First Single-Payer System Advances in Vermont Legislature

By Robert Lowes
Medscape, April 26, 2011

Vermont is closer to becoming the first state in the country with something akin to a single-payer healthcare system after today's 21 to 9 vote by the state Senate to approve the plan.

The measure, which preserves a role for private insurers alongside a single giant public plan, passed easily last month in the state House. However, because the state Senate amended what it received from the state House, the bill will likely go to a legislative conference committee for a final rewording, and then back to each chamber for one more vote, which could happen next week. Vermont Governor Peter Shumlin is expected to sign the measure into law at that time.

The concept of a single-payer system — in which all citizens are insured by a single payer — seems to have won over a majority of Vermont lawmakers, but not a majority of Vermont physicians. Of roughly 600 physicians who completed a recent online survey conducted by Democratic state Rep. George Till, MD, 44.2% support the single-payer concept, and 45.6% oppose it. In addition, 28.4% say they would likely stop practicing medicine in Vermont if such a plan gets off the ground.

The survey, criticized by some as unreliable because nonphysicians were able to participate covertly, also revealed a division between primary care physicians and their specialist peers with regard to Vermont-style healthcare reform. According to the survey, almost 62% of primary care physicians back the single-payer concept, whereas 56.5% of specialists oppose it. Nationally, organized medicine split along similar lines when it came to passage of federal healthcare reform in 2010. Both in Vermont and across the country, primary care physicians generally view their financial prospects as improving under healthcare reform, whereas specialists fear the opposite.

Vermont will not be the first state where lawmakers have enacted a single-payer system — that distinction belongs to California. However, Gov. Arnold Schwarzenegger vetoed such legislation twice, so the system was never implemented in that state.

Vermont Plan Hinges on Affordable Care Act Opt-Out

Even though a single-payer system — or, rather, a hybrid version of such a system — is on the verge of becoming Vermont law, it will not become a reality for a number of years, and state officials and lawmakers must take intermediary steps to make it happen.

As a prelude to a single-payer system, the legislation gets Vermont in sync with the new federal healthcare reform law known as the Affordable Care Act (ACA). The ACA requires states to set up so-called health insurance exchanges by 2014, through which individuals and small businesses can purchase coverage, with federal subsidies for those in need. The Vermont bill establishes such a state exchange for insurance shoppers.

Under the bill, the exchange created for the ACA could turn into a single-payer plan called Green Mountain Care, which would offer coverage to all Vermont residents. As the ACA reads now, states wishing to implement their own version of healthcare reform can begin to do so in 2017, provided they obtained a federal waiver. Such states must demonstrate that their plan would extend comprehensive and affordable health coverage to just as many people as the ACA, and not increase the federal deficit. They would then receive all the federal funds they would have been otherwise entitled to under the ACA.

Vermont may not need to wait until 2017 to opt out of ACA requirements and offer Green Mountain Care to its citizens, however. A bill sponsored by Sen. Ron Wyden (D-OR) and awaiting Senate consideration would move the opt-out year up to 2014.

Vermont also will need permission from the Centers for Medicare and Medicaid Services to include Medicaid and Children's Health Insurance Program patients in Green Mountain Care, and to administer the Medicare program for Vermont seniors, who also would be covered.

In addition to receiving these federal approvals, Vermont will need to develop a benefit package for Green Mountain Care and come up with the necessary funding. The job of designing the benefit package falls to a new entity called the Green Mountain Care Board, which is also tasked with figuring out new ways to cut healthcare costs, pay providers, and strengthen the healthcare workforce.

Physician Group Says Vermont Plan Falls Short

Vermont is on the road to creating universal coverage, but it would be home to more than just a single payer; that is, Green Mountain Care. Residents would be allowed to maintain coverage they already have, and if they switch to Green Mountain Care, they could purchase supplemental "wrap-around" plans from private insurers. In addition, Vermont would contract with a private insurer to administer Green Mountain Care.

This mix of payers is one reason why the Physicians for a National Health Plan (PNHP) says the Vermont legislation falls short of the single-payer reform it advocates. Multiple payers multiply administrative costs that are eliminated by a true single-payer plan, according to the PNHP. The organization notes that in the amendment process, Vermont lawmakers expunged the phrase "single payer" from the bill, which now refers to a "universal and unified health system." The PNHP also faults the Vermont plan for subjecting many patients to copayments that would obstruct access to care.

The Harvard University economist whom Vermont hired to design its hybrid single-payer plan — William Hsiao, PhD — countered in a Boston Globe interview that Vermont employers and employees alike would pay less for healthcare in his system than they do now, and would enjoy improved healthcare in the process.

Dr. Hsiao brought considerable experience to his assignment in Vermont — he helped design the single-payer healthcare system in Taiwan. In this country, and particularly in its medical circles, he is best known for developing the Resource-Based Relative Value Scale that Medicare uses to put a dollar value on physician services.