Single-payer health care is closer to reality in Vermont

Who is better at providing health insurance – the government or private companies? We may find an answer in an experiment that is about to begin.

The State of Vermont has taken the first step in creating a government-run single-payer health plan. Governor Peter Shumlin, a Democrat, signed legislation last week that authorizes a new five-member board to put the plan, to be known as “Green Mountain Care,” into effect. (Follow this link for the full bill -

All Vermonters will eventually be eligible for the plan, although some can keep their current coverage. These include residents in employer plans and those on Medicare. For most others, including the poor who are covered by Medicaid, Green Mountain Care will become the sole option.

The plan’s implementation keys into national health reform. Initially, Green Mountain Care will take the form of an insurance exchange that lets residents purchase policies from competing private insurers. Such state-based exchanges are at the core of the health reform law. Over time, the exchange will transition into a single government-run plan with a standard benefits package.

The transition requires some flexibility at the federal level. Insurance exchanges will begin operating in 2014. States can request permission to make major changes to them, like substituting a single-payer plan for multiple private options, starting in 2017. Vermont hopes Congress will amend the law to let them use the new approach sooner. It will also need a federal waiver to fold Medicaid into the plan.

Green Mountain Care will derive most of its funding from taxes, which may have to rise as a result. To control costs, it will devise a budget that sets payments to providers. It will also hold beneficiaries responsible for copayments and deductibles. However, the new board must work out numerous details to make the financing succeed.

The state foresees substantial savings once the plan goes into effect. (Follow this link for the full cost projections.) An analysis published in the New England Journal of Medicine predicted lower health care spending by employers, by the state, and by households, and the creation of new jobs. Governor Shumlin believes the administrative streamlining from a single coverage source could save the state as much as $500 million a year.

Will Green Mountain Care work? Unfortunately, we won’t know for awhile. Much depends on the board’s ability to devise a workable financing mechanism and the willingness of the federal government to accommodate the new approach.

But every novel initiative requires a first step. After years of national debate over the wisdom of single-payer coverage, Vermont has finally made a move to try it out.

Could the plan work elsewhere? That is also still hard to predict. With only 620,000 residents to cover, a single-payer in Vermont faces a much easier road than a plan would in a more populous state.

But the Vermont experiment is what our federalist system is all about. Each state can make itself a testing ground for new ideas. And in health care, we can certainly use that.

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