Vermont moves closer to becoming first US state to provide 'socialised medicine'

By Jeanne Lenzer
BMJ, May 10, 2011

Vermont is set to become the first US state to launch a single payer healthcare plan after a bill passed both houses of the state’s legislature.

The plan is expected to be signed by Governor Peter Shumlin, who in February originally proposed the idea that would abolish most insurance plans and would instead provide healthcare to all residents through public funding. In the United States this is known as a “single payer” scheme and is fiercely opposed by many conservative politicians as “socialised medicine.”

Some doctors in Vermont are unhappy about the proposed changes. In an online poll of roughly 600 doctors conducted by the state representative George Till, a doctor who specialises in obstetrics and gynaecology, 28 percent said that they will stop practising medicine in the state if the plan is enacted. However, the poll by Dr Till, who opposes the governor’s plan, has been criticised for not preventing multiple responses from the same person or responses from people who weren’t doctors.

The man responsible for designing Vermont’s plan, William Hsiao, professor of economics at the Harvard School of Public Health in Boston, told the BMJ that he and his colleagues evaluated healthcare schemes around the globe and found that “fee for service is the worst payment [mechanism] in the world, [as] it’s inflationary—and it’s the incentive structure embedded in our healthcare system.” Costs spiral out of control, he said, because doctors and hospitals are paid more for doing more.

An analysis by Dr Hsiao, published in the New England Journal of Medicine (2011;364:1188-1190; doi:10.1056/ NEJMp1100972), concluded that the new plan is necessary because one in five Vermont residents have either inadequate or no health insurance and rising healthcare costs threaten the solvency of small businesses and citizens.

Dr Hsiao told the BMJ, “The US is the only advanced nation other than South Africa that builds health insurance on a free market of multiple private insurers” and conditional on employment. “We need to decouple employment and health insurance,” he said. “If you live in Vermont, you will be eligible for health insurance.”

The Vermont plan, Dr Hsiao’s analysis shows, could lead to cost savings of 25 percent over 10 years. Savings would come from “administrative simplification,” introduction of a no-fault malpractice system, elimination of “perverse [financial] incentives,” and by “insulating major decisions about healthcare spending from politics.” This last reform is especially needed in the US, Dr Hsiao told the BMJ, because politicians, whose campaigns are often underwritten by large contributions from industry, often support schemes that increase profits for drug companies, hospitals, and specialist groups.

One example, he says, is the Medicare plan passed under the former president George W Bush that prohibits Medicare from competitive bidding on drugs.

As for fears that doctors will leave Vermont, Dr Hsiao told the Boston Globe that he doubts doctors will actually leave the state (7 Apr, “With health costs rising, Vermont moves toward a single-payer system,” opinion/blogs/the_angle/2011/04/vermonts_single.html). If they do, he said, communities and medical centres will not have trouble recruiting replacements.

Dr Hsiao acknowledges that the legislation has been weakened from its original version, owing to “politics.” He told the BMJ that, among other changes, the legislature defeated the no-fault insurance plan, instead calling for “further study.”

Stephanie Woolhandler, professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program, told the BMJ that the Vermont legislation “falls well short of the single payer reform needed to resolve the healthcare crisis,” in part because it allows a “continuing role for private insurance, negating many of the administrative savings attainable through a single payer reform.” The plan, she said, would “force many patients to face copayments that obstruct access to care,” and it allows the participation of “for-profit hospitals and other providers, which research has shown deliver inferior care at inflated prices.”

But despite its shortcomings, the plan “may be a useful step toward progressive health reform,” Dr Woolhandler said.

Cite this as: BMJ 2011;342:d2921