Vermont Governor Peter Shumlin recently signed Act 48 which will put Vermont on the path towards a single payer health system, hoping to save Vermont $500 million per year in health costs. Blue Cross Blue Shield MA Foundation and The Massachusetts Health Policy Forum cosponsored an event this morning titled “Stepping Toward Single Payer: An Inside Look at Vermont” that focused on Vermont’s progressive legislation and how it will work to contain costs. Panel members included Anya Rader Wallack, Special Assistant to Gov. Peter Shumlin for Health Reform and President of Arrowhead Health Analytics, William Hsiao, Professor of Economics at Harvard School of Public Health, Representative Michael Fisher from Vermont, and Don George, President and CEO of Blue Cross Blue Shield of Vermont. Sarah Iselin, President of BCBS of MA Foundation, moderated the forum.
Vermont is a much smaller state than MA, with 625,000 residents, 14 general hospitals, and only 8 critical access hospitals. But like Massachusetts, Vermont health spending has soared through the roof in recent years. Between 1992 and 2009, health care spending more than tripled. There has been talk about single payer in the Green Mountain state for some time, and this talk was put into action last month. A Democratic governor and 2/3 majority in both House and Senate provided a political window for legislation, yet panel members stressed that the main catalyst for Act 48 was an economically sound argument for cost reductions from a single payer system.
Act 48 outlines three important components, according to Wallack.
1.Sets up Green Mountain Care Board (2011), the locus for cost containment that will set an overall budget and recommend minimum benefits to the plan.
2.Sets up Vermont Health Benefit Exchange (2014) which will follow along federal exchange guidelines and transition into the single payer, “Green Mountain Care” once a waiver is obtained.
3.Plans Green Mountain Care, the single payer organization. This will be an independently-run non-profit payer, and will need a waiver (2014) to replace the exchange.
The financing for coverage and the available federal funds will be worked out by the Secretary of Administration in 2013 and voted on by the legislature.
Hsaio, who researched Vermont’s situation and developed recommendations for a single payer system, believes that single payer is the best way to control costs while maintaining quality by reducing administrative waste, using electronic medical records, rewarding providers for value not volume, and improving the care delivery system. He believes the final legislation was successful in creating an independent board, decoupling health insurance from employment, and creating guidelines for a benefit package, but the proof of the pudding will come from how VT will finance the care, and how doctors and hospitals will be paid (i.e. moving away from fee for service), which we will not know until 2013.
Representative Fisher compared the passage of a single payer law to his other job as a licensed social worker. Realizing rising health costs are unsustainable, it’s easy to throw in the towel and ignore the issue, as it is with a seemingly hopeless client. However, in both cases, a step-by-step approach is needed to address the causes and fix the problem. In response to Hsaio, the legislators were not adequately prepared to outline the financing, and this step will be addressed later in the process.
You may assume the CEO of a private insurance company would oppose transition to single-payer. However, Don George, President and CEO of BCBSVT and a Vermont native, fundamentally agrees with the a single payer health care system, and claims after 25 years of working to control costs in health care, he has gained no ground. Committed to Vermont’s residents, he acknowledges that a single payer (he hopes BCBSVT) will be necessary to deliver quality affordable care to his home state.
Some attendees asked about the response of physicians and hospitals. Panelists unanimously reported that there has been a broad array of responses, but generally a more positive response from the primary care community, and a more anxious response from specialists. Hospitals are also nervous about what this will mean, as they have already been having trouble meeting the bottom line in recent years.
Other members of the audience asked about rationing care as a means to saving money. Don George replied that the goal of single payer is to restrain costs, not care. He believes a single payer system can align incentives between patients and providers, and areas such as chronic disease management will be large cost savers.
Michael Doonan, Executive Director of the Massachusetts Health Policy Forum, ended by stressing that progressive policy begins in the states, as we have seen in Massachusetts with our own health care law. Vermont’s new legislation is certainly progressive, and time will tell how the policy will influence its health care system.