Vermont seeks insurance for most residents

By Chelsea Conaboy
The Boston Globe, May 7, 2011
As soon as 2017, Vermont could become the first state to provide and pay for insurance for most of its residents under a plan passed by the Legislature Thursday. But it must first clear several significant hurdles, including persuading the federal government to allow the state to assume responsibility for Medicare and Medicaid enrollees and finding a way to pay for the program.
The bill outlines a planning process for implementing what is often referred to as a “single-payer” system. Called Green Mountain Care, the program would operate in its first few years much like other state health care exchanges established under the federal Affordable Care Act and must begin enrolling individuals and small business in 2014. That’s the year the mandate for most Americans to have health insurance takes effect.
Vermont’s plan is different, however, because it lays out the state’s intention in 2017 to move most people with private and government insurance into a unified system in which their insurance would be paid for through their taxes, not through premiums and copayments.
Anya Rader Wallack, special assistant for health care to Governor Peter Shumlin, said that the bill’s passage is a significant step toward a single-payer system, but that supporters have “some real heavy lifting ahead.”
An analysis by Harvard economist William Hsiao and Steve Kappel, a Vermont health-policy consultant, said the plan could shave between $1.7 billion and $2 billion off the state’s projected $9 billion in health care costs in 2020.
Implementing the plan would require new taxes. One proposal studied by Hsiao, Kappel, and others is to raise payroll taxes to 10.9 percent for employers and 3.6 percent for employees.
By Kappel’s analysis, even with the new taxes, employers and employees at low-wage companies that now offer high benefits would save money using the exchange. But the new program would cost those at high-wage companies with lower benefits. Kappel called it a “humble bill” that leaves many open questions. “This bill is very much more a statement of goals,” he said.
Wallack said far more analysis is needed before the state can present the Legislature with a solid financial plan. The Vermont secretary of administration must present a plan for paying for the program to the Legislature by Jan. 15, 2013.
The state’s largest health system, Fletcher Allen Health Care, could manage just fine as a provider in the proposed system, said Melinda L. Estes, president and chief executive. However, she said, “There are a tremendous amount of unknowns from the business and employer side,” including whether the system would be exempt under the new program because it is self-insured, meaning it acts as insurer for its employees.
Paul Harrington, executive vice president of the Vermont Medical Society, questioned whether the state could secure the waivers necessary to assume authority for the federal programs while continuing to receive hundreds of millions of dollars in subsidies through the Affordable Care Act. His group did not take a position on the bill.
The bill, which passed with a final House vote of 94 to 49 after approval in the Senate, was opposed by some business groups, including the Vermont Insurance Agents Association.
The bill establishes a system to help people find and manage their health plans through the exchange. But Joseph Normandy, executive director of the insurance association, worries that many of his members could lose business. About one-third of his group’s 150 member agencies sell health insurance, he said.
“In this economy, when you outlaw health insurance agents, you eliminate jobs,” Normandy said.
But the plan also saw pushback from people who said it did not go far enough.
Without a funding plan or details about what kind of coverage the state would offer, the bill does not actually do much, said Dr. David Himmelstein, visiting professor at Harvard Medical School and a founder of Physicians for a National Health Program.
“It’s an important step, if they take the next one,” he said. “If this is all they pass then, frankly, it’s not.”
Chelsea Conaboy can be reached at