from
federal law."
• Control health care costs
• Meet PPACA requirements for health
insurance exchange to get federal money
• Lay foundation for “single payer exchange”
• Make a clear commitment to multi-year
reforms that will lead to a “real” single payer
• No funding specified: To be proposed by
administration January, 2013
Vermont Health Reform Board (2011)
First step: Payment reform/cost control
• Five-person board employed by state: chair, health
policy expert, practicing physician, representative of
hospitals, employers, consumers.
• Work toward consistent provider reimbursement
across all payers, global budgets, uniform payments
methods
• Develop and approve payment reform pilot projects
• Establish cost-containment targets for each sector of
the health care system.
• “ensure reasonable payments to health care
professionals …that the amount paid to health care
professionals is sufficient and distributed equitably”
Vermont Health Benefit Exchange (2014)
(“single payer exchange”- Hsiao’s "single pipe")
Purpose: to facilitate the purchase of qualified
(private) health plans while providing a means
of moving toward a single-payer system
• All (not just uninsured!) individuals and small (< 100)
employers, state and local government employees,
Medicaid and Medicare recipients
• Self-insured employers potentially can choose to stay
outside the exchange because of ERISA
• Would offer Medicaid and Medicare benefits as well as
private insurance (if waiver obtained)
• Collect all premium payments, administer all benefits
• Unified, simplified claims administration and billing,
common payment methods and levels
What an Exchange Looks Like:
Leading to a List of Options:
…And Select your Plan
Green Mountain Care (2017)
"Public-private single payer system"
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Implemented upon receipt of PPACA waiver
All Vermont residents eligible to enroll
Private insurers prohibited from duplicating coverage.
May be administered by private insurance carrier (cf. Medicare
fiscal intermediary, Blue Cross interest/support)
Will seek waiver to administer Medicare and Medicaid with
Green Mountain Care as secondary/Medigap carrier.
Budget set each year by legislature, special fund is the "single
source" of all health care spending.
Cost sharing (co-pays) set each year by Vermont Health Reform
Board, waived for primary and preventive care, chronic care
management.
Run by Dept. of Vermont Health Access, with Consumer and
Health Care Professional Advisory Board.
Conclusions
• A single-payer plan is feasible for Vermont
• Achieving it will require overcoming
numerous significant political, financial, and
organization hurdles between now and 2017
• To offer support for single payer advocates in
Vermont, go to
www.vermontforsinglepayer.org