With a new governor in 2011 and supportive legislature, Vermont became the first state in the nation to pass a bill establishing truly universal health care and potentially leading the way to a single payer program. Its state house passed the legislation in March, followed by its senate in April, both by about a 2-to-1 margin. Governor Peter Shumlin (D) signed the reconciled legislation, known as Green Mountain Care, on May 26th.

The bill enacted is not a single payer one as such, but it lays a path that many Vermonters hope will lead to one. It does not take effect until 2017 and still requires financial analyses and detailed funding recommendations by January 2013, overseen by a governing board of appointees, confirmed by the state's senate. Because of the 2017 effective date, its implementation still could be thwarted by a future legislature, a new governor, or continued opposition, such as by insurance, business, and provider lobbyists. It will also need a federal waiver to replace the health exchange and some other rules placed on states by the ACA, starting in 2014.

A central principle under Green Mountain Care, as stated by Gov. Shumlin, is the establishment of health care as a human right. The conviction that decent health care should not remain a privilege for those who have the wealth to afford it or the advantage of working for a large employer that offers it provided much of the impetus behind the successful grassroots push. Fortunately for Vermont, achieving truly universal coverage will be easier than in most other states, since there only 7% are uninsured, vs. 16% nationally, the state's population is healthier than most, and there are 374 physicians per 100,000 people, compared to a national average of 271 per 100,000. (See "In Vermont, health care for all nears reality," Click here).

One potential hurdle to overcome though is getting around the federal ERISA law, which "pre-empts states from enacting legislation if it is ‘related to' employee benefit plans," which exempts employers with self-insured plans from having to comply with state insurance laws. But the new ACA law does allow a waiver in 2017 to states that meet overall ACA coverage standards by 2017. Vermont Rep. Peter Welch (D-VT) has introduced an amendment that would move the waiver date up to 2014, which President Obama supports. Vermont's biggest private employer is IBM, which lobbied for amendments to allow it and other employers to maintain an insurance-market model. Under the ACA, a state's health exchange would only serve small employers and those with no other source of coverage. But the new Green Mountain Care program would require everyone, except those in Medicare and Medicaid, to obtain coverage though the exchange by 2017, in order to simplify administration and spread the risk and funding.

A preliminary report on single payer was issued in January by Harvard economist Professor William Hsiao and colleagues in order to determine if a single payer system could provide sufficient savings to help offset the costs of better coverage extended to everyone. Hsiao led the recommendation for a single payer system in Taiwan in 1995, that has proven successful in controlling and limiting costs while providing universal coverage (Taiwan's program costs 6% of GDP and covers everyone, vs. 16% of GDP for the U.S. health care "system" with 16% uninsured and many others with limited benefits).

As Hsaio states in his January 19th testimony to the Vermont legislature, "our research and analysis indicate that the single-payer options will have a more dramatic impact on reducing cost than the public option because they incorporate a uniform benefits package and reduce much of the administrative structure needed to compensate multiple payers."

You can read his presentation to the state legislature by clicking here. The full report provides a wealth insight on how a single payer plan would be implemented, administered, and impact health care providers. To read the report, click here.

Hsiao's report considered three alternatives:

• Option 1: Government-administered single payer, with minimal co-pays and costing in total slightly more than what individuals with coverage and employers now spend.
• Option 2: similar to the ACA requirement for state health exchanges, but with a public option competing with insurance options.
• Option 3: Single payer with slightly higher cost-sharing provisions than in Option 1 (but still coverage 87% of medical costs and 77% of drug costs), administered by one or more insurers bidding for 2-year contracts with the state, and managed by an independent board.

Options 1 was projected to save 24% and Option 3 to save 25% of total state and private costs between 2015 and 2024. Option 2 would save 16% and still leave 30,000 uninsured. Of the three options, Hsiao's team recommended Option 3, because of its slightly higher savings and reliance on an independent board rather than a normal government agency. The costs of the three scenarios were compared to projected costs for Vermont under the ACA law enacted in 2010. Cost projections have a 15% margin of error, according to the report.

