Study: Single-payer health care would save state money

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By Louis Porter
Vermont Press Bureau
August 30, 2006

MONTPELIER — A Legislative study released Tuesday concludes that Vermont could save money by adopting a single-payer health care system.

But key lawmakers who authorized the study said they want more information before endorsing or rejecting such a system.

Implementing single-payer health care would pose political and financial challenges by forcing a “substantial redistribution of who pays for health care,” said Kenneth Thorpe, a national consultant hired by lawmakers to conduct the study.

Vermonters who lack insurance now and companies that do not offer coverage to their employees would pay more under a single-payer system, the study found. People who already have health insurance, and employers that offer it to their workers, would pay less.

When state lawmakers passed a reform bill last year to change the way health care is delivered and financed in Vermont, they promised to continue examining one alternative — a single-payer system, run by the state, that would pay hospital and doctor bills for all Vermonters.

Such a system would be more complex than it might seem, lawmakers and experts said.

For example, even the single-payer system studied by Thorpe would be funded by at least three sources. In addition to money provided by the state, the federal Medicare program would continue to cover eligible Vermonters. And private insurance companies would keep paying bills on behalf of out-of-staters who receive medical care while visiting the state.

Even with multiple funding sources, such a system could save $51 million in administrative costs, Thorpe said.

A single-payer system in Vermont would be financed by a payroll tax on companies and workers of about 13.5 percent, Thorpe said. Companies would pay about 75 percent of those costs, while employees would pick up the rest.

Companies that offer their employees health insurance, and workers who have coverage, would see a net savings under that system. But the roughly 40 percent of companies that offer no coverage to their workers would pay more, Thorpe said.

Rep. John Tracy, D-Burlington and Sen. James Leddy, D-Chittenden, who run the Legislature’s Health Care Commission, said they aren’t prepared to endorse the single-payer system outlined in Thorpe’s report. They said they need to see additional studies, including an analysis of all the economic effects such a system would have on the state.

Tracy and Leddy said a single-payer system could be a complement, rather than an alternative, to the “Catamount Health” measure lawmakers passed last year to increase the number of Vermonters covered by health insurance and improve care of chronic illnesses.

“We are not at the end of the road,” said Tracy, who is a Democratic candidate for lieutenant governor. His primary opponent is state Sen. Matthew Dunne. “As we continue to go forward we need to look at all the options to finance it.”

The report quickly drew fire from two sides: from those who don’t believe last year’s measure went far enough, and from those who believe it went too far.

“Imposing a payroll tax will drown Vermont’s job providers, who are a backbone of Vermont’s economy,” Vermont Chamber of Commerce President Duane Marsh said in a prepared statement.

Jason Gibbs, a spokesman for Gov. James Douglas, said the governor “negotiated and signed the most comprehensive health care legislation in the country.”

“The governor’s focus is on implementing those reforms, assuring universal access to affordable health insurance and lowering the cost of care for those who currently have health insurance,” Gibbs said. “We find it very troubling that, just a few months after landmark legislation has been passed, the Legislature is contemplating how to raise the payroll tax.”

But Marvin Malek, a Progressive Party candidate running for lieutenant governor, said Vermont’s new law does little to address the problems of information management and administrative waste. Lt. Gov. Brian Dubie, a Republican, also is running for lieutenant governor.

“That bill is hardly the answer,” Malek said. “I don’t even think it is funded.”

Taxpayers fund the health insurance plans provided to federal, state and local government workers, Malek said. “We are already paying so much for these government plans, why not just say all right, everybody is in,” Malek said.

Increasing the number of Vermonters eligible for government-subsidized health insurance fails to go far enough, he said.