Funding would come from a combination of federal dollars (as already provided under the ACA to subsidize costs for those with low income), exiting state funds, and an 11% payroll tax, shared between employees and employers (the specific split to be determined by the planning board). Hsiao claims the tax is less than what larger employers spend on their current insurance premiums. Employers could continue to offer supplemental coverages.

The proposal is not a true single payer program, since Medicare and Medicaid programs were left out of the proposal, due to various hurdles that would need to be overcome. But the proposal did include modifying Medicaid to provide more equitable and uniform provider payment rates, since that program currently pays providers notoriously low rates. Hsiao cautioned that any move to a true single payer system would have to be very gradual and deliberate and could take up to 12 years.

Like the ACA, the proposal promotes integrated delivery systems, where most payments to doctors and facilities would be on a per capita basis ("bundled payments") or global budgets for provider systems to encourage efficient care and control costs. Payments would also be uniform for all patients in the program, meaning that all participating payers would pay providers the same rates – no complex network discounts and cost shifting (however, as noted, Medicare and Medicaid would remain outside the program, at least initially). Risk adjustments still would be needed to compensate providers according to the health status of covered patients.

The proposed payment system would also have performance-based payment elements to promote higher quality of care, as well as significant tort reforms. According to Hsiao's presentation to the Vermont legislature on Jan. 19th, "With a single-payer in place to manage all claims, Vermont can significantly reduce instances of fraud and abuse within the system. By implementing an integrated delivery system, providers will be able to share information about their patients more efficiently and will be required to do so by law. This will result in considerable savings and reduce overuse of services, tests, duplicative procedures, as well as the negative impact of over-treatment and drug interactions."

A major reason the Vermont health care law came to be enacted was the extensive campaign to frame health care as a human right, and not just to position health care reform as a cost control or delivery system reform mechanism. According to an article by Anja Rudiger for the National Economic and Social Rights Initiative (click here):

"While strong attempts were mounted to divert and hijack the reform process, especially by large corporations and the insurance industry, it was the growing vision of health care as a human right that captured the public imagination and created the political space for action by the administration and legislature. Observers largely credit this achievement to the grassroots organizing by the Healthcare Is a Human Right Campaign, led by the Vermont Workers' Center, which engaged many thousands of ordinary Vermonters in demanding their human right to health care.

The Healthcare Is a Human Right Campaign has built a broad-based people's movement guided by principles, such as universality and equity, rather than by specific policy or legislative proposals, such as single-payer. By shifting the focus from cost containment (which has dominated debates on health care and other public goods) to people's collective needs and rights, the campaign placed people at the center of policy and practice, challenging the powers that be. When viewed as a human right, health care becomes a unifying concern for everyone, not just for the uninsured, or for individual "consumers" struggling to pay their bills, or for workers seeking to hold on to benefits. This unity the campaign achieved at an organizing level has helped to embed human rights principles in public and political discourse, which in turn has advanced the goal of treating health care (and potentially other human needs) as a public good, financed through taxation, rather than a market commodity.

The success of this emerging grassroots organizing model – led by the people, inclusive, based on human rights principles – became particularly clear when pressure from the Healthcare Is a Human Right Campaign prompted legislators to drop a last-minute amendment that would have excluded undocumented people from universal health care."

But the article also cautions that:

"...the maneuvering of private insurance companies has been harder to detect and defeat... In Vermont's bill, private insurance companies, whose business model depends on restricting our access to care, managed to keep a foot in the door. This means that the development of the new system's financing mechanism may well be the most important struggle yet to come. Unless Green Mountain Care will be funded as a public good, through equitable contributions from all of Vermont's people and businesses, the system could be downgraded to a "public option", torn apart by opt-outs before it even starts."

But the state's nonprofit Blue Cross Blue Shield organization indicated some receptivity, since it could compete with other organization to help administer the program behind the scenes.

According to an article on Hsiao's presentation in VTDigger.org, cited by the single payer organization Healthcare Now! (click here), he acknowledged that "much of the burden for financing the plan would be borne by specialist physicians, some small businesses, and affluent two-earner couples, all of whom are adept at public relations and political infighting."

In any event, the enactment of Vermont's new Green Mountain Care program bears close watching, as this state has best current opportunity to move to truly universal coverage and possibly test a single payer system.

